Baby Due in Februrary - High Deductible Plan or High Premium Plan

[Keppy]

Hello -

It's Open Enrollment Season! My family (2 adults, 1 toddler) typically choose the high deductible medical insurance plan because we are healthy with no prescriptions or specialty doctor visits needed. This February, however, we are expecting our second child. With the birth of a child in the hospital in our near future, would it be more beneficial to choose the high premium plan this year instead of the high deductible insurance plan?

Thank you for your input.

[dm200]

Hello -

It's Open Enrollment Season! My family (2 adults, 1 toddler) typically choose the high deductible medical insurance plan because we are healthy with no prescriptions or specialty doctor visits needed. This February, however, we are expecting our second child. With the birth of a child in the hospital in our near future, would it be more beneficial to choose the high premium plan this year instead of the high deductible insurance plan?

Thank you for your input.

Just my opinion, but I would more heavily weight the opinion of the spouse who will be giving birth.

[frugalmama]

Honestly, no one can answer that for you. It depends on which doctors you use, how often you go, and if your child has any medical issues when born,how much your employer pays (so your OOP for each plan) etc. You must run your specific numbers as we are a family of 12 and we STILL come out better with the high deductible plan but we are healthy people and while we see a few specialists I can push appointments as they aren't dire to our health, etc. so that we get them in the same deductible year, etc...so I try to meet our deductible every other year and get everything in on those years. I will say we had quite a few health issues this past year (especially me) and I am pretty sure that even with the ER visits and me having a baby etc. that we came out better with the high deductible plan although it can be hard to say for sure. This year we thought about switching due to the specialist appointments as I figured out that we would come out better with the number that we potentially have. However, our speech therapist wasn't on the plan and the potential out of pocket made the switch to the other plan very expensive, so we didn't switch. I would sit down and do a best case/worst case scenario and what you expect based on the numbers you have and decide whether you can take the risk to do high deductible. I tend to think high deductible is better if you can take the risk as otherwise you are essentially just prepaying the doctors visits (at least on our plans as the difference is astronomical). Plus, you can do an HSA with high deductible and then that money stays in your pocket if you don't use it. That isn't true under an FSA.

[P&C actuary]

Complete a comparison of the total costs under each plan. This includes expected medical and prescription out of pocket expenses under each plan for the year. Include an estimate of the out of pocket cost of birth under each plan. Also include the annual premium for each plan.

Does your employer offer a plan comparison worksheet?

If the comparison is close, take into account the value of the HSA to have tax free savings for medical costs.

[dodecahedron]

Just my opinion, but I would more heavily weight the opinion of the spouse who will be giving birth.

Good point! Please bear in mind that there are many possibly very emotional decisions ahead that might have potential financial consequences, e.g., whether care should be transferred to a high-risk specialist or hospital with higher level NICU, whether to go for induction/C-section/type of anesthesia, etc.

High deductible policies were not an option when I gave birth decades ago. At a time when emotions were already running high and so much is at stake, I am not at all sure I would have wanted to add finances to the list of things I was worried about.

[Thegame14]

We are also due in FEbruary with baby #2, we are going to choose the insurance plan by looking at the monthly premium and assuming we will hit the Out of Pocket max for FAMILY coverage. They way I understand it and I could be wrong, but once baby is born, all of their treatments are separate from the mom and billed as family not single with the mom's expenses. I assume both will hit their out of pocket max which is the family max.

So take the monthly premiums plus OOP max and which ever is cheaper is the plan we are going to take.

also going to each max out our FSA for the year at $2,600 each to help pay for the costs, and the hospital has offered no interest for 1 year with minimum monthly payments and if balance is over $5K, they will do no interest for 2 years with monthly minimum payments. We then plan on paying the monthly minimum out of salary, and then when we get bonuses and tax refunds, use those to make larger payments.

[frugalmama]

We are also due in FEbruary with baby #2, we are going to choose the insurance plan by looking at the monthly premium and assuming we will hit the Out of Pocket max for FAMILY coverage. They way I understand it and I could be wrong, but once baby is born, all of their treatments are separate from the mom and billed as family not single with the mom's expenses. I assume both will hit their out of pocket max which is the family max.

So take the monthly premiums plus OOP max and which ever is cheaper is the plan we are going to take.

also going to each max out our FSA for the year at $2,600 each to help pay for the costs, and the hospital has offered no interest for 1 year with minimum monthly payments and if balance is over $5K, they will do no interest for 2 years with monthly minimum payments. We then plan on paying the monthly minimum out of salary, and then when we get bonuses and tax refunds, use those to make larger payments.

Yes you each get a hospital bill once the baby is born. So, you need to look at the family max. Note that there is often an Individual Deductible, Family Deductible and then often a percentage pay up to a family out of pocket max...which could be something like 15,000, so if your family deductible is 5K, you'd need to hit another 20K of expenses AFTER hitting the 5K, before you'd get free care IF they paid 50% after the deductible meaning you'd be OOP 5K +10k = 15K before free care. You must look at the specifics of the plan.

[UpsetRaptor]

I'd recommend high premium, because regarding childbirth, a lot of things could potentially happen to mom or baby that can jack up costs quick. Even just something like a C-section.

[Thegame14]

Right so if plan A is monthly premium of $200 with OOP family max of $10K, then you assume your cost of insurance for next year, is $10K plus $2,400 for a total of $12,400

And Plan B is $500 a month with a OOP family max of 5K, then you assume your cost of insurance for next year is $5K plus $6,000 for a total of $11,000 and choose plan B.

Also remember all prescriptions, co-pays and any other doctor bills for the year will then be included in these amounts, so if there is a medical procedure you want to do that you have been waiting on, 2019 is the year to get a full physical EKG, have that elective surgery to fix whatever, get colonoscopy, anything else you think you may need this year, wait on til 2019 or you may need in 2020, do early and do that in 2019 to take full advantage of hitting the OOP max.

[Thegame14]

I'd recommend high premium, because regarding childbirth, a lot of things could potentially happen to mom or baby that can jack up costs quick. Even just something like a C-section.

Ignore the deductible, with having a baby, and especially if there is potential for a C-section you will blow past the deductible on day one, be more concerned with the monthly premiums you pay to have the insurance and the family out of pocket max, then fully fund your FSA to pay costs pre-tax up to your limit, the rest I would get a 12 month interest free payment plan from the hospital.

[marklar13]

As others have posted, it depends on the specifics of the plan, and your situation. We had to make this same decision last year, and when I ran the numbers it was basically a wash. I ran numbers for the "expected case" and "worst case", but really went with worst case assumptions -- I assumed we'd be maxing the deductible, and was mostly focusing on the out of pocket max (which looking back at hospital billing, I think we would have pretty easily hit). The high premium plan came out *slightly* ahead after going through the analysis, including tax considerations... but it was not by much. Both are viable options. Things I considered:

• Making sure hospitals / groups that my spouse wanted to use were in network
• Tax considerations (I believe that medical premiums are paid pre-tax... so make sure to adjust that number)
• Even in high premium, max coverage type plans there is usually an "hospital admission" co-pay associated with a hospital stay (I think ours was $500). All of the pre-delivery visits were covered by a single regular co-pay (which I think was like $30).
• If you do the high deductible plan, will you max the HSA? How will you value this? I think I valued it at $2000 for my comparison, but that is pretty arbitrary.
• You aren't guaranteed to hit it, but I used the max out of pocket costs for the high deductible plan. So I think my comparison was basically:
• High Deductoble: tax adjusted premium + OOP max - HSA added value (subjective) ... but obviously check your actual plan
• High Premium plan: tax adjusted premium + hospital copay + other expected regular copays (both pre-delivery copays and expected copays for the rest of your family) ... but obviously check your actual plan

One final thought... regardless of what you choose, it is probably a good time to do other visits for the family if there are any tests/etc that you think your doctor might be ordering. You'll have your deductible maxed, or will have a high premium plan that covers lots of things... so might as well get max value for it if there is anything else to take care of. Obviously, this isn't totally in your control, but if there is low hanging fruit then it is a good time to get it taken care of.

[c1over8]

Compare the worst case scenario cost for both plans: Premiums + Family out of pocket max - any incentive the company offers (Ex. do they kick in $x to the hsa if you go with the high deductible plan?)

You may also be able to run a cost estimator to see what the expected delivery/hospital costs are and do a "likely" scenario analysis as well based on the deductibles, coinsurance, copays, and out of pocket max. My insurance company has a tool online that does this calculation for you - not sure how accurate it is though.

[njdealguy]

If theres a plan to eventually send baby to daycare, I'd go with the best coverage possible. We have since the baby reached 7 months old and since then have been needing to visit the doctor/urgent care/1 time er literally every week or every other week. Already wenth through 4 ear infections and lots of cough/colds within just the last 6 months.

[willthrill81]

Compare the worst case scenario cost for both plans: Premiums + Family out of pocket max - any incentive the company offers (Ex. do they kick in $x to the hsa if you go with the high deductible plan?)

You may also be able to run a cost estimator to see what the expected delivery/hospital costs are and do a "likely" scenario analysis as well based on the deductibles, coinsurance, copays, and out of pocket max. My insurance company has a tool online that does this calculation for you - not sure how accurate it is though.

Just to add, I've heard some recommend that you go with a high premium, low deductible plan when you have little ones until you get a good idea about their overall health and potentially switch to a high deductible plan. Some kids need a lot of medical help, and some don't. Thankfully, ours has been in the latter group, so our high deductible plan has been great for us.