Friday, October 20, 2006

Election Time...

No, not that election: employee benefits election time. Our family’s benefits come courtesy of my better half’s employer, and last night was THE night to make our choices for next year.
Why last night, you ask? After all, most employers have weeks and weeks available for Open Enrollment. Well, hers is no different: OE has been on-going for some time. Last night marked its end (well, actually, it ends today, but last night was the first opportunity we’ve had to get those elections made). If you’re thinking “hey, the Prof, guru extraordinaire, is a procrastinating SOB,” well, you’ll get no argument from me.
In any case, I’ll share one of the choices we made, because it's illustrative of how I try to live what I preach: consumer empowerment.
The employer in question offers several health plan options (known in “the biz” as a “cafeteria plan”). Some are high-end, soup to nuts plans, some are “in the middle,” and there were even two HDHP (High Deductible HSA-compatible Health Plans). When I saw that, for the first time, we could choose an HSA, I was thrilled. I couldn’t wait to jump on board that train.
Our current plan is one of those “middle of the roaders:” a modest deductible, 20% co-pays at network doc’s, a prescription drug card. Nothing too fancy, and priced accordingly. Our maximum exposure (OOP) for a catastrophic claim is $4,000 (that number is important; we’ll be coming back to it).
We were offered two HDHP choices: a $2400 family deductible, and a $5,000 family deductible. Neither of those was particularly frightening, until I read on: in addition to the deductible, the plan also added a co-insurance layer of 20%, bringing the max OOP to $7,200 and $10,000 respectively. Yikes!
To put this in context: one of the reasons I like HDHP plans so much is that one can delete the co-insurance (the confusing 80/20, 70/30, 60/40, what day is it?) component altogether. This makes for a simple, and usually inexpensive plan design. In fact, I often tout the lack of co-insurance as the best feature of such plans.
So of course, the HDHP that we were “offered” included a substantial co-insurance chunk, bringing the max exposure on a large claim to over $7,000. But we’d be saving big bucks, right? Well, if by “big bucks” you mean $240 a year well, then, yeah.
Needless to say, we opted again for the “generic” plan. I was quite disappointed: I would really prefer to go the HDHP route, for a number of reasons, but there has to be some “reward” for such a “risk.”
So, am I a hypocrite for pushing HDHP’s? Not at all. If, for example, that was all I ever recommended – a “one trick pony” – then no question, a hypocrite would I be. But I don’t do that; when it’s appropriate, I recommend such plans to my clients, and I continue to blog on their merits (and disadvantages, of course). It’s really up to the carriers to “get it,” and come up with product designs and pricing that make sense.
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