Orlando Harmon
High-deductible health plans (HDHPs) are a type of health insurance that offers lower monthly premiums with a higher annual deductible. This means that you pay less each month, but more out-of-pocket expenses until you reach your plan's yearly deductible amount. HDHPs are becoming more common in the US health insurance market, and they cover a range of essential benefits, including mental health services. This raises the question: how does HDHP coverage work for mental health specifically, and what are the potential benefits and drawbacks of this type of plan for those seeking mental healthcare?
Does medical insurance HDHP cover mental health?
| Characteristics | Values |
|---|---|
| Definition | A high-deductible health plan (HDHP) is any health insurance plan with a deductible greater than $1,500 for an individual or $3,300 for a family on average. |
| Coverage | HDHPs cover a variety of essential benefits, including hospitalizations, maternity care, mental health, and more. |
| Cost | HDHPs have lower premiums, meaning you pay less every month for your plan. |
| Out-of-pocket expenses | You may pay more out of pocket for non-preventive healthcare until you reach your plan's yearly deductible amount. |
| Preventive care | Preventive care like screenings and immunizations are still covered at no cost. |
| Annual out-of-pocket maximum | The maximum amount you will pay out of your pocket in a year is legally capped and cannot be higher than $8,300 for an individual or $16,600 for a family. |
| Pairing with a health savings account (HSA) | HDHPs can be paired with an HSA to help pay for eligible medical expenses. The money deposited into an HSA is tax-free. |
| Effect on spending | Studies suggest that HDHP enrollees with mental health conditions without a substance use disorder reduced their overall spending on mental health care by 4.8% but increased their spending on mental health-related emergency department visits by 11.3%. |
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What You'll Learn
HDHPs and out-of-pocket expenses
High-deductible health plans (HDHPs) are a type of health insurance plan that can help you save money on taxes and medical expenses if you don't require a lot of medical care. HDHPs have lower monthly premiums but higher deductibles, which means you pay less each month but a higher amount for medical services before your insurance plan starts to pay.
HDHPs have annual out-of-pocket limits, which are the maximum amount you would have to pay per year for health care items and services. For 2021, an HDHP in the FEHB Program had a minimum annual deductible of $1,400 for Self Only coverage and $2,800 for Self Plus One/Self and Family coverage. The annual out-of-pocket limit for the same program was $7,000 for Self Only coverage and $14,000 for Self Plus One/Self and Family coverage. These amounts are indexed annually. Once the catastrophic limit is met, you will not incur additional out-of-pocket covered medical expenses, including doctor visit co-payments and prescriptions.
Out-of-pocket expenses for mental health services can be high, especially for privately insured people with depression and anxiety. In 2021, enrollees who were treated for depression and/or anxiety had almost twice the out-of-pocket spending compared to those without a mental health diagnosis ($1,501 vs $863). Psychiatric office visits and psychotherapy were among the most expensive commonly used outpatient mental health services, with annual out-of-pocket costs of $128 and $348, respectively.
To manage out-of-pocket expenses, some individuals combine their HDHP with a Health Savings Account (HSA). An HSA is a type of savings account that allows you to set aside money on a pre-tax basis to pay for qualified medical expenses, including some dental, drug, and vision expenses. By using an HSA, you can pay for deductibles, copayments, and coinsurance using tax-free money. Your HSA balance also rolls over from year to year, allowing you to build up reserves for future health care needs.
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HDHPs and preventive care
High-deductible health plans (HDHPs) are becoming more common in the US health insurance market. They are designed to reduce the use of low-value services, but evidence suggests that subscribers also reduce their use of high-value services. HDHPs have lower monthly premiums, making health coverage more affordable for many, especially those with lower incomes. However, they also come with higher upfront costs and higher out-of-pocket deductibles for medical expenses, including mental health care, medications, labs, and diagnostic tests.
HDHPs are required by law to cover a range of essential benefits, including hospitalizations, maternity care, and mental health services. They must also provide a series of free preventive benefits, including annual check-ups, well-woman visits, and vaccinations. These preventive services are provided at no cost to the patient, without needing to meet the deductible.
The idea behind HDHPs is to encourage users to be more responsible for their health care and to shop around for the best prices. However, this can be challenging in reality, as some recommended services may be out-of-network or not covered by the plan. It is important for patients to be aware of these potential issues and to seek covered treatment by in-network providers.
One way to make an HDHP more cost-effective is to pair it with a health savings account (HSA). This is a tax-free savings account specifically for medical expenses, which can also help with retirement savings.
Overall, HDHPs can be a good option for those who are generally healthy and rarely need to see a doctor, as they provide peace of mind with lower monthly payments. However, for those with significant health needs, including mental health care, the high deductibles and out-of-pocket costs can be a burden.
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HDHPs and health savings accounts (HSAs)
A High-Deductible Health Plan (HDHP) is a health insurance plan with a deductible greater than $1,650 for an individual or $3,300 for a family. HDHPs also have an annual out-of-pocket maximum, which is the largest amount you will pay out of pocket. This amount cannot be higher than $8,300 for an individual or $16,600 for a family.
HDHPs are often paired with a Health Savings Account (HSA) to save money. An HSA is a tax-free savings account specifically for medical expenses. You can contribute to an HSA only if you have an HSA-eligible plan, which is another term for an HDHP. The money you contribute to an HSA is tax-deductible or pre-tax, and any increase in the value of your account is free from federal taxes, as long as withdrawals are made for qualified medical expenses. Some employers also choose to make contributions to their employees' HSAs.
You can direct portions of your paycheck into your HSA. When your HDHP doesn't cover a qualified medical expense, you can pay for that cost out of your HSA. HSA funds can be used to pay for occasional expenses, such as urgent care facilities, which are often significantly less expensive than the ER.
It is important to note that HSA funds cannot be used to pay premiums. Once you turn 65, you can use the money in your HSA for anything you want. If you don't use it for qualified medical expenses, it counts as income when you file your taxes. You must stop contributing to your HSA six months before you retire or get Medicare benefits.
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HDHPs and co-occurring substance use disorders
Mental health problems and substance use disorders (SUDs) sometimes co-occur. Certain substances can cause people with an addiction to experience symptoms of mental health problems. Conversely, people with mental health problems may misuse substances as a form of self-medication. Mental health and substance use disorders also share underlying causes, including changes in brain composition, genetic vulnerabilities, and early exposure to stress or trauma.
The coexistence of a mental health disorder and an SUD is referred to as co-occurring disorders. Co-occurring disorders may include any combination of two or more SUDs and mental disorders. Common mental disorders that co-occur with SUDs include anxiety disorders, depression, attention-deficit hyperactivity disorder (ADHD), bipolar disorder, personality disorders, and schizophrenia. Other health conditions that commonly co-occur with SUDs are HIV, hepatitis C, and chronic pain.
Research shows that an integrated approach to treating co-occurring disorders leads to better health outcomes. Treatment for co-occurring disorders may include medications, psychosocial interventions, or a combination of both, depending on the individual's needs. For instance, cognitive-behavioral therapy (CBT) is a type of talk therapy that helps people learn to cope with difficult situations by challenging irrational thoughts and changing behaviors. Brief strategic family therapy (BSFT) targets family interactions that may maintain or worsen adolescent SUDs and other problem behaviors.
The first step in treating SUDs is withdrawal management, where the individual stops taking the substance, allowing it to leave their body. This can be challenging due to withdrawal symptoms, and healthcare providers may offer medications to lessen these effects. After detox, treatment options include inpatient and outpatient settings, short-term care, and long-term therapeutic communities. Therapeutic communities (TCs) are a form of long-term residential treatment that helps individuals develop new, healthier values and behaviors related to substance use and co-occurring mental health conditions.
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HDHPs and insurance claims
A High-Deductible Health Plan (HDHP) is a type of health insurance plan with a deductible greater than $1,500 for an individual or $3,300 for a family, on average. HDHPs offer lower premiums with higher annual deductibles. This means that you pay less every month for your plan but pay more out-of-pocket expenses before your insurance provider starts contributing.
HDHPs cover a range of essential benefits, including hospitalizations, maternity care, and mental health services. They also provide free preventive benefits, such as annual check-ups, well-woman visits, and vaccinations. These preventive services are typically covered at no additional cost.
When it comes to insurance claims, HDHPs work as follows:
- Before meeting the deductible: You pay for most of your medical expenses out-of-pocket until you reach the deductible amount. Preventive care services from in-network providers are usually covered 100% during this stage.
- After meeting the deductible: Once you've paid out-of-pocket expenses up to the deductible amount, your insurance plan starts contributing. However, you may still be responsible for a small percentage of the costs, called coinsurance.
- Reaching the out-of-pocket maximum: Your out-of-pocket maximum is the maximum amount you'll spend on healthcare in a year, excluding premiums. After reaching this maximum, the insurance company pays for all covered medical services in full when rendered by participating providers.
- Using reimbursement accounts: Many individuals with HDHPs set up reimbursement accounts, such as Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), or Health Reimbursement Accounts (HRAs), to help pay for their medical expenses. These accounts allow you to save and pay for qualified medical expenses on a pre-tax basis, reducing your overall tax burden.
It's important to note that HDHPs may impact individuals with mental health conditions differently. One study found that offering a HDHP to enrollees with mental health conditions led to a reduction in overall spending on mental health care, but an increase in spending on mental health-related emergency department visits. Therefore, while HDHPs provide coverage for mental health, the specific plan details and potential out-of-pocket expenses should be carefully considered when choosing a health insurance plan.
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Frequently asked questions
A High-Deductible Health Plan (HDHP) is a type of health insurance plan with a deductible greater than $1,500 for an individual or $3,300 for a family on average. With an HDHP, you pay lower monthly premiums but have higher out-of-pocket expenses before your insurance coverage kicks in.
Yes, a High-Deductible Health Plan (HDHP) covers mental health. By law, HDHPs must cover essential benefits, including mental health services, hospitalizations, maternity care, and more.
HDHPs often have higher upfront costs, but you can save money by pairing your HDHP with a Health Savings Account (HSA). An HSA is a tax-free savings account specifically for medical expenses, helping you save on mental health services and other healthcare costs.
