Analyze Your Medical Insurance Plans & Save Money
You have started a new job and have to make a decision of which medical insurance plan to sign up for. Or you are about to re-enroll in your medical insurance plan. You are offered multiple options with various monthly premiums, annual deductibles, and maximum out of pocket costs.
When I started my last job, I did an analysis as to what option would save me money. I was basically offered the 3 options listed below:
This is an 80/20 plan. Once your deductible is met, the plan pays 80%, I pay 20% until the maximum out of pocket is met, and then the plan pays 100%.
The question is; which plan will cost me less money? Will like most things, it depends. However, per my analysis most people will save money with Plan C, unless their medical costs for the year is over approximately $17,000.
To figure this out, I created a spreadsheet that you can DOWNLOAD HERE and play with. You can change the spreadsheet to analyze your medical insurance options.
As an example, if your medical cost for the year is $5,000, you will save $1,744 with Plan C, or $1,040 with Plan B (see screenshot of spreadsheet below).
Screenshot of Spreadsheet Showing Medical Plan Options
The lower your medical costs for the year the more money you will save with Plan C.
Most of the saving with Plan C comes from the yearly premium. Plan C will costs $216 for the year, while Plan A costs $2,400 for the year, a savings of $2,184. That’s a big difference!
Although, the annual deductible is $800 for Plan C, one strategy to lower that cost is to put at least $800 in a Flexible Spending Account (if your plan offers it), which is not subject to payroll taxes thus lowering the cost.
See related article: Staying Healthy is Money in the Bank
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