So far, we’ve gone over traditional copay insurance, as well as high deductible health plans. All caught up? Great. Now we want to effectively compare the two, and figure out what will work best for your clients.
Take a look at the chart below, where we examine three different health insurance plans.
The top row is a HDHP with a $5000 deductible. The middle row represents a copay style plan with a $3500 deductible, while the bottom row is a plan with the same deductible but a limited number of copays. Let’s compare these three plans and see how they stack up. Note that these quotes were pulled for a hypothetical, single 47-year old non-tobacco using male in Georgia.
Right away, we see that the copay plans have a lower deductible. However, notice the out-of-pocket limit – think of this as the maximum liability the insured can be exposed to in a year with their insurance policy. Even though the HDHP has the highest deductible, it has the lowest total liability. Isn’t the point of insurance to limit liability? By that definition, the HDHP is doing the best job already. Curiously, though, it’s also the least expensive policy here with premiums of just $143.35/month.
One great way to compare potential health policies is to take a look at how they’d perform under a best-case scenario, where the client is perfectly healthy, and under a worst-case scenario in which the client has to use every benefit available to them. Best case, they never use the plan and just pay their premiums. Worst case, they pay their premiums and are exposed to the maximum amount of liability their plan allows. As we can see in our chart above, there’s a big gap between the best case and worst case scenarios for these plans. The combination of higher premiums and additional liability makes the copay style plans look pretty bad in comparison. Don’t forget, too, that with those copay plans the liability is actually totally unlimited – even when your client meets their deductible and out-of-pocket, they’ll still have to keep racking up copays.
So ask yourself this: would your clients rather have the insurance policy that costs more and exposes them to an unlimited amount of potential financial outlay just because it reminds them of the coverage you used to get through work? Or does it make sense to pay less and be exposed to less liability? When you lay out the facts for your clients, they’ll see that the numbers don’t lie.