Tips for selecting a health insurance plan
How do I sort through all these plans?
It’s open season. That’s right. If you plan on enrolling in an employer-based health insurance plan, you have approximately two weeks to choose an insurance plan that is supposed to help you cover potentially thousands of dollars in medical expenses. Oh, and by the way, that plan itself will likely cost you thousands of dollars over the next year just to be enrolled in it.
Depending on your employer, you may have just a few or a ton of plans to choose from. For example, the list of health insurance plans for federal employees residing in Maryland is more than four pages long. Between premiums, deductibles, co-pays, co-insurance, and tier 1/2/3 prescriptions, who has time to calculate medical expenses for their family for an entire year?
Well, apparently me. Overwhelmed by the options, I had to find some way of organizing my analysis of plans. So naturally, being the self-proclaimed spreadsheet nerd that I am, I turned to GoogleSheets, the cloud-based, simplified version of Microsoft Excel.
- Estimate what you can afford to pay in premiums
In employer-based plans, the premium is what your company deducts from your paycheck every pay period. My current plan, which covers all members of my family (i.e., self + family in insurance-speak), costs about $189 per pay period, and my family is not in a position to pay much more than that. I ruled out any plans with premiums of more than $200 per pay period.
2. Check which plans your doctors accept
If you have a doctor that you love, check to see which plans his/her practice accepts. My pediatrician and ob/gyn, both of whom I want to stick with, are not part of Kaiser Permanente’s system. Thus, I ruled out any Kaiser plans.
3. Focus on known or very likely expenses
Instead of letting my mind jump onto the dangerous train of “what-ifs” (What if I get into a terrible bike accident and break both arms and legs? What if on my Carribean vacation I contract some rare and debilitating tropical disease?), I focused on my known expenses.
My family consists of my husband, my toddler, and a baby that’s in the cooker (a.k.a., “Pumpkin”), to be born in April 2020. I thought about my family’s doctor visits and prescription purchases over the past year and projected expenses for Pumpkin. I came up with the following estimates medical visits and prescriptions:
- 9 primary care preventative care visits: includes adult annual exams and well-child check-ups per the recommended schedule
- 10 primary care visits to treat an injury or illness (i.e., sick visits): includes quarterly doctor visits for each of the kids for ear infections and the like, as well as one sick visit a year for each adult
- 21 generic prescriptions: includes my monthly maintenance medications, quarterly prescriptions for each of the kids to go along with the quarterly sick visits, and an extra prescription for good measure
- 4 maternity visits: includes ob/gyn visits once a month to monitor Pumpkin
- 1 childbirth/delivery: there’s only one cooking, and it’s biologically impossible that I would have more than one childbirth in 2020
Your family may have vastly different medical needs, but the point is, tackle your known expenses.
4. Determine your ability to pay for an unexpected medical bill
When you look at the summary of benefits and coverage for each plan, you will see co-pays or co-insurance. Co-pays are a flat fee that you must pay per visit. With co-insurance, you pay a percentage of the medical costs. For example, my last insurance plan had a co-pay of $300 for a hospital stay. That means I had to pay the hospital $300, no matter what the actual hospital costs were. After a relatively healthy pregnancy, my last child had a 12-day neonatal intensive care unit (NICU) stay when she was born. I had to pay $300. Co-insurance is another story. For hospital stays, 20% co-insurance is fairly common among federal plans. If I were on an insurance plan with a 20% hospital stay co-insurance instead of a $300 co-pay, I would’ve had to pay $3,000, which is 20% of the $15,000 hospital costs. Yes, $300 sucks. But $3,000 would have been a big problem.
Given that I will be delivering Pumpkin in a hospital, and I don’t want cost to be a factor when deciding which treatments Pumpkin may need in the hospital, I ruled out any plans with hospital co-insurance. By sticking with plans with a hospital co-pay, versus hospital co-insurance, I greatly reduce my chances of a surprise medical bill of thousands of dollars. When browsing plans, you can generally look for dollar signs ($) for co-pays and percentage signs (%) for co-insurance.
In case you’re wondering, my child who had the NICU stay is doing wonderfully now. She’s happy, healthy, and has no long-term health issues.
5. Calculate yearly medical expenses
After steps one through four, I was left with three plans. This is when I whipped up a Health Insurance Selection Tool spreadsheet to do some calculations for me. It’s not as visually pleasing as I usually make my spreadsheets, but it does the job. Here are some of the basic steps I took to build the spreadsheet.
- I get paid every-other-week, so I multiplied the bi-weekly premium cost by 26 pay periods to get a yearly cost.
- I inputted the cost-per-visit and estimated number of visits for 2020 (see step 2) for primary care and hospital visits.
- Similarly, I inputted the cost-per-prescription and estimated number of prescriptions I’d likely to purchase in 2020.
- To arrive at the total estimated medical costs for each plan, I added up the yearly costs for premiums, deductibles*, primary care and hospital visits, and prescriptions.
If you want to use my categories, you just have to change the highlighted cells in the Health Insurance Selection Tool. You can also customize the tool to fit your needs. For example, maybe you’re not concerned with maternity care. Feel free to download the spreadsheet or make a copy of it in GoogleSheets. If you’d like me to send you an editable version of the tool, you can also shoot me a message via my website.
*The deductible is what you must pay before your insurance company will pay for anything. Sometimes there are exceptions. For some plans, you don’t have to pay the deductible in order for the insurance company to pay for your annual check-ups. For most plans, you have to pay the deductible before the insurance covers hospital stays, so I went ahead and included the deductible in my yearly cost calculations.
6. Select your plan
My Health Insurance Selection Tool helped me clearly see that BlueCross BlueShield is the best option for my family based on the premium, deductible, known medical expenses for 2020, and inability to shoulder the cost of co-insurance for an extended hospital stay.
As an added bonus, I can see my estimated out-of-pocket costs. I can put this amount into my medical flexible spending account (FSA).
My top option is BlueCross BlueShield (BCBS), followed by Cigna. I am positive my pediatrician and ob/gyn accept Cigna, because that is my current insurer. I am fairly certain they both accept BCBS, because I used to have BCBS and their provider network is fairly large. I’ll make a couple quick phone calls to their offices to make sure they accept BCBS. Then, I’ll be able to enroll in my 2020 health insurance plan, confident in my decision.
7. To avoid steps 1–6, move to Sweden
I’m doing my best to navigate a highly flawed system. I regularly daydream about moving to Sweden or another country where people can get healthcare without having to deal with this hot mess of health insurance plans and associated costs.
