As an HR professional, I’ve heard the question “which health insurance plan should I choose?” more times than I can count. The answer is a common one in all things HR: it depends. The best plan for your particular situation is based on how often you go to the doctor, how many prescriptions you take (and the cost of each prescription), and how risk-averse you are.
Let’s take a look at a couple of scenarios when a high-deductible plan is most likely your best option.
Scenario 1: You almost NEVER go the doctor – the last time you went to the doctor was when you got strep throat five years ago. You’re young, you don’t take any prescription medications, and you’re in good health.
In this situation, a high-deductible plan is your best bet. You probably won’t go to the doctor at all this year, and if you don’t, your only cost will be your premiums. Premiums are typically much lower on a high-deductible plan than on a traditional (low-deductible plan), so this will be the most cost effective option.
Scenario 2: You visit the doctor often because you have a serious illness like cancer or a chronic health condition such as diabetes. Your medical bills could hit five figures in a year, and you’ll definitely meet your deductible. While your deductible may seem crazy, once you hit it, you probably will have 100% coinsurance (depending on your particular plan). If you had chosen a lower deductible plan, you’d pay less for the deductible, but your coinsurance would likely be lower.
(Translation: If you have $50,000 in medical expenses for a year, and you have a $5,000 deductible, you’ll pay $5,000 but everything else will be completely covered if you have 100% coinsurance. Alternatively, on a traditional plan you might pay $1,000 for your deductible but your coinsurance might be only 80% – which would mean you would still have to pay 20% of $50,000…which is $10,000. The high-deductible plan would cost you $5,000 less in this situation.)*
The difficult part is that most of us do not fall on either end of these two extremes. You may go to the doctor occasionally, but not often. Let’s say you go the doctor a few times per year – just for the occasional flu shot, prescription refill, and/or annual check-up. Which plan is best in that situation? Follow the steps below to determine the best plan for you.
- Calculate the average number of times you have visited the doctor per year over the past few years. If anything with your health has significantly changed, take this into consideration and realize that you may go to the doctor more often this year.
- Compare plans. Estimate the amount you would pay on each plan based on the average number of times you visit the doctor. Factor in the premiums, deductible, coinsurance, and co-pays for office visits and prescriptions.
- Think about how risk-averse you are. I don’t go the doctor all that often, and I might be able to save money on premiums with a high-deductible plan, but the idea of having a $6,000 deductible is terrifying to me. What if I broke my ankle? What if I had a year when I got sick more often than I normally do? If this frightens you, a high-deductible plan probably isn’t the right choice for you.
- Find out if your employer offers a company contribution to your health savings account (HSA). Some employers will deposit money into your HSA as a way to encourage employees to enroll in high-deductible plans.
- Remember that you are not locked in forever. You can change your plan during open enrollment. Make sure you know when that is (it occurs once per year and varies depending on your employer). You can also enroll via the Health Insurance Marketplace from November 15th – February 15th or when you experience a “qualifying life event” (such as marriage, birth of a child, or loss of other coverage).
*Note: Insurance plans vary. When shopping for a plan, pay special attention to the monthly premiums, the deductible, and the coinsurance. Don’t be lured in by low premiums or a deductible-free plan. Consider all aspects of the plan.
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Gravie (free advisors who answer healthcare questions)
The Health Insurance Marketplace
BidRx (for comparing prescription drug prices)