Author Topic: Medical Insurance Plan Comparison  (Read 789 times)

ThePhilosopher

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Medical Insurance Plan Comparison
« on: August 25, 2019, 11:43:44 AM »
My wife and I have baby due in the few weeks and we are trying to decide whether we should take mine or her insurance. My goal is to decide which plan will result in spending less money, but also taking into consideration the “sticker” shock of each visit to the doctor’s office with high deductible health plan. For example, if there was only a minor difference in savings between the low and high deductible plan, I’d likely go for the low deductible plan.

For the low vs high deductible plan comparisons, I’m assuming the maximum out of pocket will be hit in both plans due to having a first year child. My initial reaction is that the high deductible plan will likely save money, but I’d like to hear other people’s opinions. Also note, the plan coverages are essentially the same.

Low Deductible health plan:
  • The plan costs $317 per month, which totals $3,808.80 per year.
  • Once you reach $1,000 out of pocket, insurance covers the remainder of the year’s expenses. A nominal amount (20%) is covered until the $1,000.
  • The out of pocket maximum extends to $3,000 for prescription medications.
  • (-) If the insurance is not taken, the company reimburses $249 per month ($2,988 per year). The wife is currently paying $99.94 per month ($1,199.28 per year) for this insurance.
  • (-) We cannot have an HSA.
Summary: assuming that we hit he out of pocket maximum, we will spend $3,808.80 + $1,000 = $4,808.80. Also, if this insurance was not taken, we would be saving $1,199.28 that we were paying for the individual coverage plus $2,988 being reimbursed for not using this company’s insurance.

High Deductible health plan:
  • Costs $58 per month, which totals $696 per year.
  • Once you reach $7,000 out of pocket, insurance covers the remainder of the year’s expenses. Expenses are essentially paid in full until the maximum is met.
  • We could have a family HSA ($7,000).
  • (-) If the insurance is not taken, no money is reimbursed. The husband is currently paying nothing for their insurance.
Summary: assuming with hit the maximum for this plan, we would be at $7,696. However, after taking into account the $1,199.28 and $2,988 ($4,186.28) that could be saved by not taking the low deductible plan, this would essentially leave us with an adjusted amount of $7,696 - 4186.28 = $3,509.72. Lastly, this plan would allow the family HSA, which would allow us to save more pre-tax money and lower our taxable income. So it would seem that the high deductible plan makes more economical sense.

Am I missing any details?

Also, is the reduction in taxable income have a large enough impact to consider? I’m not entire sure how to calculate this.