Yesterday, we discussed indemnity, catastrophic, and conventional health care plans. One of the primary reasons to have a health care plan is to be able to get lower prices for each service that may be needed.  Without such a plan, you pay what the provider wants- or get sued.  The difference in pricing can be 90%.  It is routine for me to see an Explanation of Benefits (EOB) detailing a bill that came in as $ 7244, was considered to be $ 1200 once reduced by my insurance carrier,  and for my share of the costs to be only $ 50 or so.

But, choosing a health care plan is a tough job.  Most Americans don’t understand what a deductible is or what a copayment entails.  (A recent study- as shown above- showed that ½ the folks who have no insurance do not know these details.  So it’s not surprising that choosing the right insurance plan is very difficult, if you have not had insurance before.)

And, there are lots of choices…  I just switched my plan, which has annually jumped in costs for way too long.  Because I am not covered by my company (everyone else has a different primary residential state- and we need to provide them health care at reasonable costs, so I am the odd man out), I checked out Obamacare.  (OK, I also checked out Obamacare to insure that my book- advising the self-employed and the small business owner– was up-to-date and accurate.)

I had to weigh what I thought my health care situation would be.  Would it be pretty much the same as it has for the past few years- or would I need to get more care?   And, what about my drug costs?

In the end, I elected to choose plans.  On the face of it, you’d wonder if I lost my mind.  I chose a plan with a higher deductible- but the drug coverage was much better.  So, while I could be out $ 2K for the year, instead of the $ 1300 deductible for the plan I dropped, I don’t think that was the right basis to make the change.

Because my drug costs under the new program have a separate deductible of $ 500.  Once I spend that much, my branded drugs cost $ 25 apiece and my generics are $ 10.  That means my total drug cost for the year (assuming no change in regimen) will be $1440.  On the old plan, my drug cost charges were effectively $ 2040 for the year.

And, if my health neither improves nor deteriorates, I can expect to shell out – including premiums- a total of $ 7500 at best.  The program I dropped would have cost me more than $ 8200.  So, even with higher deductibles, I will be cutting my health care costs by almost 10%.

But, I know my health situation pretty well.  And, I understand health care finance and terminology.  I’ve helped about two dozen of my clients make similar analyses.  But,  I wonder how others will manage to make such choices wisely.

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A four page brochure detailing the definitions critical to understand health care plans and how deductibles, co-pays, and co-insurances work.  So, if you are not a subscriber, this is probably the time to change that status!

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