Author Topic: Please help with choosing insurance: new job...suddenly have options!  (Read 2410 times)

Mongoose

  • Handlebar Stache
  • *****
  • Posts: 2410
DH has a new job! He's been underemployed for quite awhile and this job will double his hourly pay. Plus he moves from 4 PTO days to 12 vacation and 4 personal days per year and 12 sick days!  Yay!!!!!

So, now we need to select benefits.  I've never had many choices for plans at previous employment and usually chose the cheapest. I'd prefer to optimize now (thank you MMM!). I don't really understand the various components of insurance.

Background: we are currently pretty low users of health care. DH and I might go to the doctor once a year and the kids have not needed anything but the regular checkups for a couple of years (4 people: myself, DH, MiniMongoose 1 (7 years), MiniMongoose 2 (5 years). None of us take any prescriptions.

Our options (for health insurance)

1. Least expensive: $188/month family premium.$3000 combined medical/Rx deductible. $0 for preventive services. 10% of costs after deductible for all in-network services. Out-of-pocket limit: $6000 in network; $12,000 out of network. The employer contributes $1200 per year to a HSA under this plan. We can contribute up to $5500 extra to the HSA. To max this out would appear to take an additional $435 out of our monthly pay (not affordable for us right now). We could possibly some (maybe around $100...which would give us around $2400 per year in the HSA). The plan says: The minute money is deposited in your HSA, it is yours to keep forever. There are no requirements to use your HSA funds by the end of each year (unlike a flexible spending account, in which funds must be spent by the end of each year). Furthermore, your HSA stays with you even if you separate from employment. And even if you are no longer eligible to contribute to your HSA, you can still use the funds that are in it.

2. Mid-range: $272/month family premium. $0 combined medical/Rx deductible in-network. $25-50 for all in-network services. Out-of-pocket limit: $8700 both in network and out of network.

3. Most expensive: $434/month family premium. $1100 combined medical/Rx deductible in-network. $25-50 for all in-network services. Out-of-pocket limit: $8700 both in network and out of network.

I'm a bit confused that the more expensive plan seems to cover less than the mid-grade plan. The only difference I can see is that it has a nationwide network. We have never visited a doctor on a trip (I know it is possible but so far hasn't happened) and don't travel a lot.

Questions:
1. I'm leaning towards the mid-range plan. Our regular doctors are all covered under all the plans. I really don't understand how a HSA works. I thought that was one where you had to use up the money every year but it appears to not be the case. Would this potentially be a good deal based on our "normal" usage? If we go the HSA route, should we make up the difference between it and the next premium by adding about $100 pre-tax per month ourselves?

2. I also have a question about the $0 preventative care vs 10% for a primary office visit. Does that mean that a routine checkup is covered completely but a "sick visit" is only covered at 10%?

3. Dental coverage is available for $50.58 per month that covers up to $1500 with a $300 deductible. This covers 100% of preventative services (no deductible) and 50-80% after that. This is for the family of 4. We haven't needed anything but regular cleanings for a long time. Good/bad deal?

4. Vision coverage is available for $20.26 per month that covers eye exams for $10 and glasses for $25 plus contact lenses for $60.  We do use this type of service quite a bit. Both DH and I have glasses and contacts and DH's are very expensive (needs a lot of correction). We would easily spend more than the $433 per year for all the coverage and glasses/contact lenses for both of us. And that's assuming that the kiddos aren't going to need glasses. I'm leaning strongly towards getting this coverage.

sisto

  • Pencil Stache
  • ****
  • Posts: 971
  • Age: 50
  • Location: Sacramento, CA
Re: Please help with choosing insurance: new job...suddenly have options!
« Reply #1 on: August 30, 2016, 10:23:07 AM »
Option 1 is your best bet. It's cheaper and will likely have the least out of pocket expenses. The employer is giving you free money $1200. You can also contribute pre-tax into the HSA which reduces your tax rate.

Davids

  • Pencil Stache
  • ****
  • Posts: 973
  • Location: Somewhere in the USA.
Re: Please help with choosing insurance: new job...suddenly have options!
« Reply #2 on: August 30, 2016, 10:55:52 AM »
Take option 1 and start your research through many different topics here about how HSA works.

v8rx7guy

  • Handlebar Stache
  • *****
  • Posts: 1327
  • Location: Bellingham, WA
Re: Please help with choosing insurance: new job...suddenly have options!
« Reply #3 on: August 30, 2016, 11:07:26 AM »
What is your coinsurance % for options #2 and #3?  I can put together a nice little graph to help you with your decision.

caracarn

  • Handlebar Stache
  • *****
  • Posts: 1426
  • Age: 49
  • Location: Ohio
Re: Please help with choosing insurance: new job...suddenly have options!
« Reply #4 on: August 30, 2016, 11:29:19 AM »
Having used high deductible plans for years, I understand HSA's very well.  I used an HSA outside my employer because the fees were cheaper.  Some HSA's offer options to invest your money so it can grow versus just acting like a savings account.  Yes an HSA let's you keep your money forever, from one employer to another (I used the same HSA account for two different employers high deductible plans).  An HSA requires a high deductible plan for you to be eligible to participate.  The tax benefits are the big reason to funnel your money through.   One of the big differences that you do not mention is that unlike an FSA with and HSA you DO NOT have to commit to what you will contribute to it for the year, which it seems you may not understand given yoru calculation of $435/wk to contribute the maximum.  The other piece you need to be clear on (I'm not in an HSA right now so have not kept up on annual maxes) is that the employer match plus your contributions cannot exceed the maximum.  So take the $1,200 off that amount to arrive at your contribution limit.  I used an HSA by waiting until I had expenses incurred and then deposited the money into the HSA to then pay the bill.  This was done purely to get the tax savings.  Some people use them are additional tax sheltered accounts for retirement money as you will almost invariably need a lot of health care dollars in your old age.  I think HSAs are great.

I have attached a spreadsheet I made years ago to determine the best health care options.  Each year when my employer provided the new documents I would go ahead and put the numbers in and the graphs make it very easy for you to make a decision.  If you want to use it and need some help understanding how it works, PM me and I will be happy to help.  In my last employer HR actually ended up using this spreadsheet to help employee's understand their costs because it was better than anything they could come up with.  The only reason it has Single coverage on it versus just Family is because I was helping others and I built it with the least and most expensive options we offered and then the Employee + Spouse or Employee + Children would fall in between, or you could just redo with those numbers if relevant, but the vast majority of people choose one of these two options.
 

Mongoose

  • Handlebar Stache
  • *****
  • Posts: 2410
Re: Please help with choosing insurance: new job...suddenly have options!
« Reply #5 on: August 31, 2016, 08:50:53 AM »
What is your coinsurance % for options #2 and #3?  I can put together a nice little graph to help you with your decision.

I don't understand. Gah....I really need to figure out more about insurance I guess. The only thing that has a % is option #1 and that is that we would pay 10% for most things after the deductible. For #2 they have a $5 copay for primary care visits, $25 for specialists and $100 for ER. Labs are covered fully.

I'll check out the spreadsheet and see if that gives me any insight.  And I guess I need to find a definition of "preventative services" somewhere too.

caracarn

  • Handlebar Stache
  • *****
  • Posts: 1426
  • Age: 49
  • Location: Ohio
Re: Please help with choosing insurance: new job...suddenly have options!
« Reply #6 on: August 31, 2016, 02:22:49 PM »
I responded to your PM about the spreadsheet and how I recommend handling.

As I said there Option #1 which is a typical high deductible plan will almost always be cheaper in total if your HR people are worth a damn.  The lever they pull to do this is the  HSA contribution which will offset some things, but for many years at my last employer they could have dropped that and it still would have been cheaper.  In the end this works out for the employer because since your bills are "bigger" you will be ore careful with your visits, whereas people have gotten used to "I have a sniffle and my co-pay is $10 so I'll go get some sniffle meds rather than just let my immune system function".  This is what drives health care costs up because frankly most people go to the doctor WAY too often because we've hidden the costs in nice insurance packages.  What people miss is the premium is part of what you are "paying" for your healthcare, and so they charge you an extra $2,000 a year in premiums for the privilege of only paying $10 when you go to the doctor.  Even though that one visit now cost you $2,010 most people miss that and that is why people foolishly keep demanding something other than high deductible.

In the end you need to be insured for catastrophic medical bills.  Everything else is just a payment, which is the model high deductible moves back towards.  If you look at health insurance in the 70s, that was all you could get was catastrophic coverage.  When you went to see the doctor there was no insurance involved, you just paid your bill, and if they found cancer your insurance kicked in.  But then insurance companies said they could get a piece of the pie each time you went and foisted it on us like a "savings" when it was the opposite.  Anyway, it will be most likely that Option #1 is your cheapest option when taken as a whole (with premiums).  In the end you need to look at everything flowing out of your income, not just what you pay when you go see Dr. Kildare.

ETA:  Sorry I forgot in my reply to indicate that if the high deductible plan is cheaper then the co-insurance does not matter as it only makes the cost worse.  Worry about the co-pays only if by some miracle (or lack of competent HR negotiation) option 2 and 3 actually even look like they make sense.
« Last Edit: August 31, 2016, 02:24:35 PM by caracarn »

nobody123

  • Pencil Stache
  • ****
  • Posts: 524
Re: Please help with choosing insurance: new job...suddenly have options!
« Reply #7 on: August 31, 2016, 02:46:05 PM »
The HSA is a truly awesome vehicle.  If the company is giving you $1200 with an out of pocket max of $6K, you only really have to worry about $4800.  You're saving ~$80/month on the premium, so that's only $3840 you have to worry about.  If you can put $100/month in, now you only have to worry about $2640.

You get to avoid income and payroll taxes on the HSA contributions, so if you have the option to invest in your HSA (mine you have to keep $1K in cash, anything above can be invested in Vanguard products), it might be a better option for retirement planning than your 401k.  Personally I reduced my 401k contribution slightly to allow me to max out my HSA.  My company also matches contributions up to $1200, and I wasn't going to pass up free money.  I know a lot of my coworkers didn't make the switch because they are on pricey meds for chronic conditions, so our traditional insurance was a better deal for them. 

Assuming your family is mostly healthy, I would go the cheap HSA route.  You can always change plans next open enrollment period if it turns out someone develops an expensive chronic condition.

caracarn

  • Handlebar Stache
  • *****
  • Posts: 1426
  • Age: 49
  • Location: Ohio
Re: Please help with choosing insurance: new job...suddenly have options!
« Reply #8 on: August 31, 2016, 02:59:37 PM »
Mongoose, attached is the spreadsheet modified for your plans. 

You did not provide the coverage for Options 2 and 3 so I assumed a standard 80/20.  You will need to modify if that is wrong.  I did this all in about 5 minutes, so you might want to double check to make sure I did not miss something, but it is as I figured, the PPO is ridiculously expensive.  You have a tiny crossover where Option 2 becomes cheaper for a bit at a certain point of claims, but it is so trivial I would not worry about it.  I had a plan year like this at one point where it crossed over and was about $1,000 different between $15,000 and $25,000 in claims, so we either wanted to be reasonably healthy or just have someone develop some huge problem to stay cheaper :). 

Anyway, this very clearly shows that #1 is your best bet.

With the last poster I want to point out a fallacy that I see all the time.  Your family's health has absolutely no bearing on which option you choose.  Option #1 is the best option in all cases except for the tiny crossover space between $3,000 and $4,000 in claims.  This is true regardless or if you are a healthy family or you all need open heart surgery.  Given the small difference and the fact that option #2 has co-pays you will almost assuredly still be more expensive with Option #2 in all cases.  Unless my 80/20 assumption was wrong, you have the info you need and Option #1 is it. 

ETA:  Keep in mind that "claims" on the spreadsheet are prescriptions or doctors, so even if you have a chronic condition as previous poster said, you get to a point then that is 100% covered.  Without knowing the plans he had access too, my guess is that that switch was probably not warranted.  I had unexpected gall bladder surgery last February.  We hit out out of pocket max with that.  All out sons diabetic supplies were 100% paid for for the remainder of the year.  If I had been on the PPO I would have enjoyed the co-pay for every prescription for his insulin, syringes, test strips etc.  So I can definitely state that the chronic condition has no bearing on the choice with most plans if you really know how to figure the cost.
« Last Edit: August 31, 2016, 03:04:38 PM by caracarn »

Mongoose

  • Handlebar Stache
  • *****
  • Posts: 2410
Re: Please help with choosing insurance: new job...suddenly have options!
« Reply #9 on: August 31, 2016, 04:58:19 PM »
Thank you for all your help!

You did not provide the coverage for Options 2 and 3 so I assumed a standard 80/20.  You will need to modify if that is wrong.

This is the part where I am getting stuck. I don't see a percentage coverage for Options 2 and 3. The copay is all the out-of-pocket for those options. After that they are covered by the insurance as long as you are in-network.

Plan 1
Medical deductible $3,000/family* coverage
Preventative services $0
Primary care office visit 10% after deductible
Pretty much everything 10% after deductible
Medical plan out-of-pocket limit $6,000/family* coverage

Plan 2
Medical deductible $0
Prescription deductible $200
Preventative services $0
Primary care office visit $5 copay
Specialist visit $25 copay
ER visit $100 copay
Inpatient $300 copay
Out-of-pocket maximum $5000 (this plan states that copays count towards the OOP max)

The example in their guide shows an inpatient surgery stay costing the insured person $300 total out of pocket with the rest covered on by insurance. Only a co-pay is listed, never a percentage unless you go out of network. However, I had a plan like this before and got bills from the "what wasn't covered by insurance" even after the co-pay. The employee benefits information doesn't seem to contain any information as to how that might be calculated though.

I really like the idea of the HSA as a way to save up tax favored money outside of a retirement plan but with using some health services each year I'm on the fence about these options. Plus the lower monthly premiums are enticing...and the extra $1200 from the employer. We do have occasional urgent care visit/sick child visit and I have no idea how much 10% of an office visit is likely to run (we've either had a version much like option 2 with only a co-pay or no insurance at all...and just didn't go to the doctor).

Option 3 (the PPO) looks bad either way this goes.

Need2Save

  • Bristles
  • ***
  • Posts: 254
  • Location: Maryland (USA)
Re: Please help with choosing insurance: new job...suddenly have options!
« Reply #10 on: August 31, 2016, 06:24:59 PM »
Plan 1 - is a smart consumer's plan.  You get $1,200 from the employer, plus save $960 in deductions over the course of the year.   That's $2,160 in savings right off the top. It sounds like you have few expenses a year and no ongoing prescriptions. Right?  Did the few bills you have historically exceed $2k when you looked at the cost before your old insurance kicked in?  You are a very good candidate for the HSA option and are covered with the $6k OOPM if something wild happens with any of you.  Really don't sweat the details.  You'll have $1,200 from the employer, plus at least the minimum of $960 savings that you will add to the HSA (hopefully you can contribute more since it's pretax) and you'll use those funds for any urgent care visit/sick visit comes along. Preventive care should be covered 100% for normal annual physical/checkups and bloodwork.

Plan 2 - is what I'd call the "Fear" Plan or the "Just in Case" plan.  Probably more coverage than your family currently needs and you would be over-insuring yourself. Don't stress over the flat copays vs. coinsurance.  I would assume that no % listed applies if it's a straight up PCP visit (you pay $5 unless they add extra services in the same visit - like run diagnostic tests) and you'd pay $25 copay for a specialist.  Again, no other costs unless there are 'extras' in the same visit.  It also sounds from your early notes that it's a narrow network which severly limits your choice in providers to a specific area. 

A Health Savings Account (HSA) is similar but not the same as a Flexible Spending Account (FSA) which is likely what your prior experience involved if you had use-it-or-lose-it rules apply.  With an HSA, you are not required to use up the funds in the same year and in fact can rollover them year to year to year over a long period of time and build up the balance.  You can even earn interest and invest the funds like a 401(k) depending on the rules the employer and the administrator come up with respect to minimum amount to invest. A really good deal to use to supplement your other retirement accounts.

On the dental plan, a $300 deductible is on the high side.  You will be paying just over $600 a year in premiums (pretax though).  It's good that preventive care (including cleanings and probably xrays) is at 100%.  But you'd pay the first $300 of any additional dental work done.   If all 4 of you get 2 cleanings a year and your dentist would charge you $75 or more for a visit if you had no insurance (maybe you can call and ask?) then I would sign up for the dental plan as you are just as good as paying out of pocket or better and would have at least 50% coverage up to the annual max if any of you needed major work.  If your dentist charges far less than $75 for those without insurance, I'd reconsider it. 

On the vision plan.  You said $25 for glasses? That is usually the copay, but additional costs can stack on if you get fancy frames or need special lenses so take a 2nd look at the small print.  Also, most plans cover either frames/lenses or contacts but not both in the same year.  Again, read the small print on that too! 

caracarn

  • Handlebar Stache
  • *****
  • Posts: 1426
  • Age: 49
  • Location: Ohio
Re: Please help with choosing insurance: new job...suddenly have options!
« Reply #11 on: September 01, 2016, 07:43:33 AM »
Mongoose,

The challenge here is if all the information is there on the other plans.  And also that you are the one getting information but it is your DH that has to go ask the questions so you are the middle person here and not sure how good your DH is at getting details.  I would absolutely have him look into getting a definitive answer from his HR people on if there is really nothing other than the co-pays and if that would add up to your $8,700 OOP.  To me this just seems way, way to good to be true.  That is saying for just $100/month more you could have expensive outpatient services for thousands of dollars and you are paying almost nothing.  You could easily get to $35,000 in services on $1,000 OOP.  This is what makes me feel this is very, very unlikely.  If you do find it is then that changes the picture immensely.  The problem is it makes it a complete gamble for you to select what you think will happen.  Let's go through that analysis so you know what to look for.

If you do not plan to visit the doctor much then Option #1 is still the best.  You save about $1,200 in premiums and get $1,200 in free money.  If you anticipate several doctors visits (with children this is almost a given with about 2-3 visits per child per year is what I've usually seen with our six) you just need to see if you see any scenario where your costs in Option #1 are offset more my Option #2 assuming 100% coverage after co-pay.  As I said this is a crystal ball guessing game and no way I can help more with that.

I still go back to the fact that 100% coverage is sooooo unlikely.  It is possible his employer is really generous, but for 100% coverage policy given your premium I'm guessing they would have to be paying at least 80% of the premium if not 90%+ as it would most likely be over $2,000/month and would certainly fall under the Gold or higher plan on the healthcare exchanges.  Frankly I'm not even sure you can purchase a 100% policy on the HCA because the cost would be so insane it would never be bought.  That's why I'm suggesting he ask the questions rather than trying to figure it out from the pamphlet.  I have found that a good 30 minute conversation with HR going through details will save you 2 weeks of trying to figure it out yourself.  It's possible that his HR people barely understand the policy, but worry about that if it happens.  In that case you will need to get the phone numbers of the insurance carriers and contact them directly and ask all these questions.

I would agree with last poster that dental is pricey.  Given that most cleaning visits are at most $200 you can self insure here for almost less money than the plan, since you will need to pay $900 to get that same service ($600 in premiums plus your $300 deductible).  To offer perspective I paid $16/month for family coverage with the same top limit and a $75 family deductible, but I am now paying about $88/month for $50/inv $150 family deductible with $1,500 coverage.  With 8 of us in the household though we get our money's worth especially since I've got 4 in or needing braces so far. 

Agree also that vision usually pays for glasses OR contacts but not both in the same plan period (also verify if it is a 12 or a 24 plan as most employers have moved to a 24 meaning that you only get glasses/contacts covered every two years).

Hotstreak

  • Pencil Stache
  • ****
  • Posts: 772
Re: Please help with choosing insurance: new job...suddenly have options!
« Reply #12 on: September 01, 2016, 10:11:33 AM »
If you're healthy and stay that way, plan #1 is clearly the best option.  Lower cost for monthly premiums, the option to have an additional tax sheltered account, and the company is giving you $1,200 dollars to use for healthcare at any time throughout your life.

Plan #2 is actually a really great plan too.  I can't believe it's less than $100 more per month than plan #1!  If you develop an ongoing health condition, you will want to run the numbers and see if this plan makes sense.  I would have definitely benefited from this plan a few years ago, due to expensive name brand prescriptions, weekly office visits with specialists, surgery, etc.  The trick is being able to predict that in the future. 

As somebody posted above, your minimum savings by taking plan #1 are over $2,000 (premiums + employer HSA contribution).  The OOPM is $6,000.  So, if you have a serious medical need every three years ($33,000 billable amount), you will break even.  Food for thought there.