Health insurance discussion(leave obamacare out of it)

[toycar]

So my employer has offered us our new rates and I was thinking that many people actually are probably dealing with this right now or will be in the future(or maybe just have dealt with this). Open enrollment is often in December, and I know this is late in the month but after doing some math I came to the realization that either I am getting swindled, or I am an idiot at math(doubt that).



So heres the deal.

Cheapo individual rate insurace plan overview;



-5k deductible in network/10k out of network
-100% co-insurance after that
-$35/copay for visit in network, $50 for out of network
-$5/$15/$35 on prescriptions

Since plan covers 100% after deductible, no max out of pocket is applicable. Just pay the deductible and you are done. Plan costs $38.19/bi weekly and is offered as the cheap ass plan. All other coverages are identical between the two plans. Even Hospital visits, maternity coverage, wambulance rides and all. Everything. The differences in the two plans I want to talk about will be obvious with what I post. I have verified this as it is applicable to MY plan and will be using this information for the mathematic purposes of my post.



Premo plan individual rate plan overview;


-1k deductible in network/2k out of network
-80/20 co-insurance, you pay 20% after the deductible if in network. 60/40 out of network.
-$20 copay in network, $35 out of network
-$5/$10/$20 prescriptions
-10k max out of pocket in network(applicable to co-insurance) 20k out of network.


Plan cost is $139.08 bi-weekly. Keep in mind, all other details line by line are identical.



So, in my hypothetical-scenario-of-a-brain-thinking-way(I cannot help this, it is my curse), I started doing the math and thinking of some outcomes that made me think the cheaper insurance was actually better. There are some assumptions here, like assuming you actually ended up using medical providers in your network-just as an example.


So lets say you have 1 accident that costs 10k over the span of 1 year but you avoid going to the doctor for anything else. For mathematic purposes and ease of explaining, I'll keep the details simple.


In that year you would pay on the cheap-o plan;


-Your premiums($38.19*26 paychecks = $992.94)
-Your deductible(5k)

So $992.94 in premiums and 5k deductible or $5,992.94 total. If you were in an ambulance or had to go to the ER, the coverage is the same so the outcome would be the same either way. You may have to pay a co-pay for an initial visit, depending on the emergency. This difference would be less than $50 depending on what and where you were, so, I'll leave this cost out.


In the same year, if you had the prem-o plan you would pay;

-Your premiums($139.08*26 paychecks = $3,616.08)
-Your deductible(1k)
-20% of the bill or your portion of the co-insurance(10k bill - 1k deductible = 9k. 20% of 9k=$1800)

So, $3616.08 in premiums, 1k for the deductible and $1800 for the co-insurance or $6,416.08 total.


If you do the math, over and over and over, it seems like once you break the 8k benchmark, you actually end up better off with the cheap ass insurance.


Difference? Most of the money spent on the prem-o plan is in premiums. But, you might not need the insurance. You most likely won't have an accident that costs 10k or more, and if you do, hospitals and doctors are generally very flexible with taking payments. You are paying for the "coverage" either way with a premium plan, you only pay for it if you use it for the cheap ass plan.





So I guess I don't really get it. The devil is always hiding in the details, but I wonder just how often people are getting screwed around in stuff like this and they don't even know it.

The costs are similar, less than 15% in cost difference in the example I gave if something should actually happen. However, the premiums are 400% higher for the "better" plan and its entirely possible you won't even go to the doctor for anything serious this year. I mean, it could happen but if you do the math on a 25k or 50k hospital bill, the picture doesn't get any prettier with "premo" coverage.


Cost associated with 50k accident for either plan

Cheap ass plan

-$992.94 in premiums
-5k deductible

$5,992.94 total since you are 100% covered after 5k. No co-insurance on this plan because the deductible is "so high" as my HR person explained.


Premo plan

-$3,616.08 in premiums
-1k deductible
-20% co-insurance. 20% of 49k is $9,800, just under the out of pocket max. (I subtracted the 1k deductible that you pay 100% of)

So, $3,616.08 in premiums, 1k deductible and $9,800 in "shared costs" and you are looking at $14,416.08 that you owe over a 50k medical emergency with a "premo" plan.




Thoughts?


My thoughts are that the insurance plans are written to intimidate people into feeling like "OMG 5k deductibles what ever shall i do" and so they just instinctually sign up for the "more affordable, better inurance". Or so they think because of how it is presented to them. Insurance companies make money off of premiums, not claims. So, it sure seems like the appearance of the plan is supposed to be a better plan, but when you start doing the math it actually seems to be working against you to have "better" insurance. Its like they assume nobody has 5k to pay a bill, so they hold that over peoples head like "well what are you going to do if you owe 5k to the doctors? Thats why you need THIS insurance" and thats when things get twisted around and manipulated and then presented to people that don't know any better than to question whats being force fed to you as the "best" option.





Discuss.

[phatdoughnut]

Do you go to the doctor a lot? For the first 2-3 years I had a PPO premium becuase I was "scared" and wanted the best. Payed a premium and had a lot more out of pocket upfront. The only thing my wife and I really use are our yearly check ups and my wifes birth control. Well the new EPO plan we are on covers that the same so we bumped down and now we pay a lot less a year/month. ER visits are cheap incase we need them.

If you don't go to the doc a lot then just get the cheapest one and pay less upfront.

[toycar]

Do you go to the doctor a lot? For the first 2-3 years I had a PPO premium becuase I was "scared" and wanted the best. Payed a premium and had a lot more out of pocket upfront. The only thing my wife and I really use are our yearly check ups and my wifes birth control. Well the new EPO plan we are on covers that the same so we bumped down and now we pay a lot less a year/month. ER visits are cheap incase we need them.

If you don't go to the doc a lot then just get the cheapest one and pay less upfront.

Thanks for the input/.



I was more posting this because I felt like either way, either outcome, the cheaper insurance costs less in the long run if you actually have deal with an expensive doctors bill.


I don't get that, and I wonder how many other insurance plans are like this. I'd much rather pay to go to the doc and pay 100% all year round and never hit my 5k deductible than pay 3600 in premiums and go to the doc twice and still have to pay 100% of that too. That would piss me off. And then, if you actually have an expensive bill its actually cheaper to pay the 5k out of pocket and get the 100% co-insurance vs paying 80/20 and having a 4k cheaper deductible.


On a 50k doctors bill you are saving like $8,500 by going with "crappy" insurance.


I think its all a ploy to get people to pay higher premiums, because thats how insurance companies make money. They don't profit when they pay out money, its when you pay premiums.


So, they illustrate the plan in this fashion that puts the average person in a mindset that "OMG WHAT EVER SHALL I DO ABOUT THIS DOCTORS BILL" and then they naturally feel like paying 1k vs 5k is better, and BOOM now you are paying out the nose in premiums for "better" insurance.


But it isn't better, not in my situation and I bet that is common.


I was hoping more people would post up their information or comment on this because it seems to me like other people are probably dealing with this too. I'd be interested to see if this is specific to my plan, or if it is common.


And just so its out there, it does work out better for the "better" insurance on bills smaller than 8k. As an example, if you had a $4500 bill on the cheaper plan you would pay 100% of that.


On the "better" insurance, you'd only pay your 1k deductible and 20% or $700 of the difference. So, basically $1700 for the incident vs the full $4500 on the cheaper insurance. Obviously, you'd want to consider the extra $2600 annually the "better" insurance costs when comparing, but, in some situations it could work out better.

It does work both ways, but the worst case scenario out of pocket costs are much worse with the "better" insurance vs the "cheaper" plan.

[phatdoughnut]

I think ours is similarly set up, but you also have to consider if its PPO, EPO, savings plan etc. Because that also weighs in the options. Do you want to go to any doctor any time you want? PPO, or do you want to go to your main care physican for his/her opinion and get refered to another doctor? EPO.

I think familys are probably more opted to go the first route because they eat up the 5k and then they don't have to pay out of pocket.

There is a lot of things to consider. I will try and post some of my plans options in a bit.


*edit* Are you sure the deductables are right? It seems like they are flopped? this is what mine covers

General Medical Expenses
Annual deductible $0 Individual; $0 Family
Primary doctor office visit $25 copay
Specialist office visit $40 copay
Out-of-pocket maximum $2,500 Individual; $7,500 Family; deductible and copays not included; Includes Mental Health/Substance Abuse
Coinsurance percentage 80% covered
Lifetime coverage limit Limit does not apply

[toycar]

*edit* Are you sure the deductables are right? It seems like they are flopped? this is what mine covers

General Medical Expenses
Annual deductible $0 Individual; $0 Family
Primary doctor office visit $25 copay
Specialist office visit $40 copay
Out-of-pocket maximum $2,500 Individual; $7,500 Family; deductible and copays not included; Includes Mental Health/Substance Abuse
Coinsurance percentage 80% covered
Lifetime coverage limit Limit does not apply

Nope, cheap rate and high deductible. High rate and cheap deductible.



You have great insurance coverage.

[phatdoughnut]

Nope, cheap rate and high deductible. High rate and cheap deductible.



You have great insurance coverage.

Really? I don't know jack about insurance, we opted for the EPO the last two years because it was cheaper than the PPO. I think we pay 360 a month for my wife and I. I think for the PPO we payed well over 500 a month.

[deevergote]

I ended up skimming much of the first post, after the initial descriptions of the plans. Insurance stuff confuses the hell out of me, and I wanted to ask this before I got my brain all muddled with details! I haven't read the remainder of the discussion, either, so I apologize if I'm rehashing.

Anyway, does the cheap plan cover 100% of hospital costs after the $5,000 deductible? And does the premium plan cover only a percentage of costs after the deductible? If I'm correct, I'd say the cheap plan is a hell of a lot better!

To my knowledge, you do pretty well at your job financially. Assuming you spend wisely, and you don't live at the ragged edge of your means, that $5000 deductible shouldn't be hard to cover in an emergency. 10k max out of pocket for the premium plan means that you could be spending 10k if 100k worth of bills are accrued, correct? In the event of a serious injury or illness, 100k is not a very difficult number to reach.


I'd go with the cheapie plan without a doubt, if I'm understanding this correctly!



I need to get insurance myself. I'm essentially self-employed, so insurance options are extremely pricey.