How To Choose A Health Care Plan

- Hi everyone, Bill Lethemon for moneyevolution.com. In today's video, I'm gonna be talking about how to choose a healthcare plan. We're currently in the middle of open enrollment season and we're in the process of choosing a new healthcare plan for our family. Fortunately, we get our healthcare insurance through my wife's employer, which really as a small business owner saves us a lot of money. What I wanna do here in this video is I wanna go through the three options that we have. We're gonna talk about some terms and definitions and as you're watching this video, think about the options that we have and maybe compare that to some of the options that you have and maybe it'll bring up some questions that you should be thinking about or asking before you enroll in your healthcare plan. As we see, we got lots of numbers on here, so we're gonna try to explain this the best as possible, but the first thing we wanna do is talk a little bit about some basic terms and definitions. The first term we wanna talk about is the premium and that's of course the amount of money that you pay for the health insurance. That's deducted right out of the paycheck usually once a month or every pay period.

We're gonna start all the way over here on the far right. We have a program option called the network option. This is a very closed network of doctors and providers and for that program, it's $249 per pay period. My wife gets paid every two weeks. We have 26 of those pay periods for a total of $6,474 for the year that we're gonna pay there. The middle option here is the extended network. That includes that same basic network of doctors, but it also includes a little bit more extended network, but it also allows as well for us to go out of that network. If we happen to be traveling out of state, we can go to really any doctor and eventually we'll have some coverage there. That's gonna be the most expensive of these three options. That's $453 per pay period for a total of 11,778. Then, all the way over here on the left, we have the savings option. This is something that allows you to also do an HSA savings, which we're gonna talk about a little bit towards the end, but that's the cheapest option. It's only $112 per pay period for a total of $2,912.

Of course, the premium is not the only factor when choosing one of these plans. If it was, we would just go right over here to the savings, but as you're exploring this, you wanna look and think about what are some of the healthcare needs of you and your family. One thing we wanna look at right off the bat is the deductible. Let's start in fact over here on the far right. The basic network has a very simple deductible of $1,000. What that means is that the first $1,000 of medical expenses, you're gonna pay that 100%. The insurance company is only gonna start kicking in money after that deductible is met and then you have a copay. That's another one of these terms and definitions. Copay means you're gonna pay a fixed dollar amount depending on the service that they're providing there and that could range anywhere from $20 to $40. That's for a doctor's visit, for example. An emergency room, that's gonna be a lot more expensive. That's actually gonna be $135 copay for that, but that's gonna be topped out. You know exactly how much you're paying there.

Let's go over here to the middle one. It's a little bit more complicated. Remember, we actually have three different networks here. If you're in that same basic network that has a deductible of $1,000 just like the network one, but it also has two other deductibles. One for $3,000, that's gonna be for the expanded network and another one for $6,000, that's gonna be the deductible that's gonna be met if you're paying healthcare expenses out of the network. If you happen to be traveling out of state or you wanna go to a doctor or a hospital that is not part of that core network, you've got that capped out. Then there's a copay once that deductible's met and that's gonna range anywhere from 40 to $55 after the deductible is met. Over here on the savings plan option, the three deductibles are 3500 compared to 1,000. For the in network, $7,000 compared to $3,000 for the expanded network and $10,000 deductible compared to the $6,000 deductible for the out of network providers there.

Another term we wanna look at here though is co-insurance. Now, that's different from a copay because a co-insurance means that you're gonna pick up a percentage of the cost or the insurance company's gonna pick up a percentage of that and basically depending on what service and where you're at, it could be between 15 and 40% that you're gonna have to pay of whatever that bill is. So, $1,000 bill and if you're at 15%, you're gonna have to pay $150 of that. Fortunately for all of these plans, another term that we wanna pay attention to is the max out of pocket. That's the maximum amount that you could be on the hook for over and beyond the premium. I'll start over here with the network on the far right. The max out of pocket for that is $6,000 for the year. So, in addition to paying that premium, no matter what happens here with the deductibles and the copays, the most you can expect to pay for this is another $6,000 over and above that, so about $12,474 for the year. In the expanded network, again there's gonna be a maximum

out of pocket for each of the three levels there, so if you're staying in network, it's the same deductible as the network, $6,000 a year, but if it's in the expanded network, that goes up to $10,000 maximum out of pocket and if you're out of the network, you could pay up to $20,000. Very important things to think about there and then if we go all the way over here to the savings option, the max out of pocket's a little bit steeper. In that case, $11,100 for the network, 13,300 for the expanded network and $24,000 for the out of network here. What are a couple things to think about? Well, one is what is my need for healthcare insurance. If you think you're reasonably healthy, our family fortunately is pretty healthy, although we've had a couple little bumps in the road. My daughter had a knee surgery here about a year and a half ago, so there's things that do crop up, but generally speaking, we're pretty healthy. We generally opt for this savings plan because it's gonna be the lowest cost, but it also allows us to do something

called an HSA plan. If you've watched some of my other videos, you probably know how much I like HSAs. What we do is to compensate or to prep ourselves for some of these unexpected costs, is we contribute the maximum amount to an HSA and for a family for 2019, that's $7,000 a year. We could put $7,000 into the HSA and that goes a long way towards paying some of these out of pocket expenses. HSAs come right out of the paycheck, there's no tax. You're not paying any taxes on that and as long as it's used for a qualified medical expense, you don't pay any taxes on the withdrawals either. If you don't use the HSA, that carries over whatever balance is unused for the next year. The idea is that even if you do have a couple bumps in the road along the way, hopefully you're not using that up every single year and a little bit carries over and eventually you build up a little bit of a balance. That's one of the things we're trying to do being in my late 40s here now, I guess, getting ready

for retirement, hopefully we'll be able to build up a little bit bigger balance in this HSA to cover some of those retirement healthcare costs, which I've got a couple other videos about that. We didn't give a lot of consideration over here to the network plan primarily for the reason that it is so restrictive on the doctors that are provided in that. We like to travel, so if you happen to be traveling out of state or out of the country for that matter, you may just be really out of luck and really having to pick up all those expenses on your own. In the extended network, that might be a great program for somebody that if you know that you have things that are coming up or if you see doctors on a regular basis, it might be something advantageous for you to know a little bit more precisely how much some of your healthcare expenses are gonna be because here they're a little bit more controlled versus what we have over here in the savings plan. With that, I hope this has been helpful for you. Open enrollment is going on right now. You might be watching this video at a different time.

If you are, save this video and watch it the next time you have open enrollment for your healthcare benefits. Unfortunately, healthcare costs and insurance in general is one of what I call the four big expenses and healthcare is certainly usually the biggest of those. Managing those expenses I think is certainly something that is gonna help your overall financial situation. If you like what we're doing here, remember to hit that like or subscribe button. If you'd like, check out our free resources section over on our blog at moneyevolution.com and I'll see you back in one of my next videos. Thanks.