Health insurance

It’s that time of year again. No, not the holiday season, although some of us will be able to gather this year for something close to our normal holiday celebrations. I hope you can.

No. It’s time for us to make our annual medical benefits decisions. I want to take this space and discuss how to make an informed decision about your medical benefits for the coming year.

Whether you’re shopping from the list of options that your company is offering or you’re out shopping in the marketplace for coverage, I’m going to offer you my process for selecting health coverage. Yes, I go through this every year.

Look at what happened this year.

It may take some time, but you need to go back and find out how much you and your family used your medical benefit this year. Of course, this is an odd year, so you might even go back two years for this one.

Look at all of the appointments and doctor visits that you might expect to see in a given year. If you have kids that play sports, you might consider a series of visits for a sports injury. If you have anyone with a chronic illness you need to be familiar with the number of visits that requires and what specialists that entails. Add in a few visits for things like colds, the flu, and allergies so that you can come up with a good number of visits that you think you might have.

Once you know what appointments you had this year (or last), you can look at what those appointments cost you. You’ll find that the normal check-up appointments (what we used to call physicals and are now called well-person visits) didn’t cost you anything. But you also need to look at the cost of the specialists that you visited, the imaging that you had done, the prescriptions that you had filled, and the rest. If you had a health savings account or a flex spending account, you should be able to get that information fairly easily by looking at those statements.

A clear idea of what has happened can give you a good idea of what might happen.

Look at how healthy everyone might be in the coming year.

I know that we’re all ten-feet tall and bulletproof, but our reality is that we are all growing older, unless you’re Benjamin Button and in that case, normal health coverage isn’t your biggest problem. We have to deal with the possibility that we might need our health benefits at least as much next year as we did this year. You might not be able to calculate it easily since you’re probably not an actuary.

But if you are an actuary, can you give me a hand calculating what I might be spending next year?

This is where you consider what new appointments might happen just because you’re a year older. You might need new tests that you didn’t need before. You might need to visit a doctor that you’ve never visited before.

This is also where you consider any chronic illnesses that might need more than regular maintenance. If you have someone in your family that isn’t fully healthy, you need to consider that this is the year that might be worse than before. They may need more than maintenance this year. There may be a procedure to consider that you haven’t had to consider before. This isn’t a time to get all morbid, but with what you know, you make some educated guesses as to what is possible.

Look at what it could cost you with each plan.

Have you ever noticed that the doctor’s office is the one place that we go and we don’t shop for the best price or the best service? We don’t ask for a list of services and what they will cost us. We don’t ever think about it most of the time. We just want a doctor that we like, but we’ll take one that’s super smart when we’re sick and afraid.

Your health coverage costs are more than just how much the premium will be. That is unless you’re just healthy and you don’t go see the doc. In that case, you can simply go by the premium you pay and that’ll be it. Unless, of course, you have gone through the exercise that I recommend and try and figure out what you might honestly have to pay in health costs in the coming year.

I look at two different scenarios. We have already considered the first one. I use the most likely appointments that I think I’ll have to come in the next year, and I apply the costs that I already know from this year and figure out how much in copays, deductible, and other expenses I’m likely to payout. Then I figure out what I will pay in annual premium and add the cost if I’m planning on using a flex spending account. I go through that with each plan to estimate how much I think I’ll have in health costs in the coming year.

I also take the worst-case scenario for costs into account. I will calculate how much will come out of pocket if we have a catastrophic health year where we pay all of our premiums and the family out of pocket maximum is reached. That way I know what to expect if it’s a really hard health year.

I compare those numbers for each plan and use those to narrow down my search to just a few plans.

Look at what you expect to use.

My last step is to compare the likely categories of expenses that we may use in the coming year. That means I want to find out how much each specialist appointment will cost. I look at how much I will have to pay for imaging and prescriptions. I also look at the cost of durable medical equipment. In looking at the likely services and expense categories, I’m looking at how much I may spend each visit.

To me, there is a difference if a service is covered at 0% until I reach my deductible, then at 40% after and if a service is covered at 0% until I reach my deductible, then at 30% after. That makes a difference in my possible payment calculations.

I also look to find specifics about coverages that I know that I’ll need. I want to know what tier my current prescriptions fall in and whether there is a 90-day supply option available.

One last thing that’s kind of important; I look to see if my current doctors are available under the new plan. That’s kind of a big deal since I at least know my doctors and I hate breaking in new doctors.

After all of that, I make my pick and get ready for the next year’s health costs. I hope this helps. Do you think I’m overthinking it? Maybe I should just use the old dartboard method.