Let’s discuss maximizing your benefits after meeting your health insurance deductible. As a certified financial planner I’ve come to realize how critical it is to be strategic about using your health insurance, especially after meeting your deductible. 

Understanding how to maximize your health insurance benefits can be a key part of preserving wealth and maintaining long-term financial security.

In this insight we will dive into how you can take full advantage of your benefits after hitting your deductible.

What Is Health Insurance Deductible?

The Basics

First things first, what exactly is a health insurance deductible? In simple terms, a deductible is the amount you have to pay out of pocket for medical services before your health insurance starts covering a larger portion of your costs. 

For example, if your deductible is $2,000, you’ll need to pay $2,000 of your medical expenses before your insurance kicks in more substantially.

After you meet your deductible, many plans cover anywhere from 80% to 100% of your medical costs for the rest of the year. That’s a huge benefit, especially if you’re managing ongoing health issues or planning for expensive procedures.

Why It Matters for High Earners

Now, I know what you might be thinking: “I’m doing well financially, so why should I be concerned about a few extra medical expenses?” While it’s true that you may have the resources to cover higher out-of-pocket costs, being strategic with your health insurance can help protect your wealth over time. 

Why pay more out of pocket than you need to? As a financial planner, I always encourage clients to make the most of every dollar, even if you’re not worried about running out of cash.

Also, an important planning strategy that I review and recommend with my clients is to consider their overall health care cost for the year. If they have met or exceeded the annual deductible before year end.

Then, I am recommending they consider incurring any additional medical expenses before the end of the year, after which point your annual deductible will reset. 

Also, if the client does not take the standard deduction and they have unreimbursed medical expenses that exceed 7.5% of their adjusted gross income then they can deduct the amount over 7.5% of qualified expenses. 

What Changes After You Meet Your Deductible?

Increased Coverage

Once your deductible is met, your insurance company begins paying a larger portion of your medical bills. For many plans, this means you only pay a small percentage (often around 10-20%) of the costs for covered services, while the insurance company covers the rest. 

In some cases, especially with in-network providers, your insurance might even cover 100% of costs. For example, let’s say you’ve had a surgery earlier in the year, and the cost helped you meet your deductible. 

Now, if you need follow-up appointments, physical therapy, or even additional procedures, your insurance could cover the majority; or all of those expenses. This is the time to take advantage of any healthcare needs you’ve been putting off.

Timing Elective Procedures

This is where timing can really work in your favor. If you’ve been considering elective procedures, like a knee replacement, dental surgery, or even something like LASIK, consider scheduling them after you’ve met your deductible. 

That way, you’ll likely pay much less out of pocket for the procedure itself and any follow-up care.

Maximize Preventive Care and Screenings

Don’t Ignore Preventive Health

One of the biggest mistakes I see people make is neglecting preventive care. After you’ve met your deductible, many preventive services like annual check-ups, cancer screenings, and vaccinations are covered at little or no additional cost to you. 

High-income individuals can sometimes overlook preventive care, thinking they’re in great health or too busy. But taking advantage of these services now can save you from bigger (and more costly) health problems down the road.

For example, getting a colonoscopy, mammogram, or other age recommended screenings can help catch issues early before they become more expensive, and dangerous, problems later.

Lower Prescription Drug Costs

Saving on Medications

If you’re on regular prescription medications, meeting your deductible can make a significant difference in your drug costs. Many insurance plans cover a much higher percentage of medication costs after the deductible is met, which can be a huge relief if you take expensive specialty drugs.

For instance, if you or a family member requires medication for a chronic condition, like insulin for diabetes, or biologics for arthritis, now is the time to review those prescriptions. You might find that refilling a 90 day supply (or more) could save you quite a bit, especially once you’re in the post deductible phase.

Review Your Medications

This is also a great time to sit down with your doctor and review all the medications you’re taking. Are there any changes or adjustments that need to be made? 

Maybe a switch to a generic drug that costs less. Taking this proactive step not only helps you save but also ensures you’re managing your health effectively.

Utilizing Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs)

Health Savings Accounts (HSAs)

For those of you with a high-deductible health plan (HDHP), you probably have access to a Health Savings Account (HSA). These accounts are an excellent way to save for medical expenses tax-free, and they can be a great wealth building tool.

Once you’ve met your deductible, using your HSA strategically can help you cover any remaining out-of-pocket expenses, like co-pays or prescription costs, while keeping your other cash free for investment or other needs. 

And since HSA contributions are tax-deductible, they can reduce your overall taxable income, something every high earner should appreciate.

Flexible Spending Accounts (FSAs)

If you have a Flexible Spending Account (FSA), be sure to take advantage of it. These accounts allow you to set aside pre-tax money for medical expenses, but the funds must be used by the end of the plan year. 

Or if your plan allows you to carry over a certain amount to the next year. I have written more about this here, and some of the lesser known allowable expenses. 

After meeting your deductible, you can use your FSA funds to pay for any remaining eligible medical expenses, helping you avoid tapping into your personal savings.

Keep an Eye on Out-of-Pocket Maximums

Why Out-of-Pocket Maximums Matter

Once you’ve met your deductible, it’s time to start thinking about your out-of-pocket maximum. This is the most you’ll have to pay for covered medical expenses in a year, after which your insurance covers 100% of your costs.

If you have multiple medical issues to manage, it’s essential to know where you stand in relation to your out-of-pocket max. If you’re close to reaching it, now is the time to schedule any additional medical services you might need, knowing that your insurance will cover the rest.

Planning Ahead for the Next Year

If you meet your deductible or out-of-pocket max early in the year, it’s worth reviewing any upcoming medical needs. Can you delay any treatments or appointments until the following plan year to avoid another deductible reset? 

This is especially important if your health insurance renews every calendar year.

The Role of a Personal CFO in Health Insurance Planning

Integrating Health Insurance into Your Financial Plan

As a high earner, you might not think of health insurance as a critical part of your wealth strategy, but it absolutely should be. Health expenses can add up quickly, and an unexpected health event can derail even the best financial plans if not managed properly.

This is where having a “personal CFO” approach comes into play. Your financial advisor or financial planner should be helping you incorporate your health insurance decisions into your broader financial picture. 

Whether that’s choosing the right insurance plan, timing elective procedures, or maximizing the use of HSAs and FSAs, health insurance is a key part of protecting your wealth.

Annual Insurance Review

Each year, take the time to review your health insurance options, especially as you approach retirement age. Medicare planning, long-term care insurance, and Medigap policies should all be on your radar to ensure you continue receiving the coverage you need without overspending.

What’s Next: Take Control of Your Health Insurance

Meeting your health insurance deductible is a turning point, it’s when you can really start making your benefits work for you. By strategically planning your healthcare, taking advantage of preventive care, and leveraging tools like HSAs and FSAs, you can protect your wealth while ensuring your health is in top shape.

So, as we enter the later part of the year, take a moment to review where you stand with your deductible. Have you hit it? If so, don’t let those benefits go to waste. Your health, and your wallet, will thank you.