Author Topic: How to choose a health plan  (Read 6258 times)

georgialiving

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How to choose a health plan
« on: December 10, 2014, 09:11:56 AM »
I did use the search feature, but please link any thread that could help me that I missed. 

We have had tricare for a long time, but now we are with a civilian employer and need to choose a plan.  We have two choices and I am really not sure how to figure out which is best for us.  Does anyone know of any formulas or easy ways to look at it?  I have looked up what coinsurance means, etc. 

MDM

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Re: How to choose a health plan
« Reply #1 on: December 10, 2014, 10:26:24 AM »
To know for sure what is best would require accurate prediction of your future medical needs.

The best you can do is make an educated guess based on historical and any known future needs.  For "historical" you need statements showing total (what you paid plus what insurance paid) costs over the past year or so.  "Known future" needs would include elective surgery, planned pregnancy, etc.  To all the above, add your risk tolerance (i.e., "what if" some large unexpected expense occurs?) and then evaluate your options.

Don't know of a unique formula, but in general you need to sum insurance premiums, co-pays and deductibles, up to the out-of-pocket maximum.  Lowest sum wins.

georgialiving

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Re: How to choose a health plan
« Reply #2 on: December 10, 2014, 10:43:35 AM »
 So when I look at these two plans, the max out of pocket is different by $1,300. But then it says there is an employer contribution into an HSA of 1200. So they are only different by $100? The one with the HSA is $65 a month cheaper as well, so it seems like the better choice.

Am I looking at it correctly?

georgialiving

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Re: How to choose a health plan
« Reply #3 on: December 10, 2014, 10:44:43 AM »
We don't have any medical conditions, no more kids planned, no surgeries planned. Just checkups for two young kiss

mxt0133

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Re: How to choose a health plan
« Reply #4 on: December 10, 2014, 10:52:17 AM »
Technically you are right, there is only a $100 difference if you take into account the $1200 employer HSA contribution.  The thing is you will hit your out of pocket max faster with the HSA.  So for things like specialist and non-preventive care you will be responsible for all of it until you hit your out of pocket max, with the PPO most will be covered with a small coinsurance.

So if you can cash flow it I would go with the HDHP vs the PPO, max out your HSA contribution and be done with it.  There are very rare instances where the PPO is better then the HDHP.  Even if you incur most of your expenses early in the year and are hit with a 3K-4k bill in Jan or Feb, you can normally set up a payment plan so that you have time build up your HSA funds to pay the bill.

rubybeth

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Re: How to choose a health plan
« Reply #5 on: December 10, 2014, 11:00:39 AM »
I did a spreadsheet for myself to compare the costs as you've presented them, and it seems like the HSA option is likely better, especially if you don't visit the doctor much. Since you aren't sharing the premium costs, I had to guesstimate, but the HSA plan came in slightly cheaper than the other option even when I estimated eight $150 doctor visits (I estimated two per family member; one visit per person for preventive care is likely to be covered under the plan, though). And if you can max out the HSA to the full family limit for 2015 ($6,650), you'd be overfunding the potential out of pocket maximum which would put you in an even better position next year.

laserlady

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Re: How to choose a health plan
« Reply #6 on: December 10, 2014, 11:06:28 AM »
With the HSA option, on the one hand, you'll paying all of your non-preventative care costs until you hit the deductible, instead of paying a smaller co-pay.  On the other hand, you'll be saving $780 per year on your insurance premiums, plus you'll be getting the $1200 contribution into your HSA.  So your increased medical expenses would have to be more than $1980 in order for the other option to make sense.  The HSA option may also have an additional monetary advantage if you can add your own payroll contributions, which will reduce your tax liability.

sabertooth3

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Re: How to choose a health plan
« Reply #7 on: December 10, 2014, 12:06:08 PM »
If you're a generally healthy person then you're probably better off with the HSA plan. But if you think you might end up in the hospital at all, you will definitely want to pony up the $65/month extra for the plan on the left. Coinsurance can be a killer; it's out of pocket money you pay after you've met your deductible. So if you end up in the hospital, where bills can easily go into the thousands of dollars, you'll be on the hook for 10% of the total cost plus your full deductible up to your annual out-of-pocket max.

gatorNic

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Re: How to choose a health plan
« Reply #8 on: December 10, 2014, 02:03:44 PM »
If you're a generally healthy person then you're probably better off with the HSA plan. But if you think you might end up in the hospital at all, you will definitely want to pony up the $65/month extra for the plan on the left. Coinsurance can be a killer; it's out of pocket money you pay after you've met your deductible. So if you end up in the hospital, where bills can easily go into the thousands of dollars, you'll be on the hook for 10% of the total cost plus your full deductible up to your annual out-of-pocket max.

This ^^    Exactly what I was going to say.

georgialiving

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Re: How to choose a health plan
« Reply #9 on: December 10, 2014, 02:33:49 PM »
 Thanks for all this info, I'm going back and forth but yall have really helped me understand it quite well.

I am confused on the out of pocket vs. deductible. Do you pay until you hit out of pocket max? Or your max deductible?

georgialiving

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Re: How to choose a health plan
« Reply #10 on: December 10, 2014, 02:35:40 PM »
Weekly premium for PPO is 68.10.   Weekly for PHA is 51.79

georgialiving

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Re: How to choose a health plan
« Reply #11 on: December 10, 2014, 02:38:58 PM »
I think we are going with the HSA. We are healthy people and we rarely see a doctor for anything

gatorNic

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Re: How to choose a health plan
« Reply #12 on: December 10, 2014, 02:45:38 PM »
You pay for everything that isn't otherwise listed as a copay up to the deductible.  Once the deductible is reached the insurance company starts paying more of it usually a percentage, but you still have some out of pocket.  This will go on until you reach the the out of pocket maximum, then the insurance company pays all.

So for example the plan on the right if you go for a doctor visit you would pay for the whole visit.  You would continue paying everything in full until you reach the deductible of $1500 (of course this is offset by the HSA which you could use to pay bills). Once you reach the deductible now there is a 10% coinsurance, so you pay 10% of any bills up until you hit the out of pocket maximum. 

dandarc

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Re: How to choose a health plan
« Reply #13 on: December 10, 2014, 03:00:21 PM »
I try to ask 2 questions:

1.  Can we handle the worst-case scenario?

2.  If yes - which is a better deal based on our expected expenses.

Remember to factor in both the employer HSA contributions, and your tax savings from maxing whatever is left to the HSA (if you're going to do this).  30% of 5400 is another $1620 in your pocket.

georgialiving

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Re: How to choose a health plan
« Reply #14 on: December 10, 2014, 03:13:10 PM »
I see. So the max I would ever have to pay in one year for the HSA is 4600. Minus the employer contribution- so 3400.

georgialiving

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Re: How to choose a health plan
« Reply #15 on: December 10, 2014, 03:14:20 PM »
Thanks for explaining gatornic about the deductible and out of pocket

georgialiving

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Re: How to choose a health plan
« Reply #16 on: December 10, 2014, 03:18:16 PM »

If you're a generally healthy person then you're probably better off with the HSA plan. But if you think you might end up in the hospital at all, you will definitely want to pony up the $65/month extra for the plan on the left. Coinsurance can be a killer; it's out of pocket money you pay after you've met your deductible. So if you end up in the hospital, where bills can easily go into the thousands of dollars,


you'll be on the hook for 10% of the total cost plus your full deductible up to your annual out-of-pocket max.

Okay- so I'm responsible for 10% total cost- up to out of pocket max- minus employer contribution. 3400 a year max

sabertooth3

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Re: How to choose a health plan
« Reply #17 on: December 10, 2014, 03:37:07 PM »

If you're a generally healthy person then you're probably better off with the HSA plan. But if you think you might end up in the hospital at all, you will definitely want to pony up the $65/month extra for the plan on the left. Coinsurance can be a killer; it's out of pocket money you pay after you've met your deductible. So if you end up in the hospital, where bills can easily go into the thousands of dollars,


you'll be on the hook for 10% of the total cost plus your full deductible up to your annual out-of-pocket max.

Okay- so I'm responsible for 10% total cost- up to out of pocket max- minus employer contribution. 3400 a year max

Not exactly- you're responsible for your premiums, copays, everything up to your deductible, and then 10% of the total costs beyond that up to $4,600. I would have to do more digging, but offhand I don't think that the employer match factor into the out-of-pocket max calculation. If you're calculating a worst-case scenario, I would factor in $4,600 instead of $3,400.

dandarc

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Re: How to choose a health plan
« Reply #18 on: December 10, 2014, 03:58:11 PM »

If you're a generally healthy person then you're probably better off with the HSA plan. But if you think you might end up in the hospital at all, you will definitely want to pony up the $65/month extra for the plan on the left. Coinsurance can be a killer; it's out of pocket money you pay after you've met your deductible. So if you end up in the hospital, where bills can easily go into the thousands of dollars,


you'll be on the hook for 10% of the total cost plus your full deductible up to your annual out-of-pocket max.

Okay- so I'm responsible for 10% total cost- up to out of pocket max- minus employer contribution. 3400 a year max

Not exactly- you're responsible for your premiums, copays, everything up to your deductible, and then 10% of the total costs beyond that up to $4,600. I would have to do more digging, but offhand I don't think that the employer match factor into the out-of-pocket max calculation. If you're calculating a worst-case scenario, I would factor in $4,600 instead of $3,400.
This - I'd count the 1200 HSA contribution as an additional cost of the PPO plan.  That plan costs $850 in additional premium per year + $1200 in extra income you would get with the HSA plan.  So $2,050 more for the PPO plan just to start.  One thing I'm not seeing in the graphic - what is the ER situation?  Because if you're pretty healthy, car accident or similar is likely the way the big $$$ comes into play.

georgialiving

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Re: How to choose a health plan
« Reply #19 on: December 10, 2014, 04:40:51 PM »
They are both the same for ER- 20% co insurance after deductible

dandarc

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Re: How to choose a health plan
« Reply #20 on: December 11, 2014, 09:32:13 AM »
Cool - so lets run some examples.

In the extreme good case -  $0 health expenses, the HSA wins due to the lower premium + 1200 into the HSA which is basically more income that you get to keep if you don't spend it.

In the extreme bad case - Say an ER visit + hospital stay where the bills are 100K or something, the HSA wins again - the lower premium + employer match outweighs the difference in out of pocket maximum.

In the middle, it gets more interesting - say you've got 2 ER visits for 2 different people that sum to 5K - in that case you've got the following:
PPO: $500 deductible + 20% of 4500 = $1400 out of pocket
HSA: $3000 + 20% of 2,000 so $3400, so that nearly wipes out the guaranteed savings of the HSA plan.  However if you had this bill, I'm guessing you'd find a way to deposit $2200 more into the HSA and pay the bill with that, thus saving quite a bit on taxes.

But if you just have a lot of office vists, the PPO looks better - say the 5K is 6 regular office visits + 18 specialist visits.
PPO: $60 (you'll go to one of the preferred doctors mentioned, right?) for the regulars + $360 for the specialists = $420
HSA: 3K + 10% of 2K = $3200 which is nearly $2800 more.

In reality, you'll have a mix of office visits, labs / tests, maybe an ER visit or two, so it is murky.  Some places offer a calculator to help estimate these things - you'd input your expected office visits, various tests, ER visits, and other costs and it tells you what each plan would cost.

If you can maximize the HSA contributions for the year, and you've got a fairly high marginal tax rate (remember to include state income tax if applicable), then I'd personally take the HSA and maximize the HSA contribution given these options.  The tax savings from maxing out the HSA narrows the situations where the PPO would come out ahead, particularly given that the HSA is the better choice if you have that extremely high health costs year.