Thursday, December 3, 2015

Health Insurance: Time to Make a Choice

My family's health insurance comes from my job.  I've had the same job for over twenty years and I'm making just over twice as much as I was when I started.  When I started this job, health insurance was free for employees, and family coverage cost $150 per month.  This was for a policy that allowed us to see any doctor or use any hospital, and which paid 80% of our bills after we met a $300 deductible.  I don't remember what the maximum out-of-pocket was, but it wasn't a tremendous amount.  Over the years, the premiums have gone up just about every year, and we've switched to a plan that has better benefits for in-network doctors, and in which we have co-pays, not deductibles.  The cost last year was about $30 per month for employees and about $600 per month for families.  

Yesterday I got an email; it is open enrollment season for health insurance,  and we have a choice this year.  We can stick with the same policy, and premiums are going up about $50/month, or we can switch to a high-deductible policy.  They are going to have someone come in and explain the choices but as I understand it, the two policies include the same network of doctors, and we will get the "adjusted" in-network prices if we use network doctors.  The difference is that if we choose the new option, we will have a deductible of $5,000 per person with a maximum of $9,000 per family.  We will also save $3094.08 per year on premiums.  

The high-deductible policy comes with a health savings account.  This is an account to which we can contribute pre-tax dollars (say the money we save on premiums, plus the money we used to put in our flexible spending account).  If we withdraw the money to pay health care expenses it is not taxed.  The money can stay in the account indefinitely, and when we retire, we can withdraw the money, though we'll pay taxes on it then; or if we don't need it, it can stay there compounding until we die.  

Which should we choose?  Choosing the high-deductible plan means we are betting that our health care expenses will be less than $3094 next year.   If nothing happens to put one of us in the hospital, this is a bet we will win.  However, if someone does end up in the hospital, this plan will cost us $1400 more next year than the lower-deductible plan, and if two people end up with high bills, it could cost us $4400 more.  Odds are we will save money with the high deductible plan. We have enough money to pay the $4400 if necessary.  We have the ability and the discipline to put the premium savings into the HSA rather than spending them. If we make it through a year on this plan with at least $1400 in the HSA, then the next year is even less of a risk. Yes, we are leaning toward the high-deductible plan.

Have you chosen a high-deductible health plan?  Have you been happy?

Disease Called Debt


  1. We have avoided the high deductible plan, and that's been to our advantage, unfortunately.
    Health care is ridiculous. Our premium will go up by close to $200 per month, even though the coverage is dropping a bit.

  2. Blah I need to get on top of this. We have no employer plan, and our premiums+copays this year came out to be a wash with what our expenses would have been otherwise. Not looking forward to the decision. Our premium stayed the same, but deductibles went up by ten times the amount they are now. We will be switching... I just don't know to what.