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This is somewhat related to the last post.
I thought I had previously posted about the new high-deductible (HD) health care plan I switched to last year, but I had actually only written a comment on someone else's post. So I'm posting it to my journal now.
The HD plan includes a Health Savings Account (HSA) as mentioned in the prior post. The low-deductible (LD) plan instead includes a Healthcare Flexible Spending Account (FSA). HSAs should not be confused with FSAs, as they are different in several regards. HSA's are much better - unused funds roll over each year, earn tax-free interest, and can be used tax-free for qualified medical expenses in retirement. FSAs do not allow unused funds to roll over each year.
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I was surprised last year when I calculated the costs of going with the new HD plan versus the LD plan of my employer's health insurance.
Both plans have a deductible and a yearly out-of-pocket maximum amount, as well as biweekly premiums you have to pay. The amounts differ per plan. The benefits are pretty much the same.
I thought that the HD plan would make more sense for someone who had fewer medical bills, and that the LD plan would make sense for someone who had higher bills. However, that wasn't exactly true.
Supposing I didn't have any health care costs during the whole year, the HD plan would cost me less, as its premiums are much smaller. The HD plan would cost me only $260 while the LD plan would cost $2184.
Supposing I had just enough costs to meet the high deductible ($2500)... then I'd end up paying about $200 more for that year compared to the low deductible ($400) plan. The LD plan's biweekly premiums are so much higher ($84 versus $10), that by the end of the year, you pay nearly as much in premiums as the higher deductible amount would have been.
Supposing I had high enough bills to reach the yearly out of pocket maximum, the total amount I'd have to pay on the HD plan would actually be $500 less than the total amount that I'd pay to reach it on the LD plan.
Based on all that, it seemed that whether or not I were to have a lot of medical bills, the HD plan was likely to cost me less.
The LD plan seems like it would only possibly be the better option for people who don't have enough savings at the beginning of the year to cover the higher deductible.
Not all HD and LD plans are the same. The deductibles, premiums, and benefits can be very different than my own situation. Anyone who is considering them needs to do their own comparisons. One shouldn't assume however, that one is better than the other without researching them first.
Another good thing with last year's changes to my company's health care plans was that the contributions were made variable based on salary bands. Employees with higher salaries pay higher premiums now than employees with lower salaries.
I thought I had previously posted about the new high-deductible (HD) health care plan I switched to last year, but I had actually only written a comment on someone else's post. So I'm posting it to my journal now.
The HD plan includes a Health Savings Account (HSA) as mentioned in the prior post. The low-deductible (LD) plan instead includes a Healthcare Flexible Spending Account (FSA). HSAs should not be confused with FSAs, as they are different in several regards. HSA's are much better - unused funds roll over each year, earn tax-free interest, and can be used tax-free for qualified medical expenses in retirement. FSAs do not allow unused funds to roll over each year.
.
I was surprised last year when I calculated the costs of going with the new HD plan versus the LD plan of my employer's health insurance.
Both plans have a deductible and a yearly out-of-pocket maximum amount, as well as biweekly premiums you have to pay. The amounts differ per plan. The benefits are pretty much the same.
I thought that the HD plan would make more sense for someone who had fewer medical bills, and that the LD plan would make sense for someone who had higher bills. However, that wasn't exactly true.
Supposing I didn't have any health care costs during the whole year, the HD plan would cost me less, as its premiums are much smaller. The HD plan would cost me only $260 while the LD plan would cost $2184.
Supposing I had just enough costs to meet the high deductible ($2500)... then I'd end up paying about $200 more for that year compared to the low deductible ($400) plan. The LD plan's biweekly premiums are so much higher ($84 versus $10), that by the end of the year, you pay nearly as much in premiums as the higher deductible amount would have been.
Supposing I had high enough bills to reach the yearly out of pocket maximum, the total amount I'd have to pay on the HD plan would actually be $500 less than the total amount that I'd pay to reach it on the LD plan.
Based on all that, it seemed that whether or not I were to have a lot of medical bills, the HD plan was likely to cost me less.
The LD plan seems like it would only possibly be the better option for people who don't have enough savings at the beginning of the year to cover the higher deductible.
Not all HD and LD plans are the same. The deductibles, premiums, and benefits can be very different than my own situation. Anyone who is considering them needs to do their own comparisons. One shouldn't assume however, that one is better than the other without researching them first.
Another good thing with last year's changes to my company's health care plans was that the contributions were made variable based on salary bands. Employees with higher salaries pay higher premiums now than employees with lower salaries.
Health Insurance
Date: 2013-11-14 03:46 pm (UTC)From: (Anonymous)Re: Health Insurance
Date: 2013-11-15 02:40 am (UTC)From:The plan is employer-sponsored, and it meets or exceeds the government's standards for minimum value and affordability.
Health Care Insurance
Date: 2013-11-16 03:08 pm (UTC)From: (Anonymous)Many people buy these HD plans because the low premium is all they can afford, but when they are sick they can't afford to use the insurance. Seems like a false sense of security to me.
Re: Health Care Insurance
Date: 2013-11-16 08:14 pm (UTC)From:In my case, given my current income and savings, I'm not worried about having to pay a few thousand dollars in deductibles and health care costs per year, if it becomes necessary. I'm more concerned about covering the costs of emergency care and surgeries, which easily go into the tens of thousands of dollars without insurance**.
Your point about people possibly forgoing expensive diagnostic procedures like MRI's, due to the up-front deductible, is a good one. Yet in my case, if I chose the LD plan instead, I'd end up paying nearly the same amount just in higher premiums for the whole year, even if I didn't have any expensive procedures.
From what I recall, my HD and LD plans cover the same types of medical care. I'll post more details on the dollar amounts later.
**If Qiao hadn't had insurance, his accident-related medical costs alone last year would have been over $900,000!
Re: Health Care Insurance
Date: 2013-11-17 04:46 am (UTC)From:HD plan: $2500 deductible, $10 biweekly premium
In-between plan: $1350 dedu, $18 premium
Those numbers are for employee-only. The premiums and deductibles are higher if a spouse and/or children are included.
LD family: $1200 dedu, $306 premium
HD family: $5000 dedu, $72 premium
The premiums also differ based on salary bands. Lower salary = lower premiums; higher salary = higher premiums.
From what I can tell, there is no difference in what is covered under the different plans. Only office visits and urgent care are charged differently - $20 to $35 copays for LD plan versus 20% after deductible for HD plan.
On the HD plan you have to meet the deductible before getting prescription benefits, while on the LD plan, there is no deductible for them. However, on the HD plan, prescription costs count towards the annual out-of-pocket maximum, while on the LD plan there is no max for Rx. Beyond that, there are differences in how much you have to pay for each prescription... One definitely would need to research which was best if one had a lot of prescriptions.
I'm not sure how much the company contributes to the plan now with the LD and HD plans, but based on my benefits statement from 2011, during that year they paid about 3/4 of the cost ($3400 them / $1084 me). It's a company-funded plan - the insurance company only administers the plan.
A lot of preventive care and screenings are covered 100% with no deductible under all the plans - I think that is a part of the government's health care reform, and is meant to help catch problems while they are easier to treat.