Health insurance is supposed to help cover the costs of care, but there's a catch. Most policies come with an annual deductible. While your insurance will likely cover some services even if you haven't paid it yet -- such as preventive care or cancer screenings -- you'll have to pay out of pocket for most things until the deductible is met.
This can be a problem since deductibles have become much higher for most Americans. In fact, research published last year revealed that health plan deductibles have actually tripled over the past decade for policyholders with employer-sponsored health insurance.
This dramatic increase far exceeds the growth in income over the same time period, and it has occurred at the same time that insurance premiums have gone up as much as 50%. It has left more than half of all families with deductibles over $1,500 for individuals and $3,000 for families, while around one in five policyholders have a deductible of at least $3,000 per person and $5,000 per family.
If you're facing a very high deductible on your health insurance plan, it could interfere with your ability to get the care you need. You don't want to compromise your health, so it's important to ensure you're able to afford essential medical services. These tips may help.
See if you're eligible for a health savings account
A health savings account allows you to make a tax-deductible contribution to an account you can use for healthcare spending. You're eligible only if you have a qualifying high-deductible health plan, which for 2020 is a plan with a deductible of $1,400 or higher and a $6,900 maximum out-of-pocket limit if the policy only covers you, or a plan with a deductible of $2,800 or higher and a maximum $13,800 out-of-pocket limit for family coverage.
If you're eligible for an HSA, you can make contributions up to the annual maximum limit, which is $3,550 for individual coverage or $7,100 for family coverage in 2020. Those who are 55 or older can add $1,000 to these limits since they're entitled to make an extra catch-up contribution.
The ability to make tax-deductible contributions can make covering the cost of your deductible much cheaper, especially since you can also withdraw funds tax-free as long as the money is used for eligible medical care.
Prioritize saving to cover your deductible
Whether you have access to a HSA or not, you need to have money saved to cover the cost of medical services up to your deductible. You can deposit this money into a high-yield savings account if you aren't eligible for an HSA.
Try to save as much as possible each month -- even if this means cutting your budget or earning income from a side gig -- so you can quickly build up this account. The sooner you have this money, the sooner you'll have the peace of mind knowing you can cover any care you might need.
If you have to tap into your savings when you or someone in your family gets sick or hurt, rework your budget again to restore your account balance ASAP; you never know when another medical problem could arise.
Talk to your doctor about covered care
Staying healthy can help you to avoid sick visits or other care that isn't covered until you meet your deductible. Check your policy to see what services you're entitled to before your deductible has been met.
Usually, each family member will be entitled to an annual exam, vaccines, and certain other kinds of preventive care. If you can get this care paid for, this can help you to catch problems early or even prevent health issues from occurring that might be expensive to treat.
Just be sure to let your doctor know you want to take advantage of all services covered by your insurance but don't want to undergo any procedures that aren't covered without finding out the cost first. Otherwise, you could end up being surprised by a big bill if you get a test you didn't realize wasn't included in the free care.
Don't let a high deductible interfere with your healthcare needs
There may be little you can do about a high deductible, especially if you have a limited choice of plans from your employer that all leave you with large out-of-pocket expenses.
But by saving up for the cost of your deductible in advance, you can ensure you and your loved ones get the care you need. If you can qualify for an HSA, all the better: You can score valuable tax breaks that make it easier to set aside the funds you need.