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Make Higher Health Insurance Costs Into Your Financial Plan Now | Business

Employers are preparing to cut benefits even further.

A new survey of business leaders reveals that nearly 90% say the cost of health care coverage will be “unsustainable” within the next five to ten years. And, no surprise here, they’re planning to increase the amounts employees have to pay to stay covered.

The Kaiser Family Foundation, an independent, non-profit research organization, teamed up with the Purchaser Business Group on Health to interview 300 executives of large companies (at least 5,000 employees).

The purpose of the survey was to assess how open Corporate America is to government intervention; 85% of executives said that if an unsustainable level was reached, the government (who else?) Should step in.

While various federal extensions of coverage are being discussed, most of us can expect our employers to insist for now that we shoulder more of the burden. Almost half of the executives in the survey said they were “significantly” or “strongly” likely to shift a higher percentage of health care costs to employees.

And it’s not really affordable at the moment.

The most recent government report indicates that health spending consumed 8.1% of household spending in 2018, up from less than 6% in 2004. Of the average total household cost of nearly $ 5,000, about 70% does not. only concern the insurance itself (premiums, deductibles, copay, etc.).

The KFF reports that between 2010 and 2020, deductibles billed by employer-provided health plans more than doubled and the premium for family coverage increased by more than 50%. Inflation during this period was below 20% and the average wages of workers increased by 27%.

In order to contain costs, employers are increasingly offering high deductible health plans (HDHP). Because the employee assumes the financial responsibility for a higher deductible, the cost of the premium to the employee and the employer is lower. Nearly one in three workers is now registered with an HDHP.

One in five singles with an HDHP had a deductible of $ 3,000 in 2020. For families with an “overall” deductible for all members, 56% had a deductible of at least $ 4,000.

One way to counter the higher deductible is for employees to put money aside in a Health Savings Account (HSA) which offers valuable tax breaks. You must be enrolled in a qualified HDHP to be able to have an HSA.

In 2020, less than half of plans that offered HDHP with an HSA made an employer contribution. And among those who have, the average premium (around $ 740 for simple coverage and $ 1,400 for family coverage) still leaves enrollees on the hook for what can be pretty high deductibles.

To be clear, HSAs offer terrific tax breaks (even better than Roth IRAs), but if you don’t get any help from the boss, it’s up to you to cough up the money to save.

Despite all the attention paid to the known upfront cost of premiums and deductibles, what is too often overlooked is what your household faces if someone actually gets sick or injured.

If you stay in the network, your plan will likely have set an annual maximum for direct payment (OOP). The annual disbursement is the maximum amount (excluding premiums) that you are expected to pay.

Only one in 10 enrolled in a workplace health plan had a maximum annual OOP of less than $ 2,000 last year. Almost one in five had a high of $ 6,000 or more. The family maximums are higher.

Whenever possible, you want to work to have enough money set aside in Emergency Savings (or an HSA if you’re enrolled in an HDHP) to be able to handle a year (or two) of reaching your goal. limit. One in three people who have an outstanding credit card balance (with high interest charges) say it’s because of medical bills. This is the system we are currently stuck in: the more health care you need, the more threatened your financial health.

An upcoming tax refund can be a great way to jumpstart your OOP protection fund. Or if you’re online to receive monthly child tax credit payments starting in July, maybe some of it can be used to boost your emergency savings. Or take a serious look at your current spending to see if there are any places you can save money to free up more money to save.

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