Previously from this Series:
Intro – How it all Started
Part 1 – Using Your EOBs

Part 2 – Breakeven Point & Worst Case Scenarios
Now that you have collected and listed your EOBs, you can now begin to analyze you medical expenses and start comparing plans for next year.

Before we dive headfirst into the breakeven point, if you have all the information for a previous year, I recommend you apply next year’s plan information to last year’s medical expenses to see how a real life comparison would look like. To do that you will need the totals for the co-pay and co-insurance from the list you have put together as well as certain insurance plan information. Here is a list of the information you will need: total charges submitted, total network savings, total co-pay, total co-insurance, plan 1 price tag, plan 1 deductibles, plan 1 co-insurance percentage and the corresponding plan information for plan 2.

If you have totaled up the amounts for charges submitted and network savings from your EOBs, then you can apply the deductible, then the co-insurance for each plan you want to compare and the add up how much you would have been responsible for under each plan. Then if you know how much you paid in co-pays (for this case assume co-pays amount to be the same for each plan) and you know the annual price tag for each plan you now have all the information you need to compare the plans.

Add up (for each plan) the deductible, the amount you would pay based on the amount of the co-insurance, and the annual price tag for the plan and that is your total cost.

Here is an example using the information from the previous article Using Your EOBs that you can follow along with:EOB_3Image by FFL-LRG via Flickr

From the summary of the EOB:

  • Total Co-pay = $60.00
  • Total Charges Submitted = $786.50
  • Total Network Savings = $516.25
  • Total Benefits Provided = $122.26
  • Total Charges Subject to Co-insurance = $786.50 - $516.25 - $122.26 = $147.99 (after meeting deductible)

Now use th

e medical expense history along with the information for the 2 plans you want to compare. For the sake of simplicity, I kept the co-pay amount the same for both plans in my comparison.plan_costsImage by FFL-LRG via Flickr

My example:

      Plan 1
      Annual Price Tag = $648
      Deductible = $500 / $1,250 (individual / family)
      Co-insurance = 20% (amount you pay)

      Plan 2
      Annual Price Tag = $2,316
      Deductible = $200 / $500 (individual / family)
      Co-insurance = 10% (amount you pay)

      Because the amount subject to insurance, $147.99 is less than the deductible under both plans, the total cost will be $147.99 plus the annual price tag for the plan.

      In this case:

      Plan 1 = $147.99 + $648 = $795.99
      Plan 2 = $147.99 + $2,316 = $2,463.99

      Save $1,668 with Plan 1!

So you ask, what if I have a lot more medical expenses than your example?

Ok, so let’s look at the worst case scenario. To do this you will need to know the out-of-pocket (OOP) maximum for each plan. For my example let use $4,000 for Plan 1 and $2,000 for Plan 2. For this example let’s assume that the plan covers 100% after you meet you OOP Max.

My example:

      Plan 1 = $4,000 + $648 = $4,648
      Plan 2 = $2,000 + $2,316 = $4,316

      Save only $332 with Plan 2!worst_caseImage by FFL-LRG via Flickr

So now
let’s go back to the EOB details we looked at before. For that example, the total charges submitted to insurance (not subject to co-pay) was $786.50, but due to network savings and benefits provided, that was reduced to $147.99. Looking at the two plans from my example, what would the breakeven point be for total medical expenses submitted to insurance (minus network savings) need to be in order for the more costly, lower deductible plan to actually be worth it?

Well this looks a little busy or complicated but its really not. First we must define some things to make the formula much shorter.

      Plan 1 Co-Insurance = A1
      Plan 1 Deductible = B1
      Plan 1 Price Tag = C1
      Plan 2 Co-Insurance = A2
      Plan 2 Deductible = B2
      Plan 2 Price Tag = C2

      BREAKEVEN = [(-A2*B2+B2+C2)-(-A1*B1+B1+C1)] / (A1-A2)

      For my example BREAKEVEN = $11,180

Below is a graph showing the medical expenses and what each plan covers plus a screen shot of the data I used to generate the graph.med_expenses_example_chartImage by FFL-LRG via Flickr
chart_dataImage by FFL-LRG via Flickr

Stay tuned, the next post will have screenshots and
include the spreadsheet I put together that you can use to compare different healthcare benefit plans, including TAX implications of pre-tax dollars used to pay for health insurance.

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Free Dr. Pepper!

Posted by Lance | 9:31 AM | , , | 0 comments »

I love free stuff!
Dr. Pepper is giving a free soda to everyone via a coupon from their website beginning Sunday at midnight for 24 hours.12-ounce Dr Pepper can sporting the new logoImage via Wikipedia Source: Fox News

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Part 1 – Using Your Explanation of Benefits (EOB)
The first place to start is to thoroughly examine your history. Start with the previous year if available and/or the current year-to-date.

I created a spreadsheet (go figure) to list everything out for myself, my spouse, and my son.

Here is an example screenshot from my spreadsheet: EOB_1Image by FFL-LRG via Flickr

The biggest thing to keep in mind when doing this is that you must recognize and document all the co-pays separate from everything else that is applicable to the co-insurance or deductible.

Just for clarifications sake. A co-pay is a set amount you pay for certain “normal” medical expenses such as a doctor visits. For example under our current plan, each doctors visit, or each time we take our son for his 3 month, 6 month, 12month check-ups it will cost us $20 in a co-pay. While co-insurance is the coverage for other medical expenses after you meet you deductible and is comprised of two percentages. One is the percent that the insurance pays and the other is the percent that you pay (totally 100%). For example if we take my son to the doctor because we think he is sick and the doctor orders a special lab analysis then the lab costs will be covered by the co-insurance. Take a look at the first line in the above screenshot, the pathology had a total charge of $83.50 and because this was an in-network provider there were $63 in network savings leaving $20.50. If we had already meet the individual or family deductible we would have only paid 30% of the cost or $6.15 and the co-insurance would have paid for $14.35. I hope this make sense, of not leave a question in a comment and I will respond as quickly as possible.

Once you have listed all your medical expenses using your EOBs. Then you need to add everything up and summarize, keeping the co-pay separate from everything else. Here is an example of the summary from my spreadsheet:EOB_3Image by FFL-LRG via Flickr

One thing to keep in mind is that there are individual deductibles and a different family deductible. So when listing your EOBs you should have them grouped by individual, i.e. you, your spouse, & your children. So you can see what it all looks like together in my spreadsheet, here is a screenshot of the EOB details and summary I have put together.

Click on the images to see a larger image I have put on Flickr.

Previously in the series: How to Choose a Healthcare Benefit Plan

energy saver CFL shrineImage by thingermejig via Flickr

Lately I have heard a lot about your “Carbon Footprint” and “Going Green”…

So in our family’s endeavors to save money and live debt free we have decided to focus on energy consumption and reduction.

I pulled up our account with the electric company and downloaded our history, including: usage (KWH), bill amount ($), actual payment amount ($, we participate in a consistent bill amount plan). I could pull up history all the way back to when we first moved into the house 2 yrs ago. Below is a graph of the usage history (Figure 1).

As you can see from the trends above, the usage spikes during the coldest months of the year in our area, December – March. The plan is to make all the changes, improvements, etc. at the same time and prior to the peak usage months. This leaves me with a couple of weeks in November to get everything implemented.

Here’s the action plan:
1 – Turn down (way down) the thermostat while on vacation for a week
2 – Install a programmable thermostat
3 – Turn down the temperature of the electric hot water heater (it was too hot already, not safe with a toddler in the house)
4 – Install a insulated blanket on the hot water heater
5 – Install a dimmer switch, if possible, for the recessed lighting in our kitchen
6 – Replace all high usage light bulbs to compact fluorescent light bulbs (CFLs)

One last note, we are also committed to making future purchases with "going green" in mind. Examples: purchasing only Energy Star appliances, all further buld replacements will be CFLs (even if we don't like the way they look), etc.

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*SMILING PUG* VINTAGE MERRY CHRISTMAS & HAPPY ...Image by *SMILING PUG* via FlickrI was recently listening to Focus on the Family and I was challenged by what Dr. Dobson had to say. He talked about retailers and their acknowledgement of Christmas. For example, do they allow or prohibit their employees to wish shoppers a “Merry Christmas”. Dr. Dobson personally stated that it was his intention this Christmas season to not purchase anything from retailers that did not recognize the real reason for Christmas – Jesus Christ’s birth.

When he made these statements, I was challenged myself to follow his leadership and do the same. So I thought I should first investigate things further in regards to specific retailers, which he did not mention on the air but did reference to the website Focus on the Family. When I went to the website to investigate I was sent to the sister site and this is what it said:

Last updated: 11/13/08

We welcome your use of these ratings in your shopping decisions. As an additional way to help you communicate with the retailers we evaluated, we are providing the convenience of a petition which you can sign by visiting

Retailers will be presented with petitions — thanking those that embrace "Christmas," and alerting those that have purged or marginalized "Christmas" that you object to the secularization of Christmas. We hope you will "stand for Christmas" with us and encourage the continued acknowledgement of this historic Christian observance in our culture.

"Christmas-friendly" retailers — prominent acknowledgment of "Christmas"

Eddie Bauer
Lands' End
Linens 'n Things
Neiman Marcus
Pier 1 Imports
The Home Depot

"Christmas-negligent" retailers — marginalized use of "Christmas"

Barnes & Noble
Bed, Bath & Beyond
Best Buy
Circuit City
Dick's Sporting Goods
KB Toys
Toys "R" Us

"Christmas-offensive" retailers — apparent abandonment of "Christmas"

American Eagle
Banana Republic
Lane Bryant
Old Navy

Originally published by Focus on the Family Action. Copyright © 2008 Focus on the Family.

What do you think about how retailers treat the Christmas holiday? Will it have an impact on where you shop? Why or Why not?

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It is common at this time of the year for annual benefit enrollments to begin for 2009. Deciding which healthcare plan is right for your family is one of the most important decisions you make each year. Choose the wrong plan and you either paid way too much for coverage or your medical expenses are way more than the coverage that you are paying for. This will be the first in a series outlining how to choose the right healthcare plan for your family.

I will cover:
How it all Started (for me)
Using Your Explanation of Benefits (EOB)
Breakeven Point & Worst Case Scenarios

Spreadsheet Comparison Analysis (download)

How it All Started

When I started with my current employer it was the 4th quarter of 2006 and I had to chose both what plan we needed for 2006 as well as what plan we needed for 2007. We had just started trying to get pregnant so we thought that there would be a good chance that my spouse would be pregnant and maybe even deliver in 2007 so we blindly chose the “better” plan, i.e. the more expensive, lower deductible plan.

By the way, my spouse did get pregnant and we did have a wonderful, health baby boy in 2007.

When open enrollment came around in ‘07 for 2008 I decided that I didn’t want to act blindly, but I’d rather analyze the plan options and determine which plan was more financially wise for my family. When I looked at the plan and ran the numbers it appeared that given the annual price tag for the plans, versus the difference in deductibles and maximum out of pocket expenses, that we should choose the less expensive plan with the higher deductible. I should mention that in my case I only had two plans to choose from and the co-pays were the same, so the only differences were in the price tag, deductible, and out of pocket maximum.

When this year’s open enrollment began, I was resolved to dig even deeper in my comparative analysis of the healthcare plans. I reviewed 2007 and year to date for 2008 and this is what I found:

· In 2007 we paid $1,285 more than we should have! (and we had a baby)
· In 2008 we have saved $1,418.78!

For 2009 we would need to have at least $11,180 in medical expenses (after in-network savings) just to breakeven for the higher deductible plan compared to the lower deductible plan.

Want to know how I determined these amounts? Would you like to analyze your own healthcare plans? Would you like to make a better decision this year when choosing a healthcare plan? Stay tuned to the series How to Choose a Healthcare Benefit Plan.
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Debt Free...

Posted by Lance | 11:05 AM | , , , , | 0 comments »

What does debt free mean to me?

It means owing no one, no bank, no credit card company, etc. The Bible has really clear way of saying it in Romans 13:8.

We have also been through Dave Ramsey’s Financial Peace University (FPU) class and agree with his approach of “debt free except the house.” Or in other words, to exclude the house in your initial steps to achieving debt free living. Later I will review and discuss in great detail Dave Ramsey’s FPU class, the Baby Steps, and where we are at.

Although I have not been through the training by Crown Financial Ministries, I have been a regular listener (podcast) and frequent visitor to their website. They use a Money Map to explain their steps to debt free living. They call the final destination true financial freedom. I really like this phrase and have adopted it myself as our family’s ultimate financial goal. I will discuss this further as I begin revealing our family’s goals and visions.

If you are on your way to debt free living, where are you on the journey? When will you be debt free (except the house)? I’d love to read your comments.

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RAMONA, CA - OCTOBER 30:  A real estate for sa...Image by Getty Images via Daylife

The housing market and economy have been and continue to be front and center of the news headlines.

I’d like to focus on the housing market and specifically home values.

I live in the southeastern, non-coastal, region of the United States and generally speaking have not seen the huge declines in home values as those seen in Michigan, Florida, or California. But recently a neighbor has been forced to move due to family health and adult dependent care related issues. She has had multiple dogs over the last several years. Mostly large breeds and some were kept indoors at various times. This had lead to lots of wear and tear to the carpet and hard wood flooring. This combined with the need for paint, etc. she and her realtor felt that the quickest and easiest way to sell her home was to auction it off.

I am not at all familiar with real estate auctions. This past Saturday was my first experience. I expected the house to go lower than expected or compared to recent homes, but boy was I SHOCKED!

Recent homes on the same street and a nearby street, with equal to or less square feet, sold for $188K and $165K. This was in the last 6 months. Within the last 2 years, the range for the same area, including my own home purchase ranged from $185K - $195K.

This house sold for $130,000!!

How have the home values been in your area? Are you concerned with the value of your home? Have you seen these types of real estate auctions in your area? (not by the bank, but by the home owner)

An overhead shot of Hull's controversial goalImage via WikipediaThe goal for this blog:

  1. Record my family's financial journey,
  2. discuss personal finance ideas, tips, etc. and
  3. share with and help other people along the way.
To get things started...

My family’s financial goals:

  • Debt Free Living

  • Fund Retirement and Kids College Accounts


If you would like to join me on this financial, family and life journey then I would love to have along for the ride. I would also love to hear your goals and your ideas along the way.

Over the next several weeks I will begin to unpack my family’s goals in more detail as well as explore other topics along the way.

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