Health Insurance Decisions, Round 2

I want to thank everyone who took the time to comment on my last post about my upcoming health plan choice. A number of commenters inspired me to sit down and do some actual math. (This is pretty rare around here, so trust me, you were really motivational.)

Scenario 1: Physical Therapy

Everyone tells me that your late 30s is when you go off a cliff. So, let’s say I wrench my knee and need physical therapy that costs about $2000 over 5-10 sessions.

HDP: Yearly premium=$132, deductible=$1500, (employer kicks in $500), 15% coinsurance after deductible met=$75. Total cost to me: $1207.

PPO: Premium=$660, co-pay for 10 sessions of in-network physical therapy=$300. Total cost to me: $960.

Scenario 2: “Unexpected surgery”

This one was suggested by the decision guide my HR department gave me, which suggested that this might be a total charge of $6500. I assume we’re not talking about open-heart surgery at that cost, but something more like getting a torn ligament repaired.

HDP: Premium=$132, deductible=$1500, (employer kicks in $500), 15% coinsurance=$750. Total cost to me: $1882.

PPO: Premium=$660, deductible=$400, 15% coinsurance=$915. Total cost to me: $2000.

Scenario 3: Car accident, ambulance, ER visit, hospital stay, physical therapy

I pulled a number for this frankly out of thin air: $20,000.

HDP: Premium=$132, deductible=$1500, (employer kicks in $500), 15% coinsurance after deductible=$2775. This plan also includes “accident insurance” which reimburses you for various things stemming from an accident. Let’s assume I get $500-1000 back from this. Total cost to me would then be $2982-3482.

PPO: Premium=$660, deductible=400, 15% coinsurance after that but we very quickly hit the out of pocket maximum, which is $1950. So the total cost to me would be $2610.

So?

Those numbers are closer than I thought they would be, actually. I’d come out ahead in two of the three scenarios if I had the PPO, but the HDP wins the “minor surgery” scenario. Even the car accident scenario isn’t too catastrophic with the HDP…if I can manage to stay in-network anyway. If there were an HSA associated with the HDP, I think that would tip the scales definitively that way.

As it is, I’m still on the fence. I have to make up my mind this week. I’m thinking it might be the PPO, but I’m definitely going to ask the HR people about the absence of an HSA.

9 thoughts on “Health Insurance Decisions, Round 2

  1. Nice calculations!
    Yeah, this sounds tough…For what it’s worth, I am on a university plan with a fairly high deductible, which I never thought much about until this summer when I ended up having to go see an off-campus doctor and got stuck having to pay a $500 bill. Not the worst scenario ever, but it reminded me how expensive these things can get. I too am generally healthy, so it’s easy to forget how expensive healthcare can be when you do need it. Based just on that experience, I personally would probably go with the PPO.
    Also, let’s all just acknowledge that picking a healthcare plan is basically equivalent to gambling.

    1. thesingledollar says:

      It is totally gambling, sigh. And despite my recent stock market venture I’m pretty risk averse as a general rule. I’m really torn, but I’m thinking maybe the PPO will make me feel more secure, even if at the end of the year I haven’t used it and I’m kicking myself 🙂

      1. Yeah, although remember it’s really a win-win: if you need it, then you can use it; if you don’t need it, that means you got through the year without any health issues!

  2. JH says:

    A few other scenarios and factors that you (or others) might want to consider when you’re running numbers:

    1) What are the costs if more than one of these incidents occurs in a single year (for example, surgery/hospital stay for a health condition + physical therapy for an unrelated ailment). Do you come out ahead on one or the other?

    2) What if you developed a health condition that required an expensive prescription for the foreseeable future? Does one offer better cost coverage than the other?

    3) Are you able to choose your health care provider under either scenario? Is it significantly more expensive under one plan than the other to go “out-of-network”?

    4) How would your routine medical costs for the year compare under each plan? Add up a yearly wellness exam (and yes, they’re supposed to be ‘free’ but are they truly 100% free or do you end up getting dinged for tests that fall outside the standard scope and if so, under which plan do you pay more), any visits associated with treatment or health conditions that require periodic check-ins before prescriptions are refilled, at least one cold/flu/infection doctor visit, etc. Under which plan do you pay more, because THAT’s the most likely scenario for you.

    1. thesingledollar says:

      These are excellent questions, thank you. They’re the kind of thing I’ve never had to deal with before; my one chronic condition is very cheap to manage, costing me all of $100 in co-pays in 2015, and I’ve never had to do physical therapy, be in the hospital, have surgery, or basically anything. My eyesight is awful but that’s not covered under health insurance anyway 🙂 (I have a separate eye plan.) The thought of having to handle any of this makes me want to go with the PPO, given that I’m so on the fence; if two of these things happened, I’d definitely come out way ahead with the PPO, where the out of pocket max is thousands of dollars less than the HDP. As far as routine costs go, they would be the same with either plan because I use the university health center as my primary care facility; both plans charge $15 for a visit. If I just get the same routine care as always, the HDP plan would win.

  3. Hannah says:

    With the difference being just $50 or so a month, it’s tough to really make a great call, but I will tell you that I had a similar choice and I’ve consistently chosen the high deductible plan. In the last five years, I’ve come out ahead 4 times. This year (when I give birth), and the year I gave birth to Kenny I came out behind, but not by much.

    The likelihood of having one of the scenarios happen this year, is pretty low, and you’ve got the cash, so I favor the low cost plan (after you ran the numbers and showed less than $500 difference for all but the highest cost thing).

    1. thesingledollar says:

      Hi Hannah — I missed replying to this earlier. It’s true that the likelihood of anything happening is fairly low. I’m going to try out the high deductible plan this year and see how I feel about it. Thanks!

  4. Debt Hater says:

    I enjoyed the crunching of the numbers for comparing the two plans (also went back and read the first post about the health plan choices). I am jealous of how inexpensive both of your options are, they both seem like great value!

    I actually compared a similar situation at my work, but then last year they removed the automatic HSA deposit of $1000 for the high deductible plan (not to mention all the fee structures of HSAs seemed to be terrible to me). I think I basically calculated it out that because of no employer contribution to that plan, it would take only two sick visits to the doctor to cancel out my savings with the high deductible plan. I ended up going with the traditional PPO plan.

    Your choice seems a little less clear, but I don’t think you can really go wrong with either option. I agree with you that if there was an actual HSA (and not just use it or lose it $500) it would make the decision pretty easy to go with the high deductible plan.

    1. thesingledollar says:

      You are probably the only person to enjoy those case studies, but I’m glad I did them 🙂 I ended up picking the HSA, but I was really on the fence and still am. They’re both good choices, like you say.

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