I come to you tired, with scrambled brains.
After last week’s discussion on dropping my health insurance, I’ve spent the last few hours researching different High Deductible Health Plans (HDHP).
I evaluated four different plans, summarizing their major costs in a table:
Out of Pocket
|Regence BlueCross 1||$636||$10,000||$5,000||$15,636|
|Regence BlueCross 2||$756||$10,000||$5,000||$15,756|
Regence 1 and Regence 2 offer nearly the same benefits. Regence 2 allows four doctor visits per year for $35 at a cost of roughly $120 in additional annual premium.
The same four doctor visits on the other three plans would come directly out of pocket at a cost of roughly $600 ($150/visit), meaning Regence 1 offers a potential annual savings of $480.
Problem is, I don’t remember the last time I went to the doctor. It might have been two or three years ago. I can easily fund a budget category with the $480 needed to cover the difference between Regence 1 and Regence 2, so Regence 2 is definitely out.
SelectHealth 1 carries a high premium relative to its features (not HSA eligible, no discounted doctor visits), but beats both Regence plans in terms of maximum possible annual cost and coinsurance split (insured pays 20% after deductible rather than 30% or 35% on the Regence plans).
Do the low coinsurance and much lower maximum annual cost of SelectHealth 1 beat out the low premium of Regence 1? $6,000 in additional potential maximum cost with Regence 1 doesn’t concern me – it wouldn’t be a catastrophic expense. I choose the lower premium.
That leaves Regence 1 to compete with SelectHealth 2. SelectHealth’s premiums come in more than 50% higher than those of Regence 1 – an obvious turn-off.
But the extra $31 per month in premium buys some nice perks. If you take a peek at my comparison spreadsheet, you’ll see SelectHealth 2 makes pretty much everything free after you hit your annual deductible.
This explains how the maximum annual cost of SelectHealth 2 comes in over 60% lower than Regence 1.
In other words, if – heaven forbid – I were to experience a major medical event on the SelectHealth plan, the entire cost should not exceed $6,000 (assuming I require no additional treatment after that calendar year). The Regence plan would save me almost $400 in annual premium, but cost an extra $9,600 in the event of a serious medical need.
$9,600 would not bankrupt my family. Hurt? Yes. Ruin? No.
If the comparison stopped here, I’d choose the low premium offered by Regence 1 and be done with the whole thing.
But SelectHealth 2 offers access to a Health Savings Account.
Here’s the three-sentence summary of Health Savings Accounts:
1. You fund it with pre-tax dollars, so it can lower your tax bill a bit.
2. You make tax-free withdrawls from the account to cover qualified medical expenses.
3. If you leave the money in the account, it grows tax-free.
Seems like a great deal – as long as the tax savings make up for the higher premiums.
At a 25% marginal tax rate, I’d have to fund the HSA at a rate of $1,600 per year to break even.
So that’s where I am with the health insurance question. I’d be happy to hear your relevant thoughts and experiences.