Health insurance policies with high deductibles are causing many people to accumulate excessive medical debt. Unfortunately, health insurance deductibles have increased by 67 percent since 2010.
Deductibles are the amount policyholders must pay before their health insurance policies cover medical expenses. When deductibles increase, policyholders may be at risk for accumulating medical debt.
More than half of the country cannot cover emergency bills exceeding $1,000. Some health insurance deductibles are now $5,000! We can use a hypothetical scenario to explain why high deductibles can put you at risk for medical debt.
How Health Insurance Deductibles Create Unaffordable Medical Bills
Dave works at a small business in Kansas City. Like other Americans working at small businesses, Dave has an individual health insurance policy bought through the health care marketplace (or health care exchange). One day, Dave comes down with a severe respiratory infection and seeks treatment at his local hospital.
At the hospital, the emergency room doctor conducts several examinations, including an X-ray, blood test and bronchoscopy. Dave is told that he has come down with the flu and is provided prescriptions for several medications before being discharged. Hospital staff point Dave towards the billing department, where he receives his initial bill. The billing department tells Dave he owes $1,235 for the initial services. This will not include services provided by other specialists and labs during his brief hospital stay.
Dave calls his insurance company only to receive more bad news. The insurance provider will not cover anything until Dave pays his deductible. Dave has only paid $50 towards his deductible this year. Unfortunately, Dave’s deductible is $2,000, meaning that he must pay for the full $1,235 plus the costs of additional bills that are likely to arrive in the mail. Poor Dave now has the flu and owes more than $1,000.
Dave’s plight is not uncommon. A recent University of Michigan study discovered that Americans pay an average of $1,013 for hospital visits. People like Dave, with individual marketplace plans, pay an average of $1,875. High deductibles are one reason why Americans continue to accumulate medical debt. Keep in mind, that health insurance providers do cover medical costs for preventative care services even if deductibles are not met.
Next week’s blog will discuss possible options for avoiding medical bills caused by high deductibles. In fact, Dave’s situation may have not occurred if he had utilized a health savings account (HSA).
The Kansas City bankruptcy attorneys at The Sader Law Firm can help people find solutions for excessive medical debts.