Health insurance question...premium vs. out of pocket decision.

In My Humble Opinion
1

I have the opportunity to switch insurance coverage. I have two plans to choose from, an HMO and a PPO.

Premiums for the HMO will cost about $400/year. Premiums for the PPO will cost about $1,440/year.

However, max OOP for the HMO is $7,500 and for the PPO is $2,000.

Since we are a family of two adults, a 9 year-old and a 4 year-old, it SEEMS to me that the best decision is to pay the higher premiums for the PPO, in case everyone in the family breaks an arm this year. In the end it could save us something like $4,500 in a year with lots of medical expenses.

Please correct me if I’m wrong, this stuff makes me cross-eyed.

2

Is the max OOP you list per person or per family?

You should consider whether you can take a financial hit (without having to borrow money, use a credit card, etc.) of a per person OOP max amount all in one shot.

Also consider that amounts paid as premiums are lost whether you use the plan or not. Amounts paid in medical bills toward the OOP max will only be incurred should something happen.

Also - HMOs tend to have smaller networks and require referrals to see someone other than your primary doctor (except emergencies generally). Are you okay with that? How’s the HMO network coverage in your area.

I have the same size family with kids about the same age. I also have similar choices with a higher premium/less out of pocket vs. a lower premium/more out of pocket and I choose the lower premium option. We have cash set aside that we can use to pay medical bills toward the oop max if we have to without borrowing.

We did, for one year, go with the higher premium plan. But that was because my wife was pregnant with our second child and we knew at the time of enrollment we would have big hospital bills ($15,000 +) for delivering the baby.

3

Should have specified…that’s OOP/family.

I guess the higher premium is kind of a gamble, isn’t it? Paying less is betting you won’t need care…

4

Is there coinsurance below the OOP max? Or just a copay? It makes a big difference.

5

HMO is mostly copays, PPO is co-insurance generally at 90%. No deductible on the HMO, on the PPO it’s 300 per individual and 600 per family.

6

Way insufficient information.
Question the first is, can you stay in network easily with both plans, or is it going to be way way easier with one or the other ? Going out of network usually dwarfs whatever differences there are between the in-network deductibles, out of pocket, etc differences the plan has.

Question the second, third, and etc is: what is the exact structure of the plans - that determines how likely you are to hit the deductible and/or out of pocket maximums.
For a realisticish example, an HMO could be copay only in network, so you pay say, $10/dr visit. If only visit the doctor a half dozen times in a year and no hospital, you pay $60. A PPO, on the other hand, could be say $600 deductible/$2000 Out of pocket max in network or something, where 6 doctor visits in year would all apply against the deductible and you’d pay the full $600.

7

There is a lot more than meets the eye to choosing an insurance plan. Sure you have a family of four, but do you tend to be robust, healthy people who never see the doctor or are you more likely to each of you be in the doctor’s office multiple times this year? Do you have a PCP you really like or do you hate going to the PCP and insist on just going to the specialist when you feel the need? Do you tend to travel only in your state or do you cross state lines pretty regularly? All of this stuff will impact whether or not you would be better off choosing the HMO or the PPO.

8

Either way, I would get to keep my current Dr. in-network.

I see your point about the deductible for the PPO…I was thinking something along those lines but couldn’t quite put a finger on it. It seems that if I go with the PPO, we’re almost guaranteed to end up paying the $600 deductible.

Eh, we might up going to the Dr. a few times a piece, maybe?

Hm…one thing on the HMO, Lab work and radiology are all “No Copay” where on the PPO they’re deductible then coinsurance. That could make a big difference as well.

9

That’s kind of the definition of insurance. Jeff Foxworthy has a routine about his life insurance agent calling him each year and gloating. “You’re still alive, huh? Sucker!”

Before we had a kid, my wife and I had separate health plans (both federal employees): She has consistent health needs and went with the high-premium, high-coverage plan, whereas I held on to my low-cost single-man’s health plan. Now that we have a child and need family coverage, we’ve all essentially moved to her plan.

10

You probably really need to drill down on the networks to make the choice. Usually the HMO is cheaper if you can stay in network the whole time, that is the tradeoff you are making vs the PPO is a narrower network and the need to preauthorize a lot more with your Primary care physician (specialist referrals, etc). Your Primary Care Physician isn’t the only provider. Are all your local hospitals, or at least all those you need, on the plan ? What about lab work your Hospital or Physician will send out ? Your wife’s OB/GYN ? Are you going to have more kids ? If so, is the nearest hospital with labor & delivery covered ? How about the nearest one with a NICU ? Those aren’t necessarily easy questions to the get answers to, but are the ones that matter more than the numbers they like to tell you. Edit to add, and are you going to make sure you check the plan before you go to a different doctor, the ER, an urgent care clinic, every time ? You really should do that on any plan, but it matters more on plans with a narrower network.

11

I tell clients to look at a five year history. How much medical service did you use? Do you take prescriptions, have other medical risk? Small children can be expensive, so that’s a consideration. It’s a cost/benefit analysis that can be unpredictable. I’d also put money aside into savings, especially an hsa if that’s an option.

12

I’d never choose the HMO option when PPO is available. Growing up with a nurse for a mom, I always heard that HMOs were inferior to PPOs. That seems to hold true in my experience. With a PPO, you can choose to directly visit any specialist in-network, and the network is fairly large. With an HMO, you need to see your primary doc to get a referral before you can see a specialist. The list of specialists available to you is small. And, this could be total bullshit, but I’ve heard that healthcare providers tend to treat HMO patients worse because they get paid less for treating them. There’s an inherent bias that anyone in an HMO is poor, so they may not get the same level of treatment as someone who appears to be rich (whether this is conscious or unconscious on the part of the provider). But again, that last part could be BS. Maybe someone who works in the medical profession can corroborate/invalidate?

13

A large HMO that is evidence based might be a great option. Kaiser is one such. Big HMOs have both a large supply of in-house specialists, and contracts externally where needed. Both my daughters aged out of our HMO and were just appalled at their costs with their PPO. Very recently (11/13) I had my gallbladder out and my out of pocket cost was $280- and that was external delivery with a contracted surgeon. That’s facility copay, imaging, meds, doctor copay. Eldest daughter had hers out by the same surgeon at the same facility (gads, for the same size single stone) in 2/14 and she met her $3500 deductible. As far as patient economics, I make 3 times as much money as she does. Both the surgeon and the hospital cut her a deal, too, as she qualifies for their assistance program.
My husband’s stroke in 2009 included acute care, step down care and rehab for a total of nine weeks in house, all contracted out by our HMO. OOP cost in 2009 was about $500- it happened in late October, and I think we reached our $2000 OOP max in 2010, as we sprung for some spendy
devices. Currently secondary preventive medications are essentially FREE for statin, BP med and diabetic meds/ supplies.

We had good care in a PPO back in the 80’s-90’s. Eldest had encephalitis at age 8, ICU, ventilator, scary stuff, but back then the rules were different and it might have been a small ER copay. I had gyn oncology surgery and the $ cost in 1987 was negligible, same PPO.

My point is, stuff can happen. Listen to the insurance brokers here, as they have the current knowledge about costs an how to make the gamble. Any insurance is definitely better than none if you own anything or want to own anything.

Having worked in fee for service medicine (private practice) and more recently for a large HMO, my comfort zone is much more with the second. IMO the care is more cost effective.

14

I just went through a forced “so sorry, your current plan isn’t ACA-compliant, bend over”.
In addition to the additional $150/month in premiums, pharmacy is now subject to deductible.
Since the retail on my scripts is close to $600/mo, I decided it was time to switch to Medicare (I am Disabled for SS purposes and became eligible for Medicare in 2009. When I asked the asshole about continued treatment, he sighed deeply and said “I am your Doctor, I will continue to be your Doctor”.
Not a happy quack.
Current doc didn’t flinch nearly as much; she just put on her happy face and said “We have lots of Medicare patients”.

I had Blue Shield PPO - they loved that stuff.

Among the lit I’m getting re. my Medicare open enrollment, one of the offerings (same Blue Shield as before) included a Medicare Supplement with a premium of $0. no PCP co-pay for most of the state (mine and 2 other counties have a $10/visit co-pay).
Why yes, it IS an HMO - how did you guess?
So they have lined up a bunch of MD’s who will work for whatever Medicare itself pays - the defining characteristic of HMOs - cheap MD’s, lots of regs - and pray you don’t need surgery immediately - you need to see the specialist and get her sign-off before we will authorize.

We had a post here in which a person went blind because the MD he had to see was booked. For people with his insurance. Want to pay cash? how about next week? BUT - if you pay cash, your insurance will not recognize the visit. Don’t worry, the three months (or whatever) will go quickly.
He went blind waiting for that appointment.

I’m poor. I’m also very close to needing dialysis and/or a $2500/WEEK drug (the stuff Lance Armstrong was using - maybe he has some he won’t need any more?) - there is no way in hell I’m trusting my care to an HMO.
My one experience with an HMO was a smoking-cessation program - group meetings to psych us up, and 'script for the patch (it was 'scrip-only originally). Problem: the 'script was scheduled to end several weeks different than the therapy sessions.
When II mentioned this, the person running the therapy just sighed, and said - "yes, we know - we keep telling them (MD’s), but they won’t change.

I found a way to quit without Kaiser (a huge network all over CA). I don’t want to imagine what the smaller HMO’s are like.

Look at this: if you want to switch plans a year from now, how difficult?

I fear the price will draw you to the HMO, and experience will teach you (painfully) why PPO’s still exist when so many have the option of a dirt-cheap HMO.

I bought the most expensive supplement available - it ain’t a HMO. The drug coverage is separate - at $74/mo is is about the same as the co-pays.

15

I’m of the opposite opinion. I love a good HMO, especially one like Kaiser. I had better care, better service and the best pricing of any plan I’ve ever had. That of course is more specific to KP than HMO’s in general, but when they are an option I won’t even consider anything else. I recommend them to my clients all the time.

16

I thought I’d throw out the comment that HMOs are on a decline, so if you pick it and like it you may have to switch anyway in the future. They were supposed to control costs by making your primary doctor as a gatekeeper to your care, but they didn’t. Subscribers hate having to get referrals, and insurance companies hate them because they’re time consuming to administer, and in the end don’t save costs because doctors have no incentive not to write referrals to expensive specialists. The newest thing is “tiered” plans, where you can go to an expensive doctor if you want, but you’re going to pay extra for it.