We know how overwhelming health insurance decisions can feel, but it doesn’t have to be that way. This year, you can make a confident choice that works for you and your family, and we’re here to guide you every step of the way.
Ready? Let’s make this your no-fear healthcare year.
To Deductible or Not to Deductible?
Most people have a choice between health plans–usually, there’s one free or low-cost option, and one with a higher monthly premium. What’s the difference, and why do people choose these plans? The answer is simpler than you might think.
To boil it down, what these health plans are really asking you is: “When would you like to pay for care?”
The options basically come in two forms:
- Pay more monthly, then less when you need care.
- Pay less monthly, then more if/when you need care.
How do you know which to choose? Here’s a general rule of thumb:
- Those with no known healthcare needs usually save money with lower premiums and pay out-of-pocket for the care they might need during the year.
- Those who expect high healthcare costs— because they are managing a condition, giving birth, or expecting to have a major procedure— tend to do better with higher premiums and lower deductibles,
However, the right choice isn’t always the “obvious” choice. That’s why understanding your total healthcare costs is key.
How to Calculate All-In Healthcare Costs
To choose the right plan, you need to calculate your all-in costs—the total amount you could potentially spend on healthcare during the year. Here’s how:
- Calculate Your Annual Premiums
- If your premium is listed as a monthly amount, multiply it by 12.
- If it’s shown per paycheck, multiply it by the number of pay periods in a month, then by 12.
- Add the Out-of-Pocket Maximum
- Add your annual premium to the plan’s out-of-pocket maximum—this is the most you’ll pay for covered services in a year.
Example:
- Plan A: $100 monthly premium ($1,200 annually) + $8,000 out-of-pocket max = $9,200 all-in costs
- Plan B: $250 monthly premium ($3,000 annually) + $5,000 out-of-pocket max = $8,000 all-in costs
Voila! You now know the most you could potentially spend in a year if you use your health plan extensively. See the differences?
Now, let’s personalize this to your healthcare needs.
You might be tempted to think that Plan B is the best choice because the all-in cost is cheaper. However, that’s only true if you expect to reach the plan’s out-of-pocket maximum.
Let’s say you’re relatively healthy and anticipate $500 in healthcare expenses for the year for the odd urgent care visit, prescriptions, etc.
Remember: your annual physical, vaccinations, and screenings, like mammograms and
colonoscopies, are usually covered in full at no cost to you, regardless of the plan you choose.
Here’s how the math looks:
- Plan A: $1,200 (premiums) + $500 (expenses) = $1,700 total cost
- Plan B: $3,000 (premiums) + $500 (expenses) = $3,500 total cost
In this case, choosing Plan B when you only have $500 worth of care needs would cause you to spend literally double what you could have spent if you chose Plan A. Even though you’ll pay more out-of-pocket for care, the savings in monthly premiums more than make up for it.
What If I Don’t Know My Healthcare Costs?
Not sure how much care you’ll need this year? Start by looking at your past healthcare expenses. Consider these pre-deductible expenses:
- Primary care visits: $150–$250 each
- Specialist visits: $200+
- Urgent care: $150
- ER visits: $1,500+
- Prescription costs
- Lab tests and imaging
No one can predict their healthcare costs with 100% accuracy because we don’t know what care our bodies might need in the future. Nobody plans on getting sick or hurt! However, you may be able to predict what you’ll need with at least some accuracy by taking a look at you and your family’s medical histories.
If you’re concerned about this, plan on saving what you would have otherwise spent on higher premiums. This strategy can help you be better prepared for healthcare costs during the year, and hey— if you don’t have too many healthcare needs, you can do something else with those dollars. Vacation, anyone?
The HSA Advantage
If you’re considering a high deductible health plan (HDHP), don’t overlook the benefits of a Health Savings Account (HSA). These are special savings accounts for healthcare expenses where you can put money before it’s taxed.
Here’s why an HSA is a game-changer:
- Unused funds roll over year to year.
- You can invest your HSA savings to grow them over time.
- Lowers your taxable income, meaning you might owe less or get a bigger refund when you file your annual tax return.
Pro tip: Many people invest their HSA and contribute yearly in order to save up for healthcare costs in retirement (especially early retirement!).
Making Confident Healthcare Decisions
Choosing the right health plan doesn’t have to feel overwhelming. With a bit of clarity, some simple math, and an understanding of your unique healthcare needs, you can confidently select a plan that works best for you and your family.
Remember, it’s not about picking the “cheapest” plan—it’s about finding the plan that matches how and when you’re most comfortable paying for care. Whether you’re managing regular healthcare expenses or preparing for the unexpected, understanding your options gives you the power to make a choice that supports your health and financial well-being.
Health insurance decisions don’t have to be intimidating. As they say, knowledge is power, and now that you’re a health insurance wiz, you’re ready to take control of your healthcare choices and make this your no-fear healthcare year.
Watch the video breakdown on our Instagram story highlight, "Health Insurance."
Let’s face open enrollment with confidence, clarity, and maybe even a little excitement for what lies ahead!
This content is for informational purposes only. It should not be treated as legal, tax, investment, or financial advice. Please consult with your tax or financial advisor for advice specific to your situation.
