It’s that time of the year again. Benefits enrollment, when you have to pick your insurance plan (medical and maybe dental), decide on an FSA or HSA, and generally review any other benefits that come with your job.
I know a lot of my patients aren’t always clear on what their options are, so I thought I’d go through the process here. I was pretty sure before I started which plan I would pick, but it’s always good to review.
Please, please, please, remember that your medical situation is different from mine, and your medical insurance options are different from mine, and in no way should you construe the following as advice on what plan YOU should pick. This is for illustrative value only.
To start with, I am married and my husband needs to get medical insurance through my work. Our child is too old to be covered on my plan, so we are looking at a employee + spouse plan.
We fill prescriptions for two medications that are kind of pricey if they aren’t covered by insurance. Looking on GoodRx.com (an excellent site to help your patients price out meds if they have high copays or no medication insurance), I see that if we didn’t have or use our insurance, these scripts would cost $550 per month. I would change that “kind of pricey” to “very pricey,” except that I know medications for autoimmune diseases can run nearly 10x that amount!
Clearly I am going to be getting health insurance through my employer. I have three choices of plan:
- The Silver plan.
- The Gold plan
- The HSA eligible plan.
Each of these plans have different details about what gets covered, and by how much; these costs have to be taken into account in addition to the monthly premium. Here are some of the terms that describe the different costs I might incur:
- Deductible. The amount of money I have to pay first, before insurance pays anything at all.
- Coinsurance. This means that if I actually use health care (get labs, have X-rays, go to the hospital), the insurance covers 80% of the cost, and I have to cover the remaining 20%. This is, of course, only after I pay the deductible.
- I also have Copays. Under most plans, if I go to a doctor’s appointment, have imaging, or go to the ER, I pay a set fee (once I have met my deductible for the year). If I need prescriptions, I have to pay a copay each time I fill a medication.
- There are Tiers of copays: the copay for generic medications is less than the copay for preferred brand name medications, which is less than the copay for non-preferred brand name medications. Some medications are non-formulary, which means my insurance won’t cover them at all, and if I still want/need them, I pay the full price myself.
- All these fees can add up. To protect me, there is a Out-of-Pocket Maximum. That means that if the family has a very sick year, with lots of doctor visits, tests, medications, and maybe hospitalizations, at some point all the copays and coinsurance hit a cap; after that, I don’t have to pay anymore.
- All of the above can vary based on whether a doctor/lab/hospital is in-network or out-of-network. As you may imagine, being out-of-network is much more expensive. For simplicity’s sake, I will assume that all care is in-network, especially considering that the closest hospitals are all in-network, and I work in-network as well.
- Some preventative care is completely free, as mandated by the ACA: a physical, a Pap, a mammogram, immunizations. Routine doctor visits to see a specialist for a chronic condition, or sick visits, are not free.
Below I will make a table comparing the premiums for each plan, my expected outlay for meds, tests and visits, and the out of pocket maximums. I am going to assume my husband and I get preventive care, and that I also see my specialist once a year. Lab work always seems to get ordered every year. We will be hopeful and assume that we don’t get sick enough to have a doctor’s visit. (Just so you know, my husband never asks me about medical stuff, so we’re not skipping visits because he gets health care from home). We will have to get those expensive medications, and a few cheaper prescriptions.
[table id=1/]
As you can see, the Silver Plan is cheapest over the year, as long as there are no unexpected medical problems. For someone with a good emergency fund, this is an excellent option, and is the one I will choose. I am basically engaging in a mild form of self-insurance, as I can cover my out-of-pocket maximum if needed; but, if I don’t need a lot of care, I will save money on my insurance and health care.
The Gold Plan will cost me much more, but protects me from an $8000 out-of-pocket maximum. The max I would pay out-of-pocket under this plan is $5000, so my emergency fund could be $3000 lower. This would be a reasonable choice if I were just coming out of training and didn’t have a big emergency fund. Or if I had a larger family, with family members who might need expensive health care.
The HSA eligible plan, which is often touted as the best choice for various reasons, will still cost me a good deal more than the Silver Plan. Not shown is a $2000 contribution from my employer to my HSA, which I can either save and invest for future health care costs, or use right away for my health care costs. If I subtract that from my expected costs under the HSA eligible plan, I can still expect to pay $3054 over the year. As I expect to pay $2666 under the Silver Plan, I find the HSA eligible plan less exciting.
This post is getting very long, and I have to go to work tomorrow. I had planned to talk about the FSA and HSA, but I think I will put this off to the next post.
What do you think about my plans? Clearly my workplace plans encourage the choice of the Silver plan. Do your insurance options at work encourage different choices?