Choosing Health Insurance: Did We Make The Right Call?

by Elizabeth on September 16, 2013 · 3 comments

No which way you slice it, health insurance is two things: a gamble and a rip-off. It’s a gamble because you’re putting down money – in most cases, a lot of money – with each paycheck in hopes that you’ll never need to take advantage of the benefits your policy promises to provide you with in case of an emergency. It’s a rip-off, because in the fortunate event that you don’t need to take advantage of your policy’s benefits, you’ll have shelled out thousands (maybe even tens of thousands) of dollars in insurance premiums over the life of the policy for something you’ve never used.

And, as just about everybody will admit, the state of health insurance in America just plain sucks. That’s why Obamacare became the law of the land in the first place; it’s why so many have attempted to block it from taking effect. But this isn’t a post about Obamacare; it’s a post about my family’s decision to switch from one insurance plan to another.

It began when my husband left his old job and I began a new one during a three-week period, forcing us to leave his insurance plan – which our family of four had been on for years – for my company’s policy. But not all types of medical insurance are created equally, and we immediately saw how different my new policy was from his old plan. While his old company’s plan had been a PPO, mine was a high-deductible health savings account, or HSA. With the exception of annual well check-ups for each member of our family, everything else was paid for completely out of pocket until we met our annual deductible of $3,500; at that point, 80/20 coverage kicked in. The plan’s out of pocket max was $10,000 for our family.

I wasn’t tasked with paying for everything myself, though; my company chipped in $1,000 annually to my HSA, plus matched every dollar I put in with $0.33, up to a maximum of $2,000 a year.

But here’s where the gamble comes in: any money left in my HSA at the end of the year could be rolled over to the next year; on top of that, if or when I left the plan (after a three-year vested period), any money in that HSA could be rolled over into a tax-deferred retirement account. In other words, it was free money – but only if my husband, kids, and I could manage to stay healthy and accident-free. Otherwise, it could cost us a whole bunch of money.

Things were cruising along until my husband got a new job, that came with – you guessed it! – a new health insurance option. I was surprised to learn that even though I had health care through my employer, that my husband’s job would still let me join his policy under a family plan. The premiums were fairly equal to what I was paying, but there was a major difference in terms of the coverage. All doctors’ visits – whether well visits, sick visits, or trips to a specialist – came with just a $20 co-pay. We had a $200 yearly deductible for our entire family, plus a $1,600 out of pocket max.

My husband and I ultimately decided to cancel my insurance and take advantage of his company’s policy instead. While it was tempting to “gamble” and see if we could stay healthy on my policy and cash in down the road with the money from the HSA, we just couldn’t let our family’s financial and healthcare future depend on such a high amount of risk.

I know a lot of folks have been seeing major changes to their health insurance policies lately, too. Leaving politics out of it (I don’t want this to devolve into a debate on the merits and demerits of Obamacare), what type of medical insurance plan do you have these days? Are you happy with what you’ve got? Why or why not?

{ 3 comments… read them below or add one }

1 Shix September 16, 2013 at 10:31 am

I am a HDHP/HSA advocate. I got married 2 years ago & one of the first things I did was analyze our insurance plans. What we decided to do after comparing the numbers was to keep our respective policies. My employer pays a subsidy to keep my premiums low, his pays to keep his low. Once you add on extra folks, you end up paying a premium. Some plans offer a plus kids OR a plus spouse option. If that is the case, I would have one spouse to add on the kids, the other maintain the other insurance & all relative benefits that come from your employer specifically. It would be great to keep the $1000 that your employer gives you in the HSA & if necessary, you can use the funds for anyone else in the family (not just you). My HDHP plan is only $13 per pay.

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2 Newlyweds ona Budget September 17, 2013 at 2:22 pm

I actually have my company meeting on our new healthcare plans this afternoon and I’m worried that the price of the plan I have now will be too expensive and I’ll have to switch to HMO (I have PPO now). we also plan on *maybe* trying for a kid next year, and I heard that HMO is better for that…costwise. Any tips?

healthcare is so confusing!

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3 Shica B October 22, 2013 at 6:29 am

I do not believe that was the absolute best choice when considering ALL factors that may be present across the board. It is currently open enrollment season for many people & I always offer to help people to look at the best option for themselves. It is great to have your entire family on the same policy, seems easier. But, if you do the math, you will typically find that your employer subsidizes the cost of your health insurance to a great degree. When I looked at our rates, my employer charged an additional $35 per pay for my spouse over and beyond the cost of my own. There is also a new trick that is being applied by employers to discourage spouses to be on the isurance policy. They want your spouse on their own employers policy that is being subsidized. We were notified that if our spouse is on our policy, but has insurance offered, there is an additional $100 per month surcharge that will be passed along to us. So, as long as the premium for the spouse is less than $1,200 per year in this case, it pays to keep the seperate policy.
What to do with the kids? Place your kids on the policy that makes the most sense. The Employee+children rate is typically less than the Employee + Spouse because the employers desire is that your spouse get their own policy with their employer.
PPO v. HMO v. HDHP – I think that hmo is living on a legacy that is keepi g them relevant. Many employers no longer offer them, we were offered $600 last year from our employer to stay away from them. They are limitingthe costs are a bit more set, but you more than make up for that in premiums. PPO is an ok option, usually a cheaper premium but as PPO is phased out, they are taking on some of their old qualities. Yes, it may be attractive to pay a set amount (our case $25 reg dr, $35 spec) per officce visit, but the HDHP in our case requires you to pay 10% of an office visit for any type of doctor that is in network. Even if an office visit is $200, you are paying less at HDHP than PPO. The difference in our premiums b/t PPO & HDHP is $600. The difference between the deductible is $500. I simply place those funds into the HSA that is not required to be spent out annuallg and is fully portable to have as a medical savings allowance. You keep the cash instead of throwing it away in premiums.
In the case of a PPO/HDHP family blend, I would put all the medical savings cash into the HSA, very littleto nothing in the FSA that has to be depleted annually. You do not have to be the insured to pull funds from the HSA, you just have to file the same tax return.

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