How To Navigate Health Insurance Choices: Part 2

I love the thrill of weighing the pros and cons of different healthcare plans. It’s not for everyone, though, which is why I’m going to walk you through my process step-by-step. I’ve also provided an Excel workbook (find it HERE) which will allow you to enter each amount and see the calculations automatically. This healthcare and healthcare insurance comparison worksheet is designed specifically to compare three plans. Ideally, you will have been offered a variety of plans including an HSA plan, a PPO plan, and/or another PPO plan or an HMO plan to pick from.

Note: I am not a healthcare provider. Any opinions or advice provided are my own and based on my own experience. If you have questions regarding a specific plan or health condition, please speak with the representative for your own insurance policy.

Tip: Grab your Health Insurance Comparison Template to calculate your own health care options! Find it HERE.

Gather Your Information

Remember those terms we defined in Part 1 of this health care discussion? This is where you get to identify them in the packet that you’ve been offered from your employer and decide exactly how much you will be spending on insurance this next year. I don’t know about you but getting that large packet of information regarding insurance plan choice can be a bit intimidating. Let’s break it down into smaller chunks.

It may seem at first glance, that the cost of the premium is the cost of the health insurance plan you choose. If you asked my husband, he’d agree with that statement, but that is really far from the truth. Instead, you are responsible not only for the premium but also for the deductible, any coinsurance or copays, up to the total out-of-pocket amount.

Start by highlighting the following: premium, deductible, coinsurance, and maximum out-of-pocket amounts. I use a yellow highlighter so that it’s easier to keep track of those items.

Step #1

Add those three plans to your color-coded columns. If you are offered an HSA, that information should go in the blue column. Any PPO or HMO plan offerings should go in the pink and green categories.

Step #2

Now that you’ve figured out which plan goes where in the spreadsheet, start by giving the worksheet a little look over. In the first column of each of the colors for each plan, there is a cost per incident/month column and a cost per year column. The per incident/month column is the only one that you will be adding to. Yearly expenses will be calculated based on the incident and/or monthly expenses you have.

Step #3

Let’s start by taking a look at our primary care, emergency care, and specialist care expenses. Looking carefully at the information your company gave you, determine what the copay is for your primary care. Keep in mind that this amount is per incident and, in my experience, typically falls in the range of $25 to $200 depending on the category. Of course, many plans have coinsurance or a combination of copay and coinsurance. If that’s the case with yours, enter both of those amounts in the per incident/month column. Do this for each plan and each category (i.e. primary care, emergency care, and specialist care).

Step #4

Let’s move over to the right side of the page and begin looking at how many times per year you typically head to the doctor for primary care. Keep in mind that primary care is your regular doctor. For emergency care, you can anticipate emergency room care. Specialist care includes any doctor you see above and beyond your regular doctor, including dermatologists, cancer specialists, and many others.

Once you have determined how many times per year you see your primary care emergency care specialist care providers enter those numbers in that column.

I have provided an estimate of typical costs per visit for primary care, emergency care, and specialist care, however, those amounts will differ depending on where you live and the providers you see. If you know approximately how much those costs are per visit, go ahead and enter them into those cells now. If you are truly concerned about the exact costs, you can always call your provider and ask what a typical visit costs.

Step #5

I’ve included radiology in the worksheet, although it’s a tough thing to calculate. Typical insurance coverage for radiology typically includes coinsurance. Keep in mind that coinsurance is a percentage of the total cost of the visit, which means that the insurance will pay a certain percentage and you will be responsible for the additional percentage of that expense.

The average radiology expense is about $1,500 per incident, and you can pretty much expect that you will be responsible for a portion of that expense. Co-pays don’t typically apply in this case but if you do you have a co-pay enter it in the gray cell in the row marked co-pay. Otherwise, simply enter the coinsurance amount that YOU will be responsible for.

Step #6

Prescriptions can also be a difficult thing to estimate because you don’t always know which prescriptions you will need in a given year. I recommend starting with the prescriptions you are already taking consistently. According to the sheet that I received from my employer I know that it’s going to cost me a $25 co-pay for Tier 1 prescriptions (generic), a $50 co-pay for Tier 2 prescriptions (preferred name brand), and an $80 copay for Tier 3 prescriptions (non-preferred name brand). Ideally, this will be very similar across the

Step #7

Additionally, it’s necessary to determine which tier or category your prescriptions will fall into you. In my case, I have a monthly prescription that I know is for certain in Tier 1. Knowing that I will purchase it 12 times out of the year, I have noted 12 of that prescription in the grey cell on the right-hand side of the screen. I know that the prescription I purchase is in the $25 range so I’m going to go ahead and put $25 is the cost per prescription. Do that for any and all prescriptions you have or anticipate having.

Step #8

If you remember from Part 1 of this series, the premium is the amount that you pay out each month just to have the plan. The spreadsheet is set up so that you can enter that amount and have it automatically calculate how much you will be paying out per year.

The deductible is the amount that you typically owe before any coinsurance kicks in. (Of course, there are always exceptions to the rule.) Enter the deductible amount in the gray cell for each plan.

The maximum out-of-pocket expense is just what it sounds like: the total amount that you will be held responsible for health-related incidents. Keep in mind that that maximum out-of-pocket does not include the premium that you pay each month. We’ll talk a little more about that later.

Step #9

To the right side of the page, there is a grey cell for employer contributions. This is where you should enter the amount of money that your employer contributes to your premium costs each month. This could be anywhere from 50% to 90% of the total cost of the premium or maybe a flat amount. In my case, for example, my employer pays 75% of the HSA plan offered. Upon entering that correct number (keep in mind it needs to be the monthly amount, not the yearly amount), the workbook will calculate the premium you will be responsible for.

Step #10

Remember when we talked about HSA plans in Part 1 of this series? If so, then you remember that a contribution is typical of an HSA plan. The contribution is money that comes out of your paycheck before taxes and is then deposited into a savings account for future health needs. Although there is a cell in the grid for this number, it doesn’t actually calculate anywhere else in the worksheet, so if you aren’t certain what plan is with your HSA, you can just leave that amount at zero.

Step #11

Now comes the fun part, the step that allows us to see exactly what we will be paying out each year in healthcare expenses. So, I may have over exaggerated the fun part, but you get the point: this is where we get to see the totals and determine which plan is best.

If we look at the “primary care only” totals, we can see the difference in cost if we only spend money on our premium and primary care. Keep in mind that preventative care is not normally included in this, as it is now 100% covered in most plans. If you are only into an insurance plan for primary care, then this is the category you should take into consideration when determining which plan to pick.

Of course, if you typically go for specialist care as well, then you will want to consider the category that has primary and specialist care included. I see a specialist twice per year, so I always take this total under advisement.

If you’ve been to a hospital or emergency room within the last 12 months or so, I suggest you look at the “primary, specialist, and emergency care” category to determine which policy you might be more interested in. Of course, it’s totally up to you how you decide.

Step #12

My favorite line item of this entire worksheet is the catastrophic event. This is what happens (or what you will owe) if you have a major event that maxes out your entire plan. The total includes your premium and the maximum out-of-pocket cost that you will be required to pay. It’s a quick glance to see which policy might be better if that catastrophic event occurs. If you regularly max out your health insurance plan for the year, this might be something to take into account.

As I’ve mentioned before, this entire worksheet is just meant for estimation. Nothing on this worksheet dictates exactly what you will spend over the course of the next year, because life changes and our health does, too. It is a good estimator, though, and will allow you to see the differences between the two plants.

Make a Choice

I know it feels like I’ve just doused you with a fire hose, and for that, I apologize, but it’s always a good idea to consider the total costs, beyond the premium, for each health insurance choice you have. This worksheet provided is simply one tool you can use to do so.

Ultimately, the insurance plan you choose has to be right for you. If the totals seem high at the bottom of the page, that’s because health insurance doesn’t typically come cheap. If you prefer to have the peace of mind that comes with having a copay, rather than coinsurance or a prescription coverage that’s better than another plan offered, by all means, make that decision and be happy about it.

If you have questions, please let me know! I love to hear from my readers.

Have a wonderful day and happy insurance hunting!

Tip: Grab your Health Insurance Comparison Template to calculate your own health care options! Find it HERE.