Healthcare inflation has outpaced the overall rate of price increases over the past twenty years. While costs have slowed, they are still projected to rise by 4.2 percent over the coming 20 years, according to research from HealthView Services. Please feel free to sigh, complain or yell right now. Now let’s move on to what you can actually control in this process: the choices you make for health insurance coverage.
Employer coverage: For the more than 152 million Americans, a Kaiser Family Foundation survey found that annual premiums for family health coverage reached $19,616 this year ($6,896 for single coverage), up 5 percent from last year. Of that total, workers on average are paying $5,547 ($1,186 for single) toward the cost of their coverage, a whopping 21 percent jump since 2013.
Of course it doesn’t stop there as the dreaded deductible can add up to significant additional outlays towards the cost of health care. The average deductible among all covered workers is $1,350 – and that includes those lucky devils that have no deductibles at all. Over the past five years, the average annual deductible among all covered workers has increased 53 percent.
So what can you do? SHOP AROUND! Yes, it’s tedious, but it could save money. Start by reviewing your current plan, what you spent this past year; and then try to project what your health care costs will be in the year ahead. Then compare plans and determine what they cover, how much they cost, including co-pays and deductibles and whether your doctors are in the network.
If your employer offers a High Deductible Health Plan or “HDHP” paired with a tax advantaged Health Savings Account (HSA), there can be great savings. Additionally, Flexible Spending Accounts (FSAs) allow you to set aside a projected $2,700 (the announcement had not been made as of this writing) in pre-tax dollars to cover out-of-pocket expenses.
Medicare: In January, Social Security recipients will get a 2.8 percent cost-of-living adjustment (COLA), the largest in eight years. But the COLA calculation does a relatively poor job of taking into account the costs that matter most to seniors, because it relies on the spending habits of people who are mostly working age. For a healthy 66-year-old couple retiring this year, healthcare costs will consume about half of lifetime Social Security benefits.
That means that seniors should pay attention to the all-important Medicare Open Enrollment period, which is open until December 7th. You can switch from original Medicare into Medicare Advantage, the managed-care alternative to fee-for-service coverage. If you do, make sure that your doctors are in the network; understand the deductible/out of pocket limits; and the prescription drug choices. For the Part D medication plan, check out Medicare.gov/findaplan to compare coverage options. If you don’t request a change, your coverage will be automatically renewed.
Affordable Care Act (ACA): After all of the fighting, the ACA is still open for business. 2019 Open Enrollment Period runs from November 1 to December 15. If you miss the deadline, you may be able to qualify for a Special Enrollment Period. Prices on average are expected to edge lower for silver plans, the most popular mid-range option on the exchanges. But costs are dependent on your state of residence.
The big change to the ACA concerns the individual mandate, which required that most Americans carry health insurance, or face a tax penalty. However, the tax law passed last December now drops the penalty to zero. One note: This change IS NOT retroactive, so you might owe the payment when you file your taxes in 2019 if you did not have coverage in 2018.