New to insurance plans

[babylee]

Hello, I am entering a new company and have been offered 2 different health insurance plans. I have never had health insurance before, so I am trying to understand what exactly is meant by “deductible” , “coinsurance” “estimated out of pocket cost” and “out of pocket max”. Additionally what is meant by “N/A” in coinsurance.

I am a healthy 21 year old, and I only planned to utilize health insurance for 1-2 check ups annually with a primary care provider, and 2 dental cleanings annually. I do not require any prescriptions, medication, or visual care.

I would greatly appreciate some help on breaking down the plans to see which plan would make the most financial sense for my situation. Thank you!

Plan 1:
Plan cost: “$39.69/pay period = $1032 annual”
Deductible: “$3500 individual”
Coinsurance: “N/A”

Out of pocket max: “$3500 individual”
Estimated out of pocket cost: “$0.00”

Plan 2:
Plan cost: “$55.85/pay period = $1452 annual”
Deductible: “$1750 individual”
Coinsurance: “80%”

Out of pocket max: “$3500 individual”
Estimated out of pocket “$0.00”

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[mcwilson40]

@babylee The deductible is how much money you have to pay before your insurance covers anything (with the exception of preventative care like annual checkups, which are covered at 100% regardless). Ex: A $250 urgent care visit would mean you would pay $250 if you haven’t met your deductible.

Coinsurance is when you and the health insurance company share the cost. This kicks in once you meet your deductible. Plan 2 you listed has 80% coinsurance which means you pay 20% of the bill and insurance pays 80%. The $250 urgent care visit during this phase would mean you only pay $50.

Out of Pocket Max is the maximum amount of money you would have to pay in a year. Once you reach this amount, services are free for you and you no longer have to pay coinsurance. That urgent care visit would be free once you meet your out of pocket max.

As for which plan to choose, it’s really up to your risk tolerance. Plan 1 is cheaper premium-wise (and cheaper overall) but could expose you to higher immediate costs since it has no con-insurance (deductible is same as out of pocket max). Plan 2 would protect you from that somewhat. Example: A $3,500 ER bill would mean you would have to pay $3,500 on plan 1 but only $2,100 on plan 2 ($1,750 deductible + $350 coinsurance). However, this is negated once a bill hits $8,750 ($1,750 deductible + $1,750 coinsurance).

The type of network can also be an important factor. EPOs are usually extremely restrictive networks with no coverage outside their operating area, HMOs are also restrictive and your primary care physician acts as a gatekeeper (you have to have a referral from them if you want to see a specialist), and PPOs are usually very large/nationwide networks that don’t require referrals but are more expensive than the first 2. If you travel frequently or the closest hospital is out of network (yes, the law changed regarding ER visits, but this only protects you until you are stabilized), I would advise getting a PPO plan if it’s offered incase you get sick.

Dental insurance is usually a separate plan with 2 types. Basic is usually full coverage for preventative, coverage for tier 2 (ex: cavity fillings), and little or no coverage for tier 3 (crowns). Advanced is usually full coverage on preventative, significant coverage on tier 2 (70-90%), and 40-60% on tier 3. Dental plans have an annual maximum (insurance stops paying for things after this amount is reached) with basic being typically below $1,000 and advanced being $1,500-$2,500.

 

[curtisptrsn]

@mcwilson40 Just to add in case it wasn't clear from this excellent answer, Plan 1's "Coinsurance N/A" means there is no cost-sharing, which is true because the deductible and OOP max are the same -- the first $3500 would be all on you, everything after that would be all on the insurance company.

 

[christeveanity]

@babylee Numbers based on 26 pay periods and in-network.

I'm not sure where the estimated OOP max cost of $0 is coming from?

Plan 1 will possibly cost $4,531.94 and you'll be paying everything out-of-pocket up to the $3,500 deductible/oop max.

Plan 2 will possibly cost $4,952.10 and you'll be paying everything up to the deductible of $1,750 and then co-insurance picks up 80% and you will pay 20% afterwards up to your OOP max of $3,500.

What type of plans are these? PPOs, HMOs, EPOs? That also might make a difference. Do either of these plans have co-pays?

 

[independenteagle]

@babylee Good answers. Also, your employer should be providing you with a Summary of Benefits & Coverage, and here is a link to a glossary.

 

[kay_asmith]

@babylee IMHO, this isn't much of a choice. I tend to think of these things in terms of "worst case scenario", e.g., if you get really sick, what's your exposure? The flip side is, if you don't get sick at all, how much did you pay for the privilege of having insurance?

In your case, the difference between your two options is $400 for the year, but you're not reducing your maximum exposure.

What you're getting for the $400 is a few less bills in case you get a little bit sick. With your first plan, you have to burn through $3500 before your plan covers you anything. The reality is, if you're young and healthy, you probably won't touch your deductible.

You probably should save yourself the $400 and go with the first choice.