# Consuming healthcare in 2020

My employer’s benefit year starts on October 1st and continues through to September 30th of the following year. With the close of the benefit year a few weeks ago, I thought it would be interesting to look and see how much health care our family consumed last year.

Let’s see what I found.

## Meeting Our Deductibles

The first thing I noticed is that we met both individual and family deductibles early during the benefit year. While we were in Spain for the first two and a half months, once we returned it didn’t take to resume our health care consumption. You can see the effect of our trip with very low consumption during the first part of the graph.

The first milestone was the race to meet individual deductibles. My plan has an individual deductible of $6,500. Within two weeks of getting home, Dependent #1 had burned through over half of their individual deductible. Would they be the first to meet the individual deductible? Alas, no. Dependent #2 leapfrogged into first place, meeting their individual deductible by January 21st, 2020. The next milestone was the family deductible of$13,000. We reached this milestone on March 11th, right when the pandemic got into full swing. This time, a third dependent, Dependent #3 stepped in to bump us over the line.

Here’s a graph of meeting our deductibles looked like in 2020:

## Total Healthcare Consumption

Once we hit the family deductible, our out-of-pocket limit was hit and we were done paying for healthcare for the rest of the year. But that didn’t mean our health care consumption as a family stopped. Here’s a graph demonstrating the continued consumption throughout the year. The yellow line is what our health reimbursement account (HRA) paid out, which roughly lines up with our deductibles. The blue line is what our medical providers billed and the red line is how much our insurance paid out, after marking down provider bills by the contract discount.

Just…Wow!

Some general observations:

• Over 70% of the total expense was in prescriptions
• Usually Dependent #1 consumes the most. While Dependent #1’s consumption was on par for previous years, Dependent #2 consumed twice as much as Dependent #1 and over half of the total amount for the family. Highly unusual and shouldn’t repeat in 2021. I hope.
• I likely won’t be retiring too early, not as long as I have dependents like these 🙂

## Comparing to 2019

Was 2020 an aberration? Do we always consume that much? Do we always hit our deductible that early in the year?

The answers are: mostly, no and no.

Here’s the graph of how we met our deductibles in 2019:

In 2019, Dependent #1 met the individual deductible on April 12th, two and half months later than 2020. Our family deductible wasn’t met until the second week of July, nearly four months later than 2020.

And here’s our total medical consumption during 2019:

The bumps in the graph are from Dependent #2, and can also be seen in the 2020 graph. You can see where we let our health insurance know we’d be on an extended vacation, enabling us to load up on the necessary supplies and prescriptions before heading to Spain.

## Conclusion

2020 has been an unforgettable year in many respects. For our family, our medical expenses in 2020 probably exceeded any prior year and hopefully any future year.

How much health care did you and your loved ones consume this year? I’d love to hear about it.

Hasta luego!

## 9 thoughts on “Consuming healthcare in 2020”

1. We incur $12k/year on asthma + ADHD drug expenses. Asthma inhalers run about$150-$250/month and we have 3 kids on those. ADHD meds run$150/month x 1 kid. Rescue inhalers cost $26/month x 4 people. Acne medicine costs$132/mo x 1 kid.

And that’s before seeing a single doctor in a given year.

A broken bone costs $1k. We had one of those last year. Behavioral counselling costs$2k/year. We have one kid doing that.

It adds up in a big way. If not for the recurring drug expenses, we’d have a non-zero chance of consuming near-zero healthcare in a given year. But with the drug expenses, I’m basically budgeting for hitting my OOP max by May of every year (our health insurance calendar is Jan-Dec).

The “arbitrage” I discovered this year is that manufacturer’s drug coupons count towards my deductible. I had an asthma one this past year where I paid $10/inhaler despite the inhaler costing$150. However, when I looked at my insurance statements, I got full credit for the $150 paid despite only$10 leaving my wallet. Consequently, my deductible was thousands less than I’d thought (normally $5.5k, but it turned out to be something like$2.5k-$3k this year after these shenanigan’s). Something indeed seems broken. I know that’s an ignorant statement to make given that we are insured and receiving great healthcare. But the fact that we spend 18% of GDP on healthcare seems absurd. For example, the asthma meds my kids are on are so expensive because the damn pharma companies extended the patent on a generic drug another 10/20(?) years by changing the “delivery method” from cfc to cfc-free propellants. There are a lot of those shenanigan’s going on. It seems that the FDA hurdle for approving such drugs (and, by extension, their patents) is quite low. Safe and effective. Nobody asks whether the marginal improvement is worth the marginal cost. Just recently I was prescribed a nose spray for allergies to the tune of$6k/year. Costco sells a generic Flonase with the same active ingredient drug for something like $100/year. The fact that doctors can so readily prescribe such drugs without asking whether the marginal benefit exceeds the marginal cost ($5.9k in this case). I’m guessing the answer is a resounding “no.”

1. Thanks for the comment. I agree whole heartedly on how messed up the patent/drug situation is. Lot’s of shenanigans. And 18% of GDP is downright crazy, especially since we often have worse outcomes for some groups of patients. I couple years ago I read “The Healing of America” and really enjoyed seeing how it could be. Alas, reforming the patent system and moving to not-for-profit insurance companies probably isn’t going to happen overnight.

You use an HSA, right? Are you saving your receipts for later reimbursement and pay your expenses out of pocket? Or do you reimburse them now out of the HSA?

https://en.wikipedia.org/wiki/The_Healing_of_America

1. Heh. I even commented on that post. They say the second thing to go with age is memory. I can’t recall the first.

As always, entertaining analysis on your part. For me, the receipt-saving thing made it mostly a non-starter. Keeping track of that would have been a nightmare. I’ve only had a couple years were I’ve even been eligible for HSA contributions and each of those years I maxed out the contribution but we also maxed out our spending. I did put the expenses on credit cards and reimbursed myself later from the HSA, so that worked out.

One other thing to consider, don’t you have to continue filing form 8889? Or only if you made contributions or distributions?

1. I would assume that Form 8889 is only required when contributing/withdrawing from a HSA.

I agree generally with the hassle of saving receipts. However, I’m much more of the opinion that I’ll use this 40-50 years from now for long term care, etc. Receipts be damned.

I think it greatly simplifies the underlying complexity. The last thing in the world I’m worrying about it oversaving for healthcare.

2. I started going down the receipt saving route when I first identified it as a possible hack, but I broke in 2016 and cashed everything out including my $3,600 LASIK eye surgery from a few years prior. It should definitely be a non-starter. I haven’t seen the full analysis done, but I still don’t think I could be convinced otherwise. Aside from the administrative burden, If I got clipped there would be no way my wife or anyone in my family would ever capture the reimbursement. That’s just one reason of many. Like you, I do still hit my cashback credit card for an extra 2% discount, then reimbursement myself for everything towards the end of the year. I suppose there is even a risk there that I could inadvertently miss something, potentially offsetting any pick-up. As I mentioned below, it won’t be much for 2020. 3. I hadn’t even thought about the burden of someone else picking up the pieces of a pay-out-of-pocket-now-reimburse-years-later-from-HSA approach. Even if I had all the receipts lined up, it would probably still be a nightmare for someone unfamiliar with it to get it right. Great point! 2. Nice and organized. I am still jealous of your HRA picking up your full deductible. We have been lucky enough to consume$0.00 of healthcare in the United States for 2020 thus far. It’s looking like that figure will hold. My \$20,000+ premiums were well spent.

Mrs. Max OOP has consumed a few hundred dollars worth of healthcare during her last few months in Canada. We just paid cash instead of dealing with trying to file an international claim that will ultimately hit my deductible anyway. Apparently, her Canadian insurance doesn’t turn back on for 90 days. I will need to add that up soon for HSA purposes.

I was considering having her just stay up there for a procedure she might need in April. But I miss her, so she will be back for Christmas. : )

Max

1. Thanks for your comment. I can’t imagine what it would be like to go so long without my family/spouse close by. Hope you have a great Christmas!

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