Can Your Family Survive a $31,000 Deductible?

If you think it hurts to pay a few thousand dollars out of pocket for health care, brace yourself. Proposed legislation from the Trump administration could push that number to $31,000 for families.

According to a recent New York Times report, we’re seeing a big change in how health insurance could look next year. To address the problem of unaffordability, management is looking for new, discounted, but affordable health insurance policies.

Because of recent price increases, Obamacare policies have pushed many Americans out of the market. More than a million people have opted out of Obamacare this year.

Let’s talk about the specifics of this proposal and what it actually means for your wallet. Remember, this is only a suggestion so far.

The math behind the $31,000 deductible

Insurance is essentially a game of risk. Under these new laws promoted by Dr. Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services, can buy a catastrophic plan with an individual deductible of $15,000 or a family deductible of $31,000.

The pitch for these programs is simple. You pay a rock-bottom monthly premium. If you are healthy and never see a doctor, you save money every month. But if you get into a car accident or get a serious diagnosis, you’re on your way for up to $31,000 before your insurance pays a dime.

For most Americans, that’s not a stretch. Bankruptcy. If you don’t have that kind of money sitting in a high-yield savings account ready to use today, this type of program is a huge gamble.

Skinny plans and missing benefits

These proposals do more than just increase the deductible. They fundamentally change what qualifies as health insurance.

The rules will redefine important benefits, which means that some coverage you expect to have may disappear.

For example, the proposal suggests that dental care for the elderly will no longer be considered an essential benefit. These “small” policies may sound great when you’re young and invincible, but anyone with a chronic illness will end up paying for almost all of their care out of pocket.

You can read more about the sweeping shifts behind this in “5 Things You Need to Know About Trump’s New Health Care Plan.”

The risk of no-network insurance

Perhaps the biggest concern in the Times report is the pressure on systems that do not have networks of hospitals and doctors.

• How does this work: Instead of negotiating rates with a network of doctors, these insurance companies pay a fixed, flat rate for a specific procedure.
• Patient burden: If your doctor charges more than that minimum, you must pay the difference.

Proponents argue that this gives you the ability to shop around and find the best deal, lowering health care prices. But if you have an expensive medical emergency, you probably won’t be in a position to negotiate prices on your insurance policy.

If you can’t find a doctor who accepts a low insurance rate, you will end up with huge, staggering medical bills.

What you should do right now

We’re seeing people leave the Affordable Care Act market because enhanced subsidies expired last year, causing premiums to double for many families. In fact, the administration’s own estimates suggest that up to 2 million people could drop coverage by 2027.

When shopping for health insurance, don’t just look at the monthly premium. You should use worst case calculations.

Ask yourself if you can afford the high out-of-pocket cost. If the answer is no, you cannot afford the program. It’s that simple. It’s better to find a way to pay a slightly higher monthly premium with a plan that won’t ruin your finances if you get sick.

Related: “The Hidden Costs of Low Premiums: Why Your Health Plan May Be at Risk”

Look carefully at the market options for your region. Check if you qualify for Medicaid or state-level advanced funding before you prepare for a disaster plan. Because insurance is supposed to protect you from financial loss, not guarantee it.