Let’s compare three typical health plan scenarios and consider how they work for you. 

Plan A

Yearly deductible you pay: $1200

After deductible is met, you pay: $0 (Coinsurance pays 100% of eligible claims)

Your total yearly out-of-pocket risk: $1200

Premium range: $

Plan B

Yearly deductible you pay: $500

After deductible is met, you pay: $1000 (Coinsurance pays 80% of the next $5000 in eligible medical claims)

Your total yearly out-of-pocket risk: $1500

Premium range: $$

Plan C

Yearly deductible you pay: $0

Doctor visit copay: $30 (per visit)

Potential hospital fees: $3000 (You pay 20% of hospital fees up to $3000)

Your total yearly out-of-pocket risk: ???

Premium range: $$$

Seeing the entire picture

This is the point where failing to understand the mechanics of a health plan, failing to see the entire picture, can cost you money.

Let’s break down each plan to better see the one that saves you the most:

Plan A

• Lowest yearly out-of-pocket risk

Plan B

• Slightly higher out-of-pocket risk than Plan A because of lower deductible
• Higher premium than Plan A

Plan C

• Traditional HMO model
• Highest potential out-of-pocket risk
• Highest premiums

Plan C is the most expensive, yet it’s the one most people feel gives them the most financial security. Why? Because most people only look at the $0 yearly deductible.

But that’s not the whole story. Consider this:

On average, 80% of us:

• Will not have more than $1,000 in yearly medical claims
• Will not be hospitalized

This means if you choose:

Plan A: you may may pay $0 to $1200 in claims + lowest premiums

Plan B: you may pay $500-$600 or so + low premiums

Plan C: you will pay $30 for each doctor’s office visit + highest premiums

The remaining 20% of us:

• Are more likely to be hospitalized and have surgery that costs, say, $30,000.

This means if you choose:

Plan A: you will pay $1,200 in claims + lowest premiums

Plan B: you will pay $1,500 in claims + low premiums

Plan C: you will pay $3,000 in claims + highest premiums

Now which plan offers the most financial security? Plan A. It limits your overall exposure to medical expenses and you pay much lower premiums. Plan C, although it has no deductible, ends up costing you the most in premiums and the most in out-of-pocket expenses.

What this means for YOU:

When deciding on a plan, do not concentrate on only co-pays or only deductibles. Look at the OVERALL out-of-pocket exposure. Determine the amount of medical expenses you are willing to cover for yourself each year. This is your deductible. A higher deductible does not mean less coverage. However, it does mean that you pay lower premiums and save more money in the long run.