Could Your Family Survive a $31,000 Deductible?

If you think paying a few thousand dollars out of pocket for medical care is painful, brace yourself. A proposed rule from the Trump administration could push that number to a staggering $31,000 for families.

According to a recent report by The New York Times, we’re seeing a massive shift in how health insurance might look next year. To address the affordability crisis, the administration is pushing for new, stripped-down, but less expensive, health insurance policies.

Due to recent price hikes, Obamacare policies have priced many Americans out of the market. More than a million people have already dropped out of Obamacare this year.

Let’s talk about the specific details of this proposal and what it actually means for your wallet. Keep in mind, this is thus far only a proposal.

The math behind the $31,000 deductible

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

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

For most Americans, that isn’t just a stretch. It’s bankruptcy. If you don’t have that kind of cash sitting in a high-yield savings account ready to deploy today, this type of plan is a massive gamble.

Skinny plans and missing benefits

These proposals aren’t just raising the deductibles. They are fundamentally changing what qualifies as health insurance.

The rules would redefine essential benefits, meaning certain coverage you expect to be there might vanish.

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

You can read more about the broader shifts causing this in “5 Things You Need to Know About Trump’s New Healthcare Plan.”

The danger of no-network insurance

Perhaps the biggest shocker in the Times’ report is the push for plans with zero established networks of hospitals and doctors.

How it works: Instead of negotiating rates with a network of doctors, these insurance companies pay a fixed, flat amount for a specific procedure.
The patient’s burden: If your doctor charges more than that flat rate, you have to pay the difference.

Proponents argue this gives you the power to shop around and find the best deal, driving down overall healthcare prices. But if you have a costly medical emergency, you probably won’t be in a position to negotiate prices from your stretcher.

If you can’t find a doctor who accepts the insurer’s low fixed rate, you’re going to get hit with massive, surprise medical bills.

What you should do right now

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

If you’re shopping for health insurance, don’t just look at the monthly premium. You have to run the worst-case scenario math.

Ask yourself if you can actually afford the out-of-pocket maximum. If the answer is no, you can’t afford the plan. It’s that simple. You’re better off finding a way to pay a slightly higher monthly premium for a plan that won’t destroy your finances if you get sick.

Related: “The Hidden Cost of Low Premiums: Why Your Health Plan Might Be Dangerous”

Take a hard look at your state’s marketplace options. Check if you qualify for Medicaid or enhanced state-level subsidies before you settle for a catastrophic plan. Because insurance is supposed to protect you from financial ruin, not guarantee it.