Finances & Money

Choosing the Right Health Care Plan Option One: The High Deductible Plan

Shawn, a subscriber and frequent commenter here at Clever Dude, as well as a personal friend of the Clever Dude and Dudette will be posting occasional guest articles. You can read his introduction here.

By Shawn

In my last post “Introduction to Choosing the Right Health Care Plan“, I presented the health plan options my employer is offering this year, some of my own life issues and assumptions, and some definitions of terms I’ll be using in this series.

The plan for this series is to allow you, the reader, the chance to see into the calculations and decision process I’ve taken to decide the best health plan from my employer based on my own parameters. You can use this series as a basis for your own calculations and decision, but keep in mind our lives and life issues are uniquely different. This article will focus on the first plan: High Deductible.

Option One: High Deductible Plan

With the high deductible plan, I would pay no monthly premium for myself, $53 to cover my wife and $27 to cover our child. This works out to a premium cost of $798 for the year.

The deductible for this plan is $1,848 per individual and $3,696 per family, while the out-of-pocket maximums are $5,500 per individual and $9,623 per family.

Co-pays on this plan are 30% of the negotiated rate for most services (in-patient hospital stays, maternity care, and ER visits, etc).

In addition, my employer will also contribute $500 into my health care spending account for the year, which is a benefit not all employers provide.

Working with the assumptions from the Introduction article, the negotiated cost of the OB services is around $2,500. We’d have to pay the deductible of $1,848 before insurance will pay. This leaves around $652 of which we’ll be responsible for $195 (30%). That brings the total copay for the OB to $2,043.

For a normal delivery, the negotiated costs for mom would be around $2,973. Since she’s already met the deductible for the year due to the OB costs, we’d be responsible for 30% of the delivery costs, or $891.90. For the baby, the total negotiated cost is around $1,080. Since that is less than the deductible, we’d be responsible for the whole amount.

For a C-Section delivery, the co-pays go up a bit. For the OB, the co-pay would be around $2,133. For mom’s hospital stay, the co-pay would be around $1,621, and $1621 for the baby (the whole amount since it’s less than the deductible).

For my assumed ER visit, the negotiated cost is around $4,000. Of this, I would have to pay my $1,848 deductible and 30% of the remainder ($2,152) which works out to $645.60.

Our Total Costs on the High Deductible Plan

With my assumptions, here’s the break down of the total cost for this plan for the year

• $798 for the premium
• $1,200 – $2,000 for co-pays (after the $500 credit from my HSA)
• $4,776 for deductibles

Making the total cost of this plan $6,774 – $7,574 out of the maximum of $10,421 possible for this plan. That maximum total accounts for the premiums plus the out-of-pocket maximum for the family.

Wow, that’s a lot of money, especially if someone doesn’t make a large income. Let’s keep this figure in mind as we see the next plan: the Low Deductible Plan.