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It's open enrollment time. When your employer offers you different plans with different options, it can be hard to decide which is right for you and your family.
In this episode of Health Care Hacks, Jonathon Hess from Athos Health walks us through the differences between an HMO/PPO health insurance plan, and a high-deductible health insurance plan with a Health Savings Account.
- An HMO/PPO plan is defined by high monthly premiums and low deductibles. Then you pay coinsurance and copays, until you hit your out-of-pocket max.
- On the other side, you have a high deductible plan. That plan usually has low monthly premiums and a higher deductible. Your first dollar isn't covered until you hit that deductible cap, and then you pay coinsurance and copays until you hit the out-of-pocket max.
All things being equal, Hess says you should usually go with the high deductible plan. Here's why:
- The high deductible plan has a health savings account, or an HSA, where you can save tax-free dollars to fund your health care expenses. The money rolls over, you can use it whenever you want, and you never lose it. You can add to it each year.
- If you're a young, healthy family, Hess says take the high deductible plan. You'll be saving money on your premiums, and putting away tax-free dollars you can use to pay that high deductible.
If you are somewhere in the middle, Hess says it may make sense to do the PPO/HMO plan. This applies to those who will have some substantial costs but will probably spend less than $10,000 - maybe you have a chronic condition or plan to have a baby. Here's why Hess says the HMO/PPO may be right for you:
- You'll have higher monthly premiums, but you'll pay less for frequent office visits or hospital care.
Let's say you have something seriously wrong, and need something like a knee replacement or back surgery. Counter-intuitively, Hess says you should take the high deductible plan. Here's why:
- The out of pocket max is typically the same between the HMO/PPO and the high deductible plan.
- So you'll pay the same amount in the end, but with the high deductible plan, you'll have the ability to save tax dollars by putting money in an HSA to pay those bills.
One more caveat: If you have a certain doctor, hospital, physical therapist or specialist that you want to continue seeing, make sure they're in network. That trumps any other decision. If they're not in network for the plan you choose, you'll pay more.
Jonathon Hess is the CEO of Athos Health, which helps people avoid unnecessary health care costs. Jon has two decades of experience in the health care industry.