The health plan consists of one deductible, that all your medical expenditures (even prescription drugs) apply towards. Once the deductible is met, the insurance carrier will begin paying 100% for the remainder of the year.
For 2010 the lowest compatible deductible is $1,200 for an individual and $2,400 for a family.
Other than select insurance carriers, plans that include copays, do not offer a deductible lower than $1,000.
Lets put some #'s to the test, shall we...
Male, 30yrs old, living in Chicago and is a non-smoker:
$200.13/month for a plan that includes:
- $1,000 deductible
- You begin to pay 20% on the next $5,000 after the deductible for a total additional out-of-pocket of $1,000
- $20 unlimited office visit copay
- 100% ER coverage
- Rx is applied towards deductible than you pay only 20%, even after your out-of-pocket is met
$143.51/month for an HSA compatible plan that includes:
- $1,750 deductible
- 100% coverage after deductible is met
- $20 office visit copay for annual physical / mammogram and pap smear
- Rx is applied towards deductible than covered at 100%
- Added benefit of opening an HSA and being able to pay for your deductible or any qualified medical expense tax-free
Plan 2 is $56.62/month lower in premium for an annual savings of $679.44.
Now..lets put these two plans to the test...
(example)
Two old time friends Mike and Sam are both 30 and live in Chicago. Mike had bought health insurance plan #1 and Sam, #2. Both were living healthy life styles and active in sports. Now both have a demanding mother who reminds them every year to go and get their annual physical. Being friends they both see the same internist.
- Both Mike and Sam paid a $20 copay
With Mike and Same being active, they both play in a separate outdoor football league and on the same summer day, both had broken their leg while falling to the ground as they were tackled. After a visit to the ER that day, both had a bill of about $3,000 which icluded fees, tests and x-rays.
- Mike will nothing for the ER visit, since it is covered at 100%
- After the ER bill was ajudicated by their insurance carrier (hospital was in network) Sam owes $1,300 which is applied towards the $1750 deductible, leaving Sam to only have to pay an additional $450 before the plan begins to pay 100%
The next day both go to the same specialist for an opinion if surgery is needed. The cost of the office visit is $300
- Mike will owe a $20 copay
- Sam will not owe anything, and will have to wait for the claim to be submitted. Once submitted, the bill was $150 which was applied towards the deductible, leaving same only $300 to pay before the insurance company begins paying 100%
From this visit, it is recommended that they both need surgery. Both go ahead with the surgery and the final bill after ajudication is $12,000.
- Mike will have to pay $1,000 (deductible), leaving $9,000, to which he must pay 20% of until an additional $1,000 is spent. total of $2,000 spent
- Sam will owe $300, then the bill is picked up 100%
Both require 6 additional follow up visits
- Mike will pay a $20 copay for each visit. $120
- Sam will owe nothing since coverage is at 100%
It is now the end of the year, and going into the new year, their deductibles have reset. So...for the year mentioned above, below is payout both Mike and Sam had for premium and plan responsibility:
Mike:
- $2,401.56 in annual premium
- $2,000 (deductible and out-of-pocket)
- $140 copays (initial visit and follow up visits)
- 4,541.56 = total of above
Sam:
- $1,722.12 in annual premium ($679.44 in savings)
- $1,750 deductible
- $3,472 = total of above
Sam saved $1,069.56 compared to the plan Mike has which had cost an additional $56/month.
*****Now, even better, if Sam had opened the HSA and was able to contribute $1,750 into the account over the year, or at one time. If Sam made the contribution, he is able to take an above the line tax-deduction on his medical expenses that are paid or reimbursed out of the HSA. If Sam is in the 30% tax bracket, than their is an additional $525 in savings.
Which plan makes more sense?
You decide!
-The Health Insurance Shoppe
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