It happens every year. The “deductible reset” period arrives, patients may or may not be aware (or understand the impact on their out-of-pocket obligations), and those who do may opt to delay care. For hospitals and healthcare organizations serving large patient populations, this can be a significant issue, especially as more patients are affected more severely due to higher deductibles.1
Organizations that choose to proactively address the deductible reset and educate patients can help empower them to make informed decisions and avoid unpleasant surprises. Preparing patient-facing staff to engage in these conversations is important as well. Based on more than 30 years of expertise and close involvement in the industry, CareCredit can offer both advice and solutions to help providers and patients alike navigate this pivotal period.
As CareCredit’s senior vice president, strategy and initiatives, Erin Gadhavi is responsible for defining, developing and executing CareCredit’s strategic vision. She’s spent most of her career in the financial services industry and joined CareCredit to help find innovative solutions to address financial issues that can affect people’s quality of health and access to care.
Here she answers five questions about deductible resets, how these periods affect patients and what providers can do help.
Question: Why is the deductible reset important for patients?
Erin Gadhavi: For patients, a new year means the potential for many variables surrounding their health insurance to change. Many will be aware of this and expect potential changes to their coverage, premiums, co-pays and other plan details. At the more disruptive end of the spectrum, patients may even need to find new providers due to network changes. Even in the best case, however, patients who have deductibles to meet will start over at zero. At the end-of-the-day, they need to be aware of what they will owe out-of-pocket.
None of this is news, but its consequences can catch patients off-guard in many cases, causing significant distress. For example, a prescription or office visit may be covered in December, but cost substantially more in January. On the other hand, procedures with high out-of-pocket costs in January may help patients reach their annual deductibles quickly, but those same procedures may not help as much in December (if deductibles have already been met). In other words, timing matters. If patients understand this, it can add pressure to treatment decisions or lead to delayed care. For patients who aren’t factoring the deductible reset into their plans, the impact can be even more problematic, potentially leading to surprise bills or financial difficulty when they “start over” paying toward an annual deductible that has recently reset.
Q: How can hospitals and other healthcare providers help patients navigate the deductible reset?
EG: One basic but important step is simply making sure patients are aware of the deductible reset and its implications. In the last few months of the year (and for any procedures scheduled for that timeframe), staff can ask patients about their deductibles and encourage them to check with their insurance providers for details. Even patients fully in the know likely won’t mind this kind of conversation, which shows that providers care about their patients’ financial health and want to make sure they can get the treatment they need in a way that works well for them and their families.
It’s also important to note that many patients don’t fully understand their coverage, including the details of their financial obligations. In fact, many aren’t even clear on what “deductible” means. In 2016, a Forbes survey reported that just 4 percent of Americans could correctly define common terms like deductible, co-insurance, co-pay and out-of-pocket maximum.2
Beyond helping with awareness and understanding, it’s crucial to have a way to help patients concerned about a deductible reset get the care they need without undue delay or financial distress. Someone who can benefit from a procedure in December shouldn’t feel compelled to postpone for financial reasons, just as patients who learn they will need an expensive procedure in January shouldn’t let large out-of-pocket obligations discourage them from moving forward with care. At CareCredit, we try to take timing out of the equation when it comes to decisions about care. By offering promotional financing for all qualifying purchases, at any point in the year, anywhere in our acceptance network, we make it possible for cardholders to move forward with care right away and manage their out-of-pocket costs over time with monthly payments.*
Q: Is the deductible reset really a big problem, or is it just an annual inconvenience that doesn’t really affect too many people?
EG: Many years ago, the deductible reset may have been less problematic, generally speaking. The problem is that many more people today have much higher annual deductibles, so when they reset, the impact can actually be substantial. Since 2006, insurance deductibles for individuals with employer-sponsored coverage have risen 396 percent, raising the average from $303 to $1,505, according to a report by the Kaiser Family Foundation.1 At the same time, more people have a deductible — 85 percent of employees in 2018 compared to just 59 percent in 2008.1 And for 58 percent of those with a deductible, their deductible is $1,000 or higher, which was the case for just 22 percent in 2009.1
The other thing to keep in mind is that deductibles alone aren’t the end of the story. In many cases, patients’ out-of-pocket obligation may include premiums, copays, coinsurance and other costs. The average employee contribution to premiums has risen to $5,547 in 2018, up from $3,354 ten years ago, and during this same period, premium costs have risen much faster than worker’s earnings.1 One analysis released in mid-2018 projected consumer out-of-pocket healthcare spending would reach $608 billion in 2019, an increase of more than 46 percent over 2014 spending.3
Q: It’s clear that costs are rising, but do they really affect decisions about care?
EG: Absolutely. Even incremental increases can have a troubling impact for many individuals and families. A study by the Federal Reserve this year found that 40 percent of Americans could not cover an unexpected expense of $400 or would have to borrow money or sell possessions to do so.4 When you consider that the same study reported that 20 percent of U.S. adults faced an unexpected medical bill in 2017, with an average cost of $1,200,4 it’s not hard to see how cost could be a major consideration when it comes to decisions about care. In fact, more than a quarter (27 percent) of adults declined medical treatment in 2017 due to cost.4 This is a very real challenge that is having a significant impact on a large number of patients.
Q: Given everything providers and patients are facing, how can CareCredit help?
EG: CareCredit offers a dedicated health, wellness, and personal care credit card, so patients can pay for care without using cards they need for other expenses, or paying cash up front. Promotional financing is available for all qualifying purchases of $200 or more, so cardholders also have the option to pay over time.* Even having six months can make a huge difference for many cardholders, and purchases may qualify for longer promotional periods—up to 60 months in some cases.*
On the provider side, CareCredit can offer the peace of mind that comes from working with a partner that has focused on healthcare financing for more than 30 years. More tangibly, we guarantee payment within two business days, with no recourse if the patient fails to pay,** so providers can reduce time, effort, cost and risk related to billing and collections. In addition, we offer a variety of tools, resources and materials to help providers with patient financial conversations, as well as promoting and managing their financing program to maximize the positive impact for both their patients and their business.
1 Kaiser Family Foundation, “Employer Health Benefits 2018 Annual Survey,” Sep. 2018
2 “To Understand Your Health Insurance Policy, Your Must First Learn These 4 Terms.” Forbes.com, January 31, 2018.
3 InstaMed, Trends in Healthcare Payments Eighth Annual Report: 2017, May 2018
4 Federal Reserve Board, Report on the Economic Well-Being of U.S. Households in 2017, May 2018
* Subject to credit approval. Minimum monthly payments required. See carecredit.com for details.
** Subject to the representations and warranties in the CareCredit Agreement with Participating Providers, including but not limited to only charging for services that have been completed or that will be completed within 30 days of the initial charge, always obtaining the patient’s signature on in-office applications and the cardholder’s signature on the printed receipt.
