While health care costs are on the rise, subsidies will make certain plans more affordable.
There is no certainty other than death and taxes. But you can add another item to that list: rising healthcare costs. According to the Business Group on Health’s annual study, large employers anticipate that health care costs will rise by 6% in 2022. This would mean an average of $16,300 per employee (including employee contributions). Large employers are expecting an increase in hospitalizations and other COVID-19-related costs to be a contributing factor to this increase in health care spending. However, they also predict that treatment of conditions like cancer, diabetes, and heart disease will have a greater impact.
In 2020, health care costs were flat compared to 2019, due to the pandemic that caused consumers to delay elective surgery and annual physicals. Some consumers also continued to postpone treatment into 2021. Employers expect workers to schedule cosmetic procedures and make-up appointments as the pandemic subsides. According to the Business Group on Health, over three-quarters of large employers believe that employees with chronic conditions such as heart disease and diabetes will use more health care services.
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Some employers tie premiums, deductibles, and other out-of pocket costs to wages to reduce their health care costs. This means that higher-earning workers pay more for their insurance. According to the Business Group on Health, 40% of large employers will offer some form of wage-based cost sharing in 2021. The survey did not ask employers about their plans for the future, but that number is expected to rise.
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High-deductible plans for health care will continue to be the norm for most people who have employer-provided insurance. According to Mark Hope, an employee benefits expert at Willis Towers Watson and a global human resource consultant, consumers can expect to receive one or two high-deductible plans, as well as a preferred provider organisation (PPO) or HMO plan. HMO plans typically do not cover out-of-network services. To be eligible for specialist visits, you may need to have your primary doctor refer you.
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A high-deductible plan for health is the best option if you are a healthy person who needs only coverage for yourself and your spouse. Premiums for high-deductible health plans tend to be less expensive than traditional PPO and HMO plans. High-deductible plans often include a health savings account (HSA), which your employer can contribute to. This is to offset the cost of meeting a deductible. Contributions are pretax or tax-deductible for HSAs not sponsored by employers. Money in the account grows tax deferred and can be withdrawn tax-free for qualified medical expenses.
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The co-payments are usually fixed costs that are tied to a particular service. For example, you might pay $25 for your primary-care physician and $40 for a specialist. Coinsurance is a percentage-based system. For example, you may be responsible for 10% to 20% of the cost of the service, while your insurance provider will pay the rest.
The maximum out-of pocket cost for 2022 high-deductible policies is $7,050 if you are self-only or $14,100 if you are a family. These plans must cover the majority of your preventive care such as mammograms, blood-pressure screenings, and immunizations. You may also be eligible for certain chronic care treatments, such as statins for high cholesterol or insulin for diabetes, as part of preventive care. This means that you will receive care at a reduced cost or even free, depending on your deductible.
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Your employer may offer a calculator that allows you to compare premiums and out of pocket costs for different plans, based on your expected medical needs. Keep any explanation of benefits (EOB) forms you have kept from the last two to three years along with any receipts that relate to medical care. This will allow you to look back at what you’ve spent, especially if you postponed appointments because of COVID-19. The amount you spend on health care for your family in 2020 or 2021 may not reflect what you actually spend.