How Do Healthcare Costs Actually Work?

MARK RIEPE: I'm Mark Riepe. I head up the Schwab Center for Financial Research, and this is Financial Decoder, an original podcast from Charles Schwab. It's a show about financial decision-making and the cognitive and emotional biases that can cloud our judgment. 

As I record this, it's October, and that means there are two scary decisions that are coming up. The first is how much Halloween candy to buy. At least where I live, demand is highly variable from year to year. Buy too much, and you just end up eating it yourself. Buy too little, and then you have to start limiting the amount each neighborhood kid can take. That isn't a big deal, but you don't want to be seen by those kids as the neighborhood cheapskate. 

A more consequential decision is the focus of this episode, and that is making your selections during the annual open enrollment period for employer health insurance. I'm looking at a report entitled "Consumer Expenditure Survey" from 2022. And for the average U.S. household, health care eats up 8% of their budget. It ranges from about 3% for households where the head of household is under 25 to 14.4% where the head of household is 75 or older.^[1]

From a psychological standpoint, which is what we like to explore in Financial Decoder, we humans crave security. Investing and saving money gives us a sense of security because what we're protecting is our future selves. We often talk about managing risks in a portfolio and assessing our risk tolerance, but some risks are tough to manage. The expenses can be so large they can bankrupt you.And that's why insurance markets exist, to deal with those big-ticket items like fires and floods. In fact, some of the oldest financial contracts in human history were insurance contracts. 

But we're not going to be talking about all forms of insurance, just health insurance. The way I think about it, insurance is just a tool. And like any other tool, it's up to you to use it in a smart way. Also with health insurance, like many things in life, we're prone to decision-making biases. In the past on the show, we've talked about how we default to the status quo. In other words, we stick to the status quo too often and fail to make a change when circumstances have changed. Open enrollment is a good example of how the status quo bias often comes into play. That's fine if nothing has changed for you or your family health-wise, but it's in your best interest to resist the urge to just leave things as they are. Take the time to think about your health over the past year and what, if anything, has changed and also if you anticipate changes in the upcoming year.

And while we can't cover every bias or aspect of health insurance, we've got a great guest who's here to make health insurance and health care less scary. Chris Kawashima is a director of financial planning here at the Schwab Center for Financial Research. He's an expert on many things, with a focus on retirement income issues, including health insurance. Chris is a CERTIFIED FINANCIAL PLANNER™, and he's had extensive training and years of experience working with investors on a broad range of investment and financial-planning issues. He also writes articles for Schwab.com on a variety of topics that face investors.

Chris Kawashima, welcome to the podcast.

CHRIS KAWASHIMA: Thanks for inviting me.

MARK: We are here to talk about health insurance, and maybe before we get into the really complicated stuff, when someone looks at their health insurance options, let's make sure we got the terminology right. What are the main terms and what are the key costs that they're going to need to understand?

CHRIS: Great question, Mark. So there are a lot of different definitions when it comes to health care, but I'll stick with the main ones here. One is premiums. Premiums are the fixed amount you pay to keep your health insurance active. For example, you might pay $100 a month to get access to the doctors, facilities, services, and medication covered by your health insurance. 

The second is annual deductibles. So this is a set amount you pay out of your pocket before your insurance starts to pay. So for example, you might have the first $2,000 of a medical bill before the insurance starts to pay any dollar amount. 

Another one is copayments. This is a fixed dollar amount you pay for service. For example, you pay $20 to see your doctor or, say, $40 for your prescription medication. You'll oftentimes see copays occur before meeting the deductible, but in those situations, they generally don't count towards that deductible. 

There's coinsurance. This is a percentage of costs that you share with your insurer after you meet your deductible. For example, you might need to pay 20% of a $5,000 medical bill. Your co-insurance in that situation is $1,000. 

Annual maximum out of pocket, that's another definition. And this is the maximum limit of your shared amount of costs. So that's going to be the combination of your deductibles, copays, and co-insurance. 

We're getting close to the end of the definitions, so next to last is a network provider. This is really important because different definitions and costs will determine whether or not you need to pay a smaller amount or a larger amount. So a network provider is a group of doctors, specialists, or medical facilities that have an agreement with the insurer to be part of that network. If there's no such agreement to be part of that network, then they're going to be out of network and probably cost you more to see them as well. 

Lastly, covered services. This is really important to know as well. This is going to be the list of services, medications that your insurance will pay for partially or in full. If it's not covered, you're probably going to be paying the full amount. So for example, insurance probably isn't going to cover me if I wanted to get hair implants. That's not going to happen, Mark.

MARK: Yeah, never apologize for defining a term. I think we're here to help people make good financial decisions. But if you don't understand the terms and what they mean, that's almost impossible to make a good decision. So thanks for going through all that. One term actually you didn't cover was employer-sponsored insurance. I suspect a lot of our listeners have some kind of employer-sponsored insurance. Can you explain what that means a little bit and how much of that cost is being split between the employer and the employee?

CHRIS: Yeah, so great call out there. An employer-sponsored health insurance is health insurance offered by a company to their workers and their families. This benefit is far and away the most common type of health insurance coverage. On average, about 50% of the population is covered by employer-sponsored health insurance. The next closest is Medicare/Medicaid, which is right around a third, about 36%. 

However, if you look underneath that hood of that 50% number, what you see is a spread. Mostly large companies offer health insurances. But if you look below, so if you see smaller employers, there's only about 50 to 60% of those employers that cover health expenses. Now the question is, well, what's the difference? It's primarily the ACA, or Affordable Care Act. The ACA mandates that if you have at least 50 full-time employees, you need to cover your employees with health insurance. Otherwise, there's a penalty if you don't have some minimum level of affordable health care to your workers. There's no such mandate when it comes to smaller employers. 

In terms of how much the cost is shared between an employer and employee, employers typically pay the vast majority of the premium. So for example, the average premium cost for a single employee is right around 15 to 20% of the cost, while the employer pays the rest. For families, the employee pays on average between about 25 to 30% of the premium, while the employers pay the rest. So while the premiums can feel painful, know that the company is usually taking on most of that brunt of the costs. But this is the price companies are willing to pay. People look at health benefits when deciding between working for company A or deciding to work for company B. That's just the price to pay.

MARK: Yeah, I mean, it's a benefit just like anything else. And you as the employee deciding where you're going to work, you're going to be looking at the total package, when making your decision. Let's talk a little bit about health plans, because we're doing this during a period of time when many companies are launching their open enrollment for employees in employer-sponsored programs. 

And a lot of times, people will get sort of a choice. They'll have a lower-premium, high-deductible option. That will be one of their choices, and that will be contrasted with a high-premium, low-deductible option. So how does an employee think about the trade-off between those two?

CHRIS: Yeah, that's a great question, Mark, and "trade-off" is a really good descriptor. It just highlights the levers you can pull to find that right balance for you and your family. So when it comes to … you mentioned the high-deductible option versus lower premium or lower premium high deductible, you potentially pay a lower premium in exchange for that higher out-of-pocket expense when you use them. So this happens when, [for] example, you use a high-deductible health plan.

As the name kind of implies here, you have a high deductible along with a higher maximum out-of-pocket, but in exchange the premiums might be lower. A high-deductible plan is going to be good for someone who's relatively healthy. And then the chance that you need it, you'll have an upper limit or maximum out-of-pocket limit to how much you can spend for health care needs. 

In contrast to that, there's also a traditional plan, which typically have lower deductibles and lower maximum out-of-pockets in exchange for slightly higher premiums. You pay slightly more a month knowing that you'll probably use it. So for example, let's say you need to see your primary doctor and a specialist maybe five to six times out of the year, and you need to order high-cost prescriptions. You might want a more traditional plan because your overall out-of-pocket costs, which includes your premiums, your deductibles, your copays, your coinsurance will likely be lower than if you went with a high-deductible plan. 

There's also one more dynamic I wanted to also throw in here outside of that premium and cost-sharing mechanism. And that's one in regards to the flexibility with using network coverage. That dynamic is typically what you see when you're looking between traditional plans. So the two most popular tends to be the PPO and the HMO. The HMO is the health maintenance organization, and that type of plan offers the lowest type of premiums with the lowest out-of-pocket costs. And they're able to achieve this by managing their network of doctors, facilities, and pharmacies that you use. 

So in other words, if you go out of network, any costs likely is probably not going to be covered by your plan unless it's an emergency. And generally, any service you need needs to go through the approval of a primary care doctor. 

On the other hand, there are PPOs, or the preferred provider organizations, and they typically have a higher premium and higher out-of-pocket limit than an HMO. But unlike an HMO, you can go out of network and still have insurance coverage, generally speaking.

MARK: Another choice that people are going to have to face is the amount of people being covered under the plan. So a lot of employers will offer multiple tiers. It might be just the individual, right? Just the employee is covered, nobody else. Then you've got maybe a family option. Maybe there's another option for the employee plus the spouse. How should the employee think about deciding whether to keep everything together or maybe put some of the insurance on their spouse's employer and some on their own employer?

CHRIS: Yeah, that's a really good call out as well, Mark. Thanks for bringing that up. There are multiple tiers when it comes to coverage, and the costs can differ. That's another dynamic. Do you do it yourself? Do you include your family, spouse, children? I think the first step in any decision when it comes to that is to review your actual usage and compare the choices based upon that. Just know that the costs tend to go up quite a bit once you do include dependents.

So it's not surprising to see costs—and what I mean by that is your premiums, deductibles, out-of-pockets—those can more than double when you include, say, spouse or children. So when you have two working spouses, it's really good to cost compare. Like you mentioned, you'll want to compare how each plan is in terms of cost by adding up the premiums and the potential spending. 

You'll also want to review what are the deductibles and the potential maximum out-of-pockets. Then once you kind of get the sense of your costs, this is where you can go ahead and review and assess what type of care you can get. This is important because, again, it's your network of doctors, specialists, hospitals, prescription drugs that you can receive through that care, which is very important to maintain your health. So again, choose cost-wise, look at whether or not you can do it individually or by family.

The cost, again, will be a little bit more if you go ahead and choose a family. But the other important component to look at is the network of doctors. Are you more comfortable with one versus the other? Those are the two important things to take a look at.

MARK: We should come back to this topic later, but since we're in this kind of opening segment where we're trying to go through the basics, tell me a little bit about HSAs and FSAs. What do those initials stand for, and how should people be thinking about those?

CHRIS: I think the way to think about them is short term and long term. Think of it in terms of budgeting, in so many ways. What are the things that you need immediately? What are the things that can maybe plan for here into the future? Both HSAs, which is a health savings account, and an FSA, which is a flexible spending account, or types of savings accounts that can be used to help pay for health care. They're really nice because they are tax-efficient ways to save for health expenses.

You can contribute pre-tax to both of those types of accounts. And when you use it for medical purposes, they come out tax free. In terms of HSAs, they do tend to be tied to an eligible health plan. So you can't make a contribution to an HSA unless you're actually enrolled in one. So if you're in a more traditional copay plan, like an HMO or PPO, you can't contribute to an HSA.

In that situation, what you have access to is a flexible spending account, the FSA. And this is where you can sock away part of your paycheck throughout the year for your expected health care needs. But if you don't use that full amount in the FSA, you're going to lose it. That's the big thing. And the difference between that FSA and HSA is this "use it or lose it" type of scenario when it comes to the FSA, except for a certain dollar amount, which you can carry over into the following year, and that's federally mandated. It's about $660 or so for this year. So if you don't use it, you lose it. And unfortunately, that money goes away. 

Lastly, you can't have both an HSA and FSA together typically. If you have an HSA, what you can do is you might have something called a limited-spending FSA, which can allow you to spend on, for example, like vision or dental, but nothing when it comes to like health care. That's a short-term side of it. There are long-term aspects in terms of like savings using an HSA, but I think we'll probably follow that up with another question here in a little bit.

MARK: Yeah, let's get back to … I got a couple more questions in this section. Then, yeah, we'll get back to HSAs later. So during an open enrollment, the absolute easiest thing for people to do is just to stick with last year's plan, take the default option. What do you think about that? What's the downside of doing that? And if people are willing to put some more time into it before making that choice, what should they be thinking about?

CHRIS: That is a really good question. The main downside here is not having the right coverage for yourself, right? Your current health, your family situations can change. It's fluid. And the type of coverage that you need based upon that fluidity can change as well. So it would make sense, especially every time the enrollment period comes along, to just take a look, smell the roses, take a little bit of time away and just understand what your needs might be here into the future and adjust if it makes sense. 

So for example, if you're staying, say, in a high-deductible health plan, that could potentially cost you more, especially if you need to get some things done health-wise, or if you get married, or if you have a new addition to the family. It's a good time to maybe just consider reviewing the coverage and seeing whether or not the insurance plan might be a better fit for the family.

MARK: We'll get back to Chris in a few minutes, but right now I'm going to talk about what it takes to have a good decision-making environment. There are a few conditions that need to be met. Number one, you need to be fully informed of all your choices. Secondly, you need to be calm and in a rational state of mind. Third, you have to have the time you need to consider your choices. When it comes to health and your health care, these conditions aren't always met.

Consider the first one, being fully informed about all your choices. If you've looked at all the choices you have for health insurance, you know it can be overwhelming. One study found that out of 2,000 people surveyed, less than half felt confident in choosing the best health plan for their needs.[2] In that same survey, only 40% said they're very confident they could choose the right plan. One reason people may not feel confident is too many options, and people are paralyzed by choice.[3] It's challenging to figure out which plan is right for you when there's an avalanche of data to wade through. 

Another hurdle to being fully informed is jargon. The world of medicine is full of jargon, and often so is health insurance. One survey found that even some people with health insurance don't know the definition of "copay," "deductible," and "premium.[4]" Obviously, health care isn't the only decision that has this problem, so we're not picking on health care, but it is a challenge, so make sure you spend the time to get informed and be more confident when you make your choice.

Another key component of making good decisions is being calm and in a rational state of mind. Nothing against hospitals or doctors or nurses, but hospitals can be a high-stress environment for patients, not exactly calm.

Finally, there's the issue of time. Time matters because you need to consider all the options. It allows you to be thoughtful and deliberate. That's hard to do if you haven't looked at any of your open enrollment health insurance materials until a few hours before they're due. Leave yourself time to review the options, and especially leave yourself time to consult with a friend or family member or a benefits specialist. Enough of me, let's get back to my conversation with Chris.

All right, Chris, let's kind of leave that basics category and do more of a deeper dive onto some of the real-life costs of care. And I got a few questions along those lines. First of which is sometimes preventative care is advertised as free. There's no such thing as a free lunch, so what does that really mean? And are there situations where even a routine exam can still lead to out-of-pocket costs depending on the type of plan you're in? 

CHRIS: Yeah, you're right. There is no free lunch, just like the markets. There are certain visits where you don't have a copay and where you're not required to meet a deductible. So this is where the insurance may cover you 100% of those costs, but you still pay a premium for that insurance. And services include such things like an annual wellness visit or vaccines like a flu shot, chickenpox, measles, or health screenings like cholesterol, diabetes, mammograms, etc.

But if during your health and wellness checkup, you bring up, like, say, a rash or maybe like a cough that isn't getting any better, that's where that wellness visit kind of changes in terms of why you're there. So it becomes more diagnostic at that point. Beyond that initial wellness visit, that portion could potentially become subject to cost sharing. 

So of course, if you go out of network as well for a visit, that can lead to a cost. So maybe you're on an HMO plan, and you decided you wanted to get a flu shot at the local pharmacy, that could potentially cost you because they might be out of network. So those are some things that you might want to consider.

MARK: Let's go through a specific example to help illustrate the difference you were talking about earlier about high-deductible plans versus low-deductible plans. Let's say you have a knee surgery. Walk us through how those contrasting plans would handle that situation.

CHRIS: Knee surgeries can be very expensive. So for illustration, let's just say the total cost for this is $30,000. So at this price point, the main primary factor is going to be the maximum out-of-pocket limit. Under a more traditional plan like a PPO, the typical maximum out-of-pocket cost could be lower than the high-deductible health plan.

Let's just say it's something like $2,500 out of pocket. But if you look at a high-deductible health plan, maybe that maximum out of pocket is, say, something like $5,500, so another $3,000 more. So the big difference there is looking at that maximum out of pocket in that situation. You're probably going to hit it because the cost is so high. Looking at a traditional type of plan is probably more beneficial to you in that situation.

The same thing holds true too, for example, if you weren't an individual ,and maybe you were on a family plan. In those situations where you might have a spouse or a child on the plan, deductibles and maximum out-of-pockets would be even higher, making the traditional plans even a better option in that situation. These are things that you want to consider, especially if there's some kind of major surgery or major procedure that you need to get done. Most likely that traditional plan is going to be much more beneficial than having to go through a high-deductible health plan.

MARK: Hopefully for most people, something like a surgery is kind of a one-off thing. But a lot of people have, though, more kind of ongoing or chronic conditions. Diabetes might be an example. Asthma might be an example. How do the monthly costs for conditions like that differ across different plan types? For the person trying to kind of put together their budget, how much should they be budgeting for medications, office visits, supplies, that kind of thing?

CHRIS: I think much of the cost is going to depend on the individual's basket of doctors' visits, medical devices, prescriptions, etc. But managing diabetes or, like you mentioned, asthma or other type of chronic conditions can be costly. Let's just say you're trying to manage asthma. My sister has asthma, and the total cost can be anywhere between $2 to $3,000 a year, for example. There's a variety of things that go into it, like the doctor's visits, the medications, inhalers, nebulizers, and especially sometimes those potential emergency room visits when you get triggered. 

So this is probably where a traditional health plan may be a better option than a high-deductible health plan because your costs will be more predictable, and you'll likely have lower copays to help with the medications and devices and seeing the doctors before hitting that deductible need. For a high-deductible plan, you'll likely come out of pocket on the full amount if you're spending under the deductible amount. 

Another thing to consider too are the potential complications. What if, for example, you needed to have that emergency visit or extra doctor's visit or diagnostics to be run or more medication? That could be more money out of pocket. So there's a peace of mind that comes with having a traditional plan versus a high-deductible plan that may go beyond just the cost comparison alone.

MARK: Chris, earlier you mentioned out-of-network care. And my impression is that oftentimes some of the surprise bills that people are hit with stem sometimes from out-of-network care. Tell me a little bit more about what that looks like in real life and why that might happen. Why would those costs balloon dramatically depending on the type of plan you have?

CHRIS: Surprise billing was a bigger problem before the No Surprise Act was passed back in 2021. For example, say you went into an in-network hospital, but unknown to you, you were using an anesthesiologist or maybe a radiologist that was out of network. Your insurance will only cover you a set amount, and any remaining balance will be billed to you. It's called balance billing. The No Surprise Act was meant to scale that practice back.

However, there are some services that are not covered by that No Surprise Act that still apply, and that you may have to pay for that balance bill. For example, ground ambulance services, like when you get into an accident and need to get rushed to hospital. It may not cover you for out-of-network ground ambulance services. It doesn't protect against you if you have non-covered services by your plan. It also doesn't cover you if you have non-emergency services at, say, an urgent care center, a clinic, or your doctor's office. 

The No Surprise Act was meant to protect people in network hospitals, but not other facilities. So here's an example. Let's say you do a covered non-emergency procedure, say like a colonoscopy, with an in-network doctor at his or her office. But say the anesthesiologist was out of network. You may still be responsible for any balance billing that occurs with that anesthesiologist. It was happening outside of the hospital. It was happening inside the doctor's office.

MARK: Last question in this section, Chris, is about prescription coverage. What should someone expect when they go to fill a prescription if they're on, let's say, a high-deductible plan versus a plan with, as you mentioned earlier, flat copays?

CHRIS: Yeah, so if you're on a high-deductible plan, you should expect to pay more. You need to meet the deductibles before the insurance pays for any copays or coinsurance versus for a traditional type plan. You can pay the copays and co-insurance without having to meet your deductibles. You'd be surprised, even for generics that you might get for a few dollars on a traditional plan. You could potentially pay upwards of hundreds of dollars or more on a high-deductible health plan.

MARK: All right, final set of questions here. And this is all about preparation, planning, long-term strategy for how you handle your insurance. So let's start out by assuming someone's chosen their plan. But they're sensible people. They want to go about estimating their likely annual costs, including not only their share of the plan for their employer, premiums, expected care, and the possibility of emergencies. How should they go about doing that?

CHRIS: Yeah, you just mentioned it right there. These are good steps to take. Assess your estimated costs. What does it look like in the new year? You want to add up the premiums. You want to include your planned visits, potential costs for any diagnostics or procedures you might want to have here in that year, and include any of your prescriptions along with it. The only thing that you can't plan for, really, are those emergencies. So you want to set aside enough money to cover at least your deductibles. That's practical.

Set aside enough for your deductibles. And if that's already met by your plan spending, then you can maybe pull some money from like an HSA, an FSA, depending upon which plan you choose and the general savings. And maybe a general savings account might be a good place to go to as well.

MARK: Another factor that's driving some of this is just, let's face it, age. Younger people tend to consume less health care than older people. So how do you go about taking that into account when you're estimating these costs?

CHRIS: Yeah, you hit the nail on the head here, Mark. Age is a factor. When you look at the data, more than half of the spending is done by people 55 and over. So budgeting is likely going to be much different when you're older versus when you're younger. Of course, your health conditions will determine that as well, especially like you mentioned, if you're managing a chronic condition like asthma or diabetes, etc. The way you might want to approach this is you want to consider again that short-term, long-term budgeting thinking, much like how we've been talking about earlier. 

If you're younger and healthier, you're probably not going to use that health insurance much. So you may want to just think of it as, look, prevent your runaway health costs and just think of just covering just the basics alone. In that situation, a high-deductible health plan might be a good route to go. And then use the HSA as a long-term planning opportunity here and sock away what you don't use today for something that you might happen to need down in the future. Using that high-deductible health plan with an HSA is potentially a good option for that. 

If you're older and you have a few things going on, you need to look at the costs a little bit more in the short run. You need to pay for doctor's visits, prescriptions, and some specialists. In that situation, a high-deductible health plan may not be really good in the end because you might pay more out of pocket. So a traditional plan could be more advantageous from that perspective.

But I do like the idea if things are, in terms of cost, if they're relatively about the same, I do like the idea of saving with an HSA or using the high-deductible health plan with an HSA. Whatever you don't use today, you can save for tomorrow. Look, with age, things are going to happen. You're probably going to likely need more medical services, not less. So having to save more for the future here always makes a lot of sense too.

MARK: I'm glad you raised that issue with HSAs the way you described it. It's really both a spending tool for health care, but it's also an investment account. And you can select how you want the money invested. So how should someone decide whether they should be spending that money out of that account or maybe just paying for medical procedure through other means and just leaving that money in the account? And hopefully it's accruing interest and doing really well in terms of price appreciation.

CHRIS: Yeah, that's a great question too. I think the primary decision for this is going to be based on your health and your own personal finances. Let's say if health care costs don't impact your finances whatsoever, save it in the HSA. Let's let it benefit from the triple tax savings that it has. And what I mean by triple tax savings, by the way, is it's pre-tax, tax-deferred growth while it's in there. And then also, take it out, it could be tax free for qualified expenses.

There's no time limit when you claim qualified expenses from an HSA. So you can theoretically bank your qualified medical expenses while you fund the HSA. Maybe you fund like a procedure or whatever it might be. Maybe you use your savings account. Don't use your HSA. Then perhaps down the road when you actually need to use it for some major medical purposes, you can cash in on some of that tax-free distribution from an HSA that you've socked away at a later date. But caution here, save your receipts. That's what you need in order to show that you have these qualified expenses.

MARK: Earlier, you mentioned the flexible spending accounts, or the FSAs, and you mentioned they have just this kind of "use it or lose it" feature, where if you don't spend all the money, then that's forfeited, although there's some exceptions that you pointed out. But my question is, how do they avoid leaving money on the table in the first place?

CHRIS: Yeah, this can be a problem, right? The "use it or lose it feature, putting too much away can mean potentially losing out on the amount of money you put set aside within an FSA. So I think one is very important is to calculate what your estimated costs are going to be here into the future. And so that includes like the doctor's visits, the prescription medications, etc. And then you can also place a buffer too up to that carryover amount that I mentioned earlier, the $660. 

At least for this year, that amount can be set aside there just in case you need to use it for emergency purposes. But that's probably not going to be enough if an emergency does happen. So you do want to make sure that you set aside enough, say, for example, like in an emergency fund or savings account in case you need to tap it to meet your deductibles or maximum out-of-pocket expenses for that plan.

MARK: Hey Chris, before we wrap up here, you were telling us before we got rolling here about some studies you've seen about people actually underutilizing some of their health care spending. Tell me more about that.

CHRIS: Yeah, Mark, thanks for bringing that up. Using a high-deductible health plan can be a double-edged sword. Yes, it's great for future savings, but there's research that shows that those who have a high-deductible plan may be underutilizing their insurance, which can lead to potentially delaying or avoiding care when they need it. 

So say if you're older or sicker, and you plan to use a high-deductible health plan with an has, you want to be aware of your behavior and potential bias to try to not spend money when you need it. Much of the preventative care is there without having to pay out of pocket or having to meet the deductible. So please make sure that you are really looking at your own behavior and why you may not want to have a procedure or get checked up for something that you feel that you need.

MARK: Chris Kawashima is a director of financial planning here at the Schwab Center for Financial Research. Chris, thanks for being here today.

CHRIS: Thanks, Mark. It was a pleasure.

MARK: Chris gave us a lot to think about, and I hope you took away some helpful information, got a better handle on health insurance, and feel that open enrollment is less scary. If you'd like to learn more, Schwab has some helpful articles on health insurance that we'll link to in the show notes. 

As for me, I'll be back in a couple of weeks, and if you'd like to hear more from me, you can follow me on my LinkedIn page or at X @Mark Riepe. That's M-A-R-K-R-I-E-P-E. And if you like the show, please consider leaving us a rating or review on Apple Podcasts or comment on the show if you listen to it via Spotify. We always like new listeners, so if you know someone who might like the show, please tell them about it and how they can follow us for free in their favorite podcasting app. Thanks for listening, and I'll see you next time.

For important disclosures, see the show notes and schwab.com/FinancialDecoder.
 

[1] U.S. Bureau of Labor Statistics, "Consumer Expenditure Survey," Table 1300, 2022.

[2] "4 Basic Health Insurance Terms 96% of Americans Don't Understand," Policygenius, January 24, 2018, https://www.policygenius.com/health-insurance/health-insurance-literacy-survey/#survey-results

[3] "Open Enrollment: Why Employees Make Poor Benefits Decisions," Collective Health, September 23, 2021, https://collectivehealth.com/blog/benefits-shop-talk/why-smart-employees-dont-make-smart-benefits-choices/

[4] Horvath, Hannah, "Health Insurance Literacy Survey 2020," Policygenius, accessed October 6, 2025, https://assets.ctfassets.net/3uw9cov4u60w/Oe30cni5ZPbOOlhPC65Ea/3192cef6e5bc15db386e8e8a661ad090/Health_Insurance_Literacy_Survey_2020.pdf