How to Choose a Healthcare Benefit Plan - Intro

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 4^th 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.