Finances & Money

Choosing the Right Health Care Plan Option Two: The Low 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 introduction post “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 second plan: Low Deductible.

Option Two: Low Deductible Plan

With this plan, I would pay no monthly premium for myself, $102 to cover my wife and $51 to cover our child. This works out to a premium cost of $1,530 for the year.

The deductible for this plan is $721 per individual and $2,146 per family, while the out-of-pocket maximums are $4,811 per individual and $8,660 per family. These are considerably lower deductibles than the high deductible plan.

Co-pays on this plan are 20% of the negotiated rate for most services (in-patient hospital stays, ER visits, etc) and 25% for maternity care. Since the percentage covered is different, the actual costs will vary by a few dollars depending on the timing of the processing of each claim.

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 $721 before insurance will pay. This leaves around $1,779 of which we’ll be responsible for $444.75 (25%). That brings the total copay for the OB to $1,166.

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 20% of the delivery costs, or $594.50. For the baby, the total negotiated cost is around $1,080. We’d have to pay the deductible of $721 which leaves $359. We’d be responsible for 20% of that — $71.80. This brings the total co-pay to $793.

For a C-Section delivery, the co-pays go up a bit. For the OB, the co-pay would be around $1,241. For mom’s hospital stay, the co-pay would be around $1,081, and for the baby, $901.

For my assumed ER visit, the negotiated cost is around $4,000. Of this, I would have to pay my $721 deductible and 20% of the remainder ($3,279) which works out to $656.

Our Total Costs on the Low Deductible Plan

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

• $1,530 for the premium
• $1,767 – $2437 for co-pays
• $2,163 for deductibles

Making the total cost of this plan $5,460 – $6130 out of the maximum of $10,190 possible for the plan. That maximum total accounts for the premiums plus the out-of-pocket maximum for the family.

Ok, that was a couple thousand less than the High Deductible Plan, but still pretty expensive depending on your income level. Let’s keep this in mind when we check out the next plan: the No Deductible Plan.