When you have multiple plans to choose from, most decisions are driven by three questions:
- Is my doctor covered? (and/or hospital and other healthcare providers)
- Which plan is right for me? (high vs low deductible)
- How much will it cost?
This article will dive into the weeds of the third question. Comparing plan costs is far more nuanced than simply looking at premiums and deductibles.
9 Factors to Consider
Beyond the obvious differences in premiums and deductibles, you should understand the costs and coverage associated with each plan.
Good news... if your employer is a Lumity customer, we estimate your out-of-pocket costs on your behalf. You'll be able to view side-by-side comparisons during your employer's benefits enrollment process.
This is the fixed rate you pay the insurance carrier for access to medical services. Your employer deducts this from your paycheck. When comparing plans, multiply the monthly premium by 12:
Monthly Premium: $_________ x 12 = Your Annual Premium
In a plan year, a deductible is the fixed amount of money you must pay before an insurance company will start to contribute towards qualified medical bills (copays, coinsurance and non-covered expenses don't count towards a deductible).
3. Out-of-Pocket Maximum/Limit
In each plan year, there's a limit to how much you may have to pay providing you stay in-network. Once you've paid this amount, your insurer takes on 100% of covered charges. This number represents your "worst case" financial exposure for a plan year. Just be aware that premiums and out-of-network costs do not count towards your out-of-pocket maximum . (Prescriptions and durable medical equipment do count towards your out-of-pocket maximum).
Out-of-Pocket Maximum $_________
4. Durable Medical Equipment (DME)
The cost of durable medical equipment (DME) may be a factor in meeting your deductible early. Some DME examples include glucose monitors, syringes, insulin pumps, wheelchairs, traction equipment, canes, crutches, walkers, kidney machines, ventilators, oxygen, monitors, pressure mattresses, lifts, nebulizers, bili blankets and bili lights. To estimate this cost, you can call your supplier and ask for the "list" price.
DME for one month: $_________
5. Monthly Prescriptions
To estimate prescription costs for High-Deductible Health Plans, ask your pharmacist for the "list" price.
Prescriptions for one month: $_________
6. What other medical expenses do you foresee?
Do you expect a baby? Any upcoming surgeries? Be sure to account for any additional medical needs you'll have in the year ahead.
Additional Expenses: $_________
7. When will you hit your deductible?
Fill in your monthly out-of-pocket expenses (for your DME, prescriptions, procedures) until the deductible is met. For the remaining months, fill in the monthly copay/coinsurance costs (for your DME, prescriptions, procedures).
Deductible ÷ Monthly Costs = # of months until you hit your deductible
For example, let's say your deductible is $1,300 and your monthly costs are $130. You'll hit your deductible in month 10 (or October if your plan aligns with the calendar year).
*Remember, you might hit your deductible earlier if you have additional expenses.
8. Stay "In-Network"
Make sure you use doctors and service providers that are in-network. This is a key strategy for keeping costs down and making sure any costs you incur are applied towards your plan's out-of-pocket maximum.
9. Use a Tax-Advantaged Account
Tax-advantaged accounts can significantly reduce your annual out-of-pocket medical costs. If you're not familiar with them, a good place to start is this comparison table.
Last Updated 1/17/19