My wife had our first child in 2017. I just ran the numbers in retrospect and it looks like because we used my employer’s “best” health plan we saved money, but just barely, versus using my employer’s HDHP.
While it was pretty neat to get a hospital bill showing that insurance paid $16,000 and our total responsibility was $100, that wasn’t the whole story. Over the course of the year we paid about $8,000 in premiums plus about $500 in out-of-pocket costs, all pretax (premiums as paycheck deductions and out-of-pocket costs via FSA).
Had we elected the HDHP instead, we would have paid about $5000 in premiums, plus about $5000 in out-of-pocket-costs, minus a $1000 employer HSA contribution – all pretax.
I have rounded the figures here but it was really like $8500 we actually paid in premiums + health costs with the insurance we had, and $9000 we could have paid had we opted the HDHP all year. It was very close and may tilt the other way for any future children.
It seems psychologically harder to be writing big checks to a hospital rather than to have most of the cost of health care borne up front as a pretax paycheck deduction. This is a real thing to worry about – if the baby is sick, will you ever be discouraged from taking them in because you budgeted for a lower-cost HDHP plan and didn’t also plan to spend the whole deductible? We had something like 5 sick visits in the baby’s first 2 weeks because of weight gain issues; although things turned out fine with no major intervention, we were effectively paying a physician $15/visit to reassure us and to use their scale. Wonder if we would have bought our own scale sooner if we had been paying $200/visit out of pocket.
The best option among various different healthcare plans seems to be really, really plan specific and to vary a lot based on the actual costs of each plan. In this thread it looks like the best optimization is to have a low-cost HDHP plan until the baby’s due date then to use a qualifying life event to opt for the highest-cost/highest-reward insurance; then, maybe after the baby is born and after everything settles down at the end of the QLE period, change back to the HDHP – overall that seems like a great deal.
Indeed plan changes made up our savings in 2017 - the expensive plan saved money vs the HDHP in part because the “insured plus spouse” premiums were significantly cheaper than the “insured plus spouse and child” premiums we paid post-birth.
Our total costs would also have been vastly different if we had used any out-of-network providers; my employer has various plans which cover this poorly (the “best” plan is an EPO which covers out-of-network at $3000 deductible/50% coinsurance to $9000 OOP pax; other PPO options offer $500 deductible/30% coinsurance to $4500 OOP max; and the HDHP offers $2700 deductible/30% coinsurance to $7400 OOP max).
For 2019, it looks like our best plan may be the HDHP. I have been modeling expenses in a few different ways:
- based on our actual 2017 and 2018 pattern of care, what would be our total costs under each available plan?
- using our actual 2017 and 2018 spend as a baseline, what happens if we have another child?
- using our actual 2017 and 2018 spend as a baseline, what happens if we get a $1000, $2000, $5000 bill from an out-of-network provider?
- if something catastrophic happens (major surgery, a severe chronic condition), what would be our total costs under each plan?
I still have several spreadsheet sheets to fill out, and it really depends a lot on the actual details of the available plans, but for us it seems like the HDHP wins every time, narrowly in the worst-case scenarios and by a wide margin otherwise. The major risk that’s hard to measure is the psychological impact of being less willing to see the doctor when sick under an HDHP vs. when the cost has already been sunk and there is only a modest copay.
