The Decision

OK, so my decision isn’t as captivating and probably won’t cause as much drama as Lebron’s did earlier in the year, but I thought I’d share it anyways!

A few weeks ago I noted that our health care options came out and that none of them looked all that appealing, with our costs going up in a big way.

There were three options available to us for next year:

High Deductible Plan / HSA Compatible
Annual Premium: $2,400
Deductible (out of pocket before coverage kicks in): $3,750
Then They Cover: 80%
We Still Pay: 20%
Max Out of Pocket: $10,000

Exclusive Provider Option
Annual Premium: $6,000
Deductible: $0
Then They Cover: 90%
We Still Pay: 10%
Max Out Of Pocket: $1,500 per person max $3,750 total

Preferred Provider Option
Annual Premium: $5,500
Deductible: $500 per person
Then They Cover: 80%
We Still Pay: 20%
Max Out Of Pocket: $2,000 per person

The third option (Preferred) was thrown right out.  The ‘benefit’ here is that you get to go out-of-network if you need to and they’ll still cover your costs.  However, all of the doctors we use and all of the hospitals in the area are in-network, so we have no use for this benefit.

That narrowed it down to the High Deductible Plan (HDHP) or the Exclusive Plan.

If you’ve been reading, then you know that we’re expecting our second child next year.  That means that we will be using medical services to a pretty big tune.

Using our costs for the birth of our first (in 2008) along with other visits, I ran a bunch of scenarios comparing the two.

If everything went as well as possible, meaning that the birth was straightforward, that the new baby was healthy, and that we had a minimal amount of sick visits and other visits, the HDHP / HSA plan actually worked out to be the cheaper option by about $250.

I was leaning towards this option, but then I started looking at risk.  I’m a project manager and one of the things I do is look at risk of various points in doing projects.  So, I started looking at the risks involved here.

The biggest risks were simple: Having more medical needs outside of the minimum planned.  This could involve anything from more sick visits than planned, to ER visits, to complications involved with the baby or delivery.

If the additional needs were small, the ‘gap’ closes slightly.  If the additional needs were larger, though, then the Exclusive Plan would provide the best coverage.

I also looked at our Maximum potential costs for the year.  With the high deductible plan, this would be up to $10,000 on top of the $2,400 premiums.  This puts our maximum costs for the year at $12,400.

But, with the Exclusive Plan, even though we’re paying a lot more in premiums, we have no deductible AND our liability is limited to a maximum cost of $3,750, possibly lower if only one member of our family really ends up needing care, since each family member is capped at $1,500.  This means our maximum out-of-pocket costs are between $7,500 and $9,750 depending on how many people need care.

In normal years where a family is not anticipating needing a lot of insurance, the HDHP option would probably be $2,000 or so favorable.  At that point, it’s arguably worth the risk of having potentially higher out of pocket costs, but since we’re knowingly going to be using insurance, most of that ‘gap in our favor’ disappears, and the additional risk simply isn’t worth the $250 or so that we’d save (reminder: that’s in the best-case scenario).

So, we ended up going with the Exclusive Provider coverage.

Either way, health care this year is going to cost us over $2,200 more than we paid in either 2008 (our first baby) or 2009.  This sucks.

The 2011 payroll tax cut of 2% was bargained for by President Obama to put more money in people’s pockets and to stimulate the economy.  Not for us.  That 2% will cover a chunk of that $2,200 cost, and since we didn’t get raises, we’re still going to come up short.

One day, maybe these new healthcare laws or stimulus packages will benefit us in some way.  So far, though, our household has been anything but stimulated.

*sigh*

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