Many of you have or will soon enroll in your employers healthcare plan. Is so, please read this because it could save you a lot of money. I work about 3 months out of the year as a benefit consultant for some fairly large companies. I dont work for any of the insurance companies so I would like to offer some objective advice on how to pick the right plan for you. Im seeing that the majority of employees and even the HR staffs dont know how analyze a plan properly. The trend now is going towards higher deductibles to keep the cost somewhat manageable. Most companies offer two or three different plans with names like Premier, Value or Basic Just because the Premier plan is the most expensive does not mean that it is the best. Its simply a matter of how you want to pay. More now and potentially less later or vice verse. The three biggest factors on determining a plan are, deductible, copays and out of pocket maximum. The deductible is the amount of out of pocket expenses you would have before the insurance kicks in and picks up, usually 80 to 90% of the cost. Copays are the amount you pay for things like office visits and prescriptions. The out of pocket maximum is the amount at which, after that, the insurance picks up 100% of your medical costs for the year. They generally count against the deductible. Heres an example: Employee A is choosing between the Premier, Value and Basic plans for his whole family. The premier plan costs him $151 dollars per week with a $1500 dollar deductible, $25 dollar dr visit copay and a $4000 out of pocket maximum. We’ll skip the value because it is really a terrible choice for most. The basic plan costs $48 per week, has no copay (if you go to the dr. you pay 100% until you reach you deductible amount), a $5000 deductible and an out of pocket max of $10,000. Prescriptions are virtually identical for both plans and preventative care is covered 100% on both plans. So his premium for the year is about $7800 choosing the Premium plan vs. about $2500 for the basic plan. So right off the bat he is ahead by $5300 dollars by taking the basic plan! Best case scenario, he saves $5300 for the year. Even if he hits his deductible in either plan, he is still ahead by $1800. (difference in deductibles $5000 minus $1500 = $3500 subtracted from his initial savings of $5300 = $1800. In the worst case scenario, meaning that he has hit the out of pocket maximum in both plans he would save only $700 for the year with the Premium plan. $10000 Basic plan minus $4000 Premium plan = $6000 minus his initial savings of $5300 = $700. So essentially by taking the Premier plan he is betting $5300 to possible save $700 in cost but only in the worst case scenario. A horrible bet! The key is to not get hung up on copays. People have been used to paying $25 when they go to the doctor and because of that they are often willing to lay out a huge chunk of change just so they have the copay. You need to look at your total cost per year in the best case, middle and worst case scenarios. The higher priced plans will not work out best for most people financially.
Posted on: Sat, 08 Nov 2014 19:10:13 +0000
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