Selecting the right plan, it’s a “no-brainer”, right?
Open Enrollment / By Daniel Sherer / October 14, 2021
A friendly disclaimer:
- The information presented is intended for general education purposes about health benefits.
- All terms, concepts, and lessons have been simplified for easy viewing and consumption.
- Each person’s situation is different. Please talk to your Human Resources department / representative(s), along with the appropriate vendor(s) & insurance broker(s) responsible for offering and administering your company’s health benefits, about your circumstances and available options.
Hopefully, you’ve seen some of our other posts about the “Open Enrollment” process, both the ones I wrote for employers on selecting which plans to offer and the series Lance wrote for employees and their families to help choose from amongst those the employer has offered. Now, let’s walk thru an example to help you make-up your own mind.
Years ago, I managed a team of about a dozen analysts and engineers, working in something called a “data warehouse” at a multi-billion-dollar insurance company. Open Enrollment came for us as it does for you and while each person was free to make their own decision independently, since it was our own product, I offered to help each associate, if they wanted to talk it out.
One of the people who took me up on my offer was Elaine.(1)
1. Needs & Requirements
Elaine was a single mom, now an “empty-nester”. She was a little older than me, but at least a decade from retirement/Medicare and in fair health. Elaine was certain she wanted to re-new her “Gold” plan. It seemed OK, based on prior years and was already in her budget, but she was open to hearing my opinion.
One of the main factors that Elaine found enticing was the very low “co-pay” for doctor visits. It was something like $5 or $10/visit for in-network physician visits. The “Bronze” plan by comparison was more like $70 or $80. Neither had a deductible for that type of visit(2).
On the downside, the Gold plan cost about $400 more, per month, out of her pocket. Elaine told me it wasn’t a problem.
She was already making ends meet with the Gold plan and it really gave her peace of mind to know she could go see a doctor any time, for practically nothing.
Now that I think of it, her co-pay might have actually been zero, but let’s say it was $10. That’s $70 LESS than if she took the Bronze option, even though both plans had the same “network” and her same familiar doctor would be covered either way.
But at $400+ more, PER MONTH, she would need to visit the doctor AT LEAST SIX TIMES.
That’s 6-times every month for the ENTIRE YEAR (72 visits!).
I pointed out that she would be paying about $5,000 more just on the off chance that she might suddenly need 72+ visits next year. I reminded her that in the prior year she hadn’t EVER had 6 visits in any month. AND that before any catastrophic event could require 72+ visits, her Out-of-Pocket “OOP”-max would be reached, and she wouldn’t be paying anyway.
Instead, I suggested that she consider the bronze-plan and setting aside money in an “FSA”. Those are “pre-tax” and therefore also reduce your overall income tax, are taken out of your check in small amounts, throughout the year, but are FULLY available on January 1st of the coverage year.
And, in addition to paying for doctor visits, that money could be used for prescriptions, medical supplies and equipment, or even a snazzy pair of designer (prescription) eyeglasses if she got to December 30th without already spending it.
Did Elaine take my suggestion?
I don’t know, that was her personal choice. As a colleague and friend, I hope she did. As an employee of the company that would be making an extra $5,000 if she went the other way, I guess I was OK with her contributing to my “bonus pool” (based on overall corporate profits).
Bottom line, if YOU have an extra $5,000 or $10,000 that you want to donate to a major insurance company, don’t expect them to try to talk you out of it...
**** Update ****
My real example with “Elaine” was years ago, so I wanted to double-check the current market to see if you’d see anything similar for the 2022 coverage year.
I jumped into my state’s “Insurance Exchange” and pulled-up some plans myself. I selected two “EPO” plans (where you can select your own doctors from a list of “in-network” providers). The Bronze plan was $556.38 while the Gold plan was $950.64. Roughly $400 more, PER MONTH, for single coverage.
At first glance, BOTH plans offer those “office visits” for free.
That’s a major improvement, right?
Oh...wait a second
If you open up the “details” you’ll see that the Gold plan actually has “no charge” for a Primary Care Visit, but the Bronze Plan only starts paying AFTER you complete your $8,700 deductible.
If your doc charges $150 for a simple visit(3) it’s going to take you a whopping 58 office visits before “free” starts being actually “free”.
Are you still better off tucking-away some money in an FSA and opting for the Bronze plan? As we discussed above, there are multiple, personal factors, but it looks like the more things change, the more they stay the same...
- Not her real name.
- If you need a quick refresher on co-pays or deductibles, check out Lance’s concise explanation, available here.
- $150 for a routine office visit (CPT 99213, “15-minute visit for an established patient”) is a rough but realistic estimate. However, most physician-practices will offer a significant discount if you offer to pay at the time of service (either with cash, check or credit card) because they don’t have to go thru the hassle and delays of filing an insurance claim. Normally, my doctor will accept $75 in this situation. Just make sure you keep the receipt and file a claim YOURSELF. You won’t get reimbursed, but the insurance company is supposed to count it towards your deductible.