How To Evaluate Health Plan Costs

“50% of people spend less than $300 a year on health care claims; therefore, most people overpay for health insurance.”

— Scott McGohan, CEO at McGohan Brabender

It is crucial for health insurance shoppers to purchase plans that provide all of the services needed without having unnecessary coverage. The savings from an adequate health insurance option can be allocated to other family expenses. Savings can be accomplished from shopping and comparing all of the options.

The average American spends 15 minutes buying health care and five hours planning a vacation.

While health plans can be confusing, there are a few specific factors to consider. Does a higher monthly premium or a higher deductible get the most cost effective coverage? That depends. Premiums and deductibles are typically dependent on each other; a lower premium usually results in a higher deductible and a high monthly premium can equate to a lower deductible. Cost is a determining factor and more specifically, it is essential to calculate how much each plan will perform.

When you give people the power to choose, you give them the power to change.

It is important for families to compare plan options and features, and to consider funding alternatives such as Health Savings Accounts (HSAs). This can help families more accurately predict their actual costs.

Here are some tips:

  • Consider past health insurance spending
  • Shop procedures; costs will vary – don’t just go where the doctor tells you
  • Use cost estimating tools to determine what you get for your premium
  • Understand that HSAs are tax-advantaged; unused dollars roll over at the end of the year and funds are transferable if you change your job

Past health insurance spending provides valuable insight into future health plan choices. As an example, a family who opted for a higher premium and lower deductible over the past three years never reached their deductible. Plan options like doctor’s visits, prescriptions, etc. are comparable. In this instance, the healthy family that does not regularly need medical care is overpaying. A lower monthly premium and higher deductible may better fit their financial and medical needs.

While the past is a strong benchmark for the future, additional research can help in saving money. Cost estimators are effective tools for consumers to compare all of the options.

“Health care should be shopped like anything else, MRI prices can vary by up to 300 percent, even within the same network,” said McGohan. “Remember, health care quality is not aligned with cost and often, the lower cost options are of higher quality due to greater expertise.”

Ohio-based McGohan Brabender, an independent health benefits and risk-management broker, offers a High Deductible Health Plan (HDHP) and Preferred Provider Organization (PPO) Insurance Calculator and a Health Savings Account Calculator to assist HR managers and consumers in identifying health insurance needs.