Choosing New Health Insurance


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Changing Insurance

Welp, it’s that time. Johnny and I are choosing new health insurance. For multiple reasons — okay, mostly because of the Affordable Care Act — our current health insurance has gone up in price and is now too expensive, and so Johnny’s company is dropping it and opting for different options. And they’re doing it through a small employer exchange. That means that we’re given a list of providers and plans in a certain price range, and we get to choose the one that fits us best. And so the last few nights Johnny and I have have lived up to our “wild and crazy” reputation by poring over printouts, comparing different providers, benefits, and costs. If you’re a little rusty on insurance terms (like we were), here’s a little cheat sheet I made a while back.

Johnny narrowed it down to three, and we’ve been crunching the numbers since. So here are some of the big questions we’ve been asking, in order of importance:

  • What’s the deductible?
  • What’s the total out-of-pocket maximum over the course of a year?
  • Are our current doctors in network with this insurance plan?
  • How much would it cost to have a baby with this plan? (It never hurts to plan for the potential future, right?)
  • What’s the monthly premium? (This question would be higher up, but the monthly premium will be mostly covered by Johnny’s insurance allowance provided by his employer.)

The three plans we narrowed it down to are as follows:

Plan A

  • Individual deductible: $250 (Once the deductible is hit, insurance then covers 80% and we cover 20% of all costs until the out-of-pocket maximum is met for the year.)
  • Out-of-pocket individual max: $5,000
  • Out-of-pocket family max: $10,000 (e.g., If all three of us had an emergency surgery, we’d only owe $10k total, rather than $5k per person.)

Plan B

  • Individual Deductible: $1,000 (Similar to Plan A, once the deductible is reached, we would pay 20% co-insurance on all covered costs until the out-of-pocket max is met.)
  • Out-of-pocket individual max: $4,000
  • Out-of-pocket family max: $8,000

Plan C (HSA Plan)

  • Family deductible: $7,000
  • Out-of-pocket individual max: N/A
  • Out-of-pocket family max: $7,000 (So once the $7,000 deductible is reached, we wouldn’t owe another dime for any covered healthcare expenses.)
  • Along with this plan, we’d get a $250 allowance to put toward our HSA each month.

For all of these plans, the monthly premium would be covered (yay!). So we’re not currently considering that into our choice. What would you choose? After pecking around on our phone calculators for a while and talking it over and over, we’ve decided to go with Plan A.

I think each choice would be a good one, but for our needs, Plan A seems to fit the bill. It’s hard to predict our medical future, but we’re hoping for another kiddo sometime in the next year-ish. And so while we love the idea of another tax-advantaged savings/retirement account with the HSA option (plus free cash from Johnny’s employer), the $7000 deductible is pretty steep when you figure a typical pregnancy runs at minimum $7,000 (barring any complications). Meanwhile, Plan A would only cost the $250 deductible and 20% of all hospital costs, totaling somewhere in the ballpark of $1,400 to $2,000 with a maximum cost of $5,000.

If you were us, which plan would you pick? What changes have you seen with your insurance this year because of the Affordable Care Act? 

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42 Comments

  • Reply Mr. Frugalwoods September 10, 2014 at 7:29 am

    Completely agree with your assessment. If you are having another child soon you get to “plan” your healthcare spending. Plan A is definitely the right choice if you know you have a major medical expense coming up.

    After your last child, the HSA starts making tons of sense as long as everyone in the house is healthy. Tax benefits are great, and as long as you save appropriately it almost always works out best in the long run.

    Of course, if anyone has a chronic medial problem then Plan A continues making sense for the long term.

    • Reply Johnny September 15, 2014 at 11:51 pm

      The plan is to “plan” our spending this year (fingers crossed), in which case, we’re feeling good about Plan A. But we’ve got our eyes on Mr. HSA for the future. Thanks for weighing in.

  • Reply Brian September 10, 2014 at 7:49 am

    Plan A you would pay up to the $10K. The baby’s costs (post birth) would go into the family deductible. So heaven forbid you kid ends up in the NICU (both of ours did for 10 days each time). The NICU runs at least $5K a day so you would hit that 10K pretty quick. Also you get $3K in free HSA money which would more than cover the difference between the $5K (per person) and $7K (per family).

    You are also gambling that your only costs are your pregnancy. So yes anything after the $5k for you would covered, but what if Johnny gets really sick or hurt, now you are going over that $5K and heading towards the $10K land.

    Of course my entire argument goes out the window if you all stay health and don’t have a kid in the next year.

    • Reply Johnny September 16, 2014 at 12:09 am

      We always appreciate your baby-related thoughts given your family’s history. Whenever I calculate health insurance expenses, I tend to look at the least amount of money leaving my pocket, which is a bad habit. It’s tricky because health insurance is something that we use on a monthly basis for fairly standard checkups and medications. Contrast that with life insurance where there’s only one possible, catastrophic scenario and it’s much easier to gauge risks and needs.

      In our case, we’re gambling a couple $1k’s in max out-of-pocket in exchange for a lower premium (which would still be within my company’s allowance if/when we have a second child), a lower deductible, and hopefully lower total out-of-pocket costs by year’s end thanks to a mediocre coinsurance rate. And in any event, a major medical emergency wouldn’t put us out thanks to our emergency fund.

      We’ll definitely be looking at an HSA in coming years, though.

  • Reply MomofTwoPreciousGirls September 10, 2014 at 7:58 am

    Since your not paying the premium I think a is probably good, although for you AND a baby you can’t tell what ur costs would be so I would look at the 10k as your max cost. Not the five. We all hope things go perfectly but my sister just had her first child. He was jaundice (as was my first child). Normally there are simple ways to help with that at home. For him, he ended up back in the hospital twice to be placed under uv lights bc the home tricks weren’t working. It’s a seemingly minor thing but two extra hospital stays for baby AFTER the labor and delivery could cost more.

    I personally love my hsa plan. I pay the premiums for the family and my company will give up to $1600 after hubby and I jump through hoops! I max out the rest from my pay checks. I admit I like it more now that I have my family’s max oop in the account! I prefer being in control of how I spend our medical dollars and I have found having that hsa feels like a good safety net but also makes me think about whether a treatment is completely needed (I admit I used to go the dr at the first sniffle!). Now that I’m not rushing to doc unless I truly feel it’s necessary, I get sick a lot less and for shorter times than before. What initially made me choose this route was the premiums though. The difference in the oop on the higher premium plan was less than the extra I had to pay in premiums AND medications had a separate deductible that meant the max oop was the same as the low premium plan! Instead I took the dollars I was saving on premiums and put it in the hsa, so for the last 3 years we have only had one incident that cost $1500. Having the hsa allowed me to call up and say “what kind of discount will you give me to pay in full?” They knocked it down to $1200! I just think it gives you more options and flexibility.

    • Reply Johnny September 16, 2014 at 12:14 am

      Good call at looking at the 10k figure family out-of-pocket figure. Sally was also jaundiced but was able to beat it at home. It wouldn’t even cross my mind about what it might cost to take her back for some UV treatment…. well, thanks to you, now it would. :)

      You make a compelling case for the HSA, especially the control aspect. And being able to negotiate better rates. Go you!

  • Reply Kay September 10, 2014 at 8:34 am

    Is this change effective now or starting the beginning of 2015? I’m used to companies having you select a new plan in October or November for the following year.

    • Reply Johnny September 16, 2014 at 12:15 am

      I think our company jumped the gun early, so I think the normal enrollment periods for most companies remains the same.

  • Reply Heather September 10, 2014 at 9:12 am

    Wow. As a Canadian, it never occurred to me to think about how much literally having a baby costs. If you are covered by your provincial health plan (which everyone is after three months of living there), you just go and have your baby. No bill comes after.

    I know there are a ton of problems with our system (it’s not the haven many Americans make it out to be in the health care debates down there…nor is it hell!), but it is really nice knowing that if an accident or something happens, I’m not going to get a bill for tens/hundreds of thousands of dollars. Or have to fight with an insurance company to get something covered.

    I have extra coverage through work for things like dental, optical, and chiro/massage/physio etc. When I was in a job that didn’t come with those benefits, that’s when I paid for extra health insurance.

    • Reply Johnny September 16, 2014 at 12:17 am

      So it sounds like we need to hop the border a few months before if/when we have a second baby. :) These topics of conversation always make us jealous of you neighbors up north. Trying to understand our health insurance plans is a full-time job in and of itself.

  • Reply Little House September 10, 2014 at 9:32 am

    I’d probably go with plan A or B. Plan C is too costly with a $7,000 deductible.

    • Reply Johnny September 16, 2014 at 12:19 am

      High five for the lower deductible!

  • Reply Danny C September 10, 2014 at 9:45 am

    I don’t quite get your math logic. If your employer is giving you $250 a month through the HSA, your getting $3,000 free each year, effectively lowering your out of pocket to $4,000 after 12 months and even lower beyond that. Add to that you guys can personally contribute another $250+ each month tax free forever.

    Beyond the large expenses like child birth or other major issues, the HSA plus $250 would be totally free healthcare. You would never pay a dime of your money for doctors visits, prescriptions, or even things not covered by your plan like dental work.

    Just my thoughts. I’m a big fan of the HSA, even without any employer contribution.

    • Reply Wade September 10, 2014 at 2:13 pm

      +1

      HSA, triple benefits. Tax free in, tax free earnings, tax free out.

    • Reply Johnny September 16, 2014 at 12:24 am

      One thing I failed to mention is that the $250 HSA “bonus” comes as a result of leftover monthly premium allowance. If/when another baby came along, poof goes the employer-contributed HSA dough. And add to that equation that we’re “planning” on having another baby, which almost guarantees a large healthcare expense. Otherwise, the HSA seems like a great option.

      Like Wade pointed out, the triple HSA benefits are HUGE. But they might just have to wait for us one or two more years.

  • Reply andee September 10, 2014 at 9:48 am

    I would have chosen plan A for sure. But I have an expensive ongoing disease, type 1 Diabetes. I spend close $800 per month prescriptions before insurance. So I hit my deductible in January. All this is to say it is important to pick a plan that works specifically for you and your family.

    • Reply Johnny September 16, 2014 at 12:27 am

      Great point, andee. No one plan is right for everyone. Thanks for sharing your perspective.

  • Reply Jimmy Mac September 10, 2014 at 10:54 am

    I’ll start the discussion with asking this,
    1) Who is “covering” your monthly premiums?
    If his company is covering the cost then this is still employer provided health benefits through the mandated exchanges. I think Johnny (or you) needs to ask what cost savings the company is receiving if they are changing because premiums were previously too high and now you have NO monthly premium? Hmmmm?
    2) HSA’s (Health Savings Accounts) are not Health Plans but exactly what they named, Health Savings Accounts. You can utilize the funds you deposit in the HSA to pay for your health insurance but they are NOT Health Insurance Plans.

    My point is healthcare costs are RISING and the corporate world has not had to enroll into the exchanges until this year. It is all driven by politics and the Nation will soon see how financially burdensome this system is.

    I look forward to hearing from you soon.

    • Reply Johnny September 16, 2014 at 12:33 am

      1. Still employer provided benefits. They are spending roughly the same amount on each employee with these new marketplace plans, but the plans are not as good. Our prior plan had a slightly higher deductible, but a much lower out-of-pocket max and 0% coinsurance.
      2. It is still a plan because after the out-of-pocket max is reached (through use of one’s own HSA funds), the insurance kicks in and covers all other expenses.

      While the jury is still out on the new system, I can tell you I’m not super stoked to be getting a downgraded plan because costs have risen.

  • Reply Jena September 10, 2014 at 11:46 am

    We didn’t see any changes to our insurance for 2014 (except that our premium went up because had a baby). Who knows what 2015 will hold for us. I hate open enrollment time. I get so anxious around the end of September because I know we will be able to look at the benefits for the upcoming year; and every year I’m terrified the cost is going to increase dramatically. Ugh.

    Our current insurance is similar to your plan B..except I just looked it up, and our family OOP is 12k. Barf.
    It’s the EPO option for us. We have a PPO, EPO or HDHP plan. We did some calculating and the PPO plan was 3x as much & the benefits were not THAT much better.

    My delivery cost us right around 3500. We were able to negotiate our big hospital bill down by 35% so we didn’t spill over the 4k mark.

    • Reply Johnny September 16, 2014 at 12:36 am

      Open enrollment is the WORST, right? But awesome work on negotiating down your bill! That’s freaking awesome. Time will tell when we’re back in a hospital for another baby, but I’d love to hear more about your tactics.

      • Reply jena September 16, 2014 at 7:57 am

        After I basically told the lady in billing that she was a moron, I had to have my Husband handle any further communications with the billing dept at the hospital. .. I’m in health care billing myself, and I can’t stop laughing over the fact that this lady thought we were going to pay $400/mth to pay down off our bill in a year.

        The hospital offered 25% off the total immediately if we would pay it off in full right then. My H is a master negotiator. He is ALWAYS asking for a discount.. Lowes, Wendys, the tire store.. anywhere, he doesn’t care. I can’t do it. I’d rather crawl in a hole & die. So he counter offered 35%.. The hospital lady said she had to talk to her boss and would call him back. She came back with 30% and he took it.. Actually, i think I said in my original post that they gave us 35%… It was 30%. He asked for 35% but they denied. – the hospital sent my husband a letter accepting the 30%, he paid, and that was that.

        They would be dumb to deny a reasonable offer. They know that it’s likely they won’t get paid in full otherwise.

        My daughter was born on 12/22. So we were able to use our tax refund to pay off the hospital. I hate having medical bills lingering, ugh. It’s like they own you until it’s paid off.

  • Reply Wade September 10, 2014 at 2:11 pm

    I would prefer C. They give you $3,000, so max out of pocket is $4,000. Essentially the first $3,000 is covered.

    If you are not sick much, your HSA balance should increase each year. Tax free earnings on your HSA dollars.

    If you are planning on having kid #2 this year, that would factor in.

    Our plan is similar. The company puts in $2,500 with a max family deductible of $6,250. So we are “on the hook” for $3,750 each year if we have a lot of medical bills.

    Good luck.

    • Reply Johnny September 16, 2014 at 12:37 am

      Good assessment. If it weren’t for numero 3 in your list, we’d be joining the HSA camp. So until we’re out of those woods, we’ll stick to a traditional plan for now.

  • Reply Melanie September 10, 2014 at 2:40 pm

    Health insurance stuff is so confusing. Good for you guys for doing your research and hammering all of this out. My company has one health insurance option, and as a single adult, I pay $174/month for health, $10/month for vision, and $12/month per dental. So $196 per month for my health care coverage, or $2,352/year. I have no idea regarding out of pocket, percentage of coverage, etc etc. I never really did the math to see how much it costs me per year. So you guys don’t pay any premium at all? That seems very good.
    I also had no idea having a baby even cost anything…but that makes sense, I guess.
    Ay yay yay–that’s how I feel about health insurance stuff!

    • Reply Johnny September 16, 2014 at 12:43 am

      Hah. Reviewing health insurance stuff is just slightly above going to the DMV. We are fortunate to not have to pay anything out of pocket for the premium. So while the plan might not be the best, it’s hard to beat “free” monthly costs.

  • Reply Jimmy Mac September 10, 2014 at 3:20 pm

    How many people reading this blog buy their own health insurance versus getting your health insurance through a company plan?

    I, as a self employed father of two daughters, purchase my own health insurance.

    My wife, who works in the medical industry, has a company plan. I call it the “Cadillac” plan because it covers every imaginable health issue, even pregnancy and she is medically unable to have children. Her company pays the monthly premiums for all their employees and offers the plan at an expense to the additional family members.
    We used her company health insurance to pay for the 2 births.
    We then asked how much it would cost to cover me and the girls on her company plan.
    The cost was $900 a month for the 3 of us. Dad and two daughters.
    I shopped for individual (non-corporate) plans and found I could select health coverages that are pertinent to my family for a much lesser cost.
    i.e, pregnancy was not needed for my two infant daughters and myself.
    The cost for a similar plan regarding deductibles and OOP expenses was $315 a month versus $900. This was prior to the ACA.
    Now I am forced to purchase my insurance through the ACA health exchanges and my premiums are more than doubling to $750 a month and my OOP (co-pays and deductibles) are tripling.
    My total cost (worst case scenario / maximum OOP including monthly premiums) has gone from $8,780 per year to $21,000.
    Best case scenario (just premiums and we are a healthy family) is our cost goes from $3,780 to $9,000.
    Same insurance, same coverage, only difference is ACA.
    Comments?

    • Reply Johnny September 16, 2014 at 12:59 am

      It’s hard to generalize the readers of this blog, but it tends to skew to younger professionals, meaning most are covered through employer-sponsored plans. But regardless, that sounds like a rough pill to swallow. But you hit the nail on the head: where you could shop around for plans that didn’t include coverage for pregnancy, now you’re on the hook for plans that all require it.

  • Reply Aldo @ MDN September 10, 2014 at 3:51 pm

    Plan A seems like a pretty good choice, but yet again, I’m not an expert. I’m glad my health insurance through my employer hasn’t really changed because of the Affordable Care Act, because I wouldn’t really know what to choose.

    • Reply Johnny September 16, 2014 at 1:02 am

      We’re not experts either, but Plan A has got our vote!

  • Reply Newlyweds on a Budget September 10, 2014 at 6:02 pm

    I would also choose plan A but man all those choices pretty much suck. I switched to HMO from PPO, bc we hope to expand our family at some point, and I was worried that if something bad happened , I’d be liable for thousands of dollars in medical costs. Health insurance really sucks in our country,doesn’t it?

    • Reply Johnny September 16, 2014 at 1:03 am

      Yeah, it’s definitely a downgrade from the last few years of health insurance options. But at the end of the day, we’re happy to be insured and have the means to cover any out-of-pocket emergencies. And that’s the best we can hope for with our screwy system.

  • Reply Angie September 10, 2014 at 7:24 pm

    Yes to plan A and YES to you having another baby!!!

    • Reply Johnny September 16, 2014 at 1:11 am

      Those are two very enthusiastic “yes”s. You have helped us make up our minds. Thank you.

  • Reply Alysha September 10, 2014 at 9:43 pm

    I am very thankful we have free health care in Canada (or rather a $70 a month premium that my employer pays). I can’t believe it costs $7000 to have a baby, that just sounds crazy to me! Of course our health care system has it’s drawbacks but I’m glad that we have the peace of mind knowing we won’t be several thousand dollars in debt in something unexpectedly happens.

    • Reply Johnny September 16, 2014 at 1:12 am

      Sooo… how long does it take to become a Canadian? Like, can we just drive across the border and you can adopt us or something? 😉

      • Reply Alysha September 17, 2014 at 6:44 pm

        I’m sure there’s not much more to it than that 😉 Canada would welcome OFB!

  • Reply Mandi J September 11, 2014 at 9:37 am

    It blows my mind that your employer is covering the premium costs on your insurance AND that you actually have good options to choose from AND that they offer so much for the HSA plan. After my employer “contributions”, I’m paying $267 per month for premiums for a $5000 deductible EACH for my husband and I with a $10,000 max OOP. And my company is gracious enough to match up to $64.62 per month for our HSA. As a healthy couple, this plan is absurd, but since healthcare is mandated now, we don’t have a ton of options. :/

    • Reply Johnny September 16, 2014 at 1:22 am

      Ugh, that’s rough, Mandi. We feel really fortunate about our limited costs, but man, health insurance is pretty lame all around. But since you’ve got an HSA, take advantage of those tax savings opportunities. Tax-free in, health-related spending whenever, tax-free earnings, and tax-free out after 65.

  • Reply Deb @ Saving the Crumbs September 11, 2014 at 4:50 pm

    You sound like us pouring over all the options! What a job it was once Obamacare came out! We don’t have any employer assistance, so we ended up going with Medi-Share. It was about half the price of what the cheapest Obamacare option would have been and had much better coverage (no annual or lifetime limits, full coverage after the deductible, no cost increases after the 3rd family member, etc)..

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