Saturday, October 6, 2007

Evaluating health insurance

I'm working on benefits enrollment this weekend. I've compiled all of this year's medical expenses to help decide what option to go with. I know that we're very fortunate not to have any health problems. The only times we typically see a doctor is for an annual checkup. This year, we had a baby, which increased our medical expenses. I'm going to use this year's expenses to help decide if we can go with an HSA or whether it's better to stick with our current POS plan.

POS plan basics

I have two options for the 2008 POS plan, a high and a low option. The high option costs about $5400 in premiums to insure my family for 2008, and the low option about $3900 in premiums. The main differences that would affect us come down to the low option copays being $20 more per doctor visit, and the low option covering 80% of certain costs (like lab costs), while the high option covers 90%.

Since we can rely on in-network doctors, both the POS high and low option out-of network deductibles don't really affect us. The out of pocket maximums for both in-network and out-of-network are drastically higher for the low option, so much so that I'd choose the high option if we expected any type of medical costs beyond routine checkups in 2008. The POS high option has in-network out of pocket maximums of $1200 for an individual and $3600 for a family.

HSA plan basics

The HSA/consumer driven plan costs about $3400 in premiums to insure my family for 2008, about $500 cheaper than the POS low option and $2000 cheaper than the POS high option. The HSA/consumer driven option has out of pocket maximums of $2500 for an individual and $5000 for a family. All the plans will cover preventative expenses 100%.

Comparison of the options

This year, we had about $1750 in medical costs beyond our medical insurance premiums. If we chose the HSA/consumer driven option, and had similar medical needs next year, we'd have to exceed the deductible of $1200 for an individual and $2400 for a family before coverage kicked in. This would cut the HSA/consumer driven option advantage from $2000 to $800 ($2000 in annual premium savings less the $1200 deductible).

Next, we exceeded the $1200 individual in-network out of pocket maximum on this year's POS plan and got some bills covered 100%. We'd have to exceed $2500 in expenses under the HSA/consumer driven plan before we got those same bills covered 100%. The POS high option is the better option if we had similar expenses in 2008 as we incurred this year (the low option having already been eliminated for this scenario).

Since I don't expect expenses like this year's in 2008, I'm down to the POS low option or the HSA/consumer driven option. While the HSA/consumer driven option has cheaper premiums, it has the deductible for non-preventative medical expenses, while the POS low option doesn't. A couple of trips to the pediatrician's office with a sick kid could easily wipe out the savings benefits. Because of this, and the fact that our pediatrician doesn't accept the company that provides the HSA/consumer driven option's insurance, meaning we'd have to use out of network benefits, means that I'm going with the POS low option.

The HSA part of the health plan isn't even a factor in my decision, it's the premiums. The premiums are going to have to come down significantly more before I'll consider going with the HSA/consumer driven option.