Compare and Contrast – thoughts on annual open enrollment

Compare and Contrast Richard Connor  |  Oct 28, 2021

IT’S OPEN SEASON for many of us—time to choose our health insurance for the year ahead. It’s a topic I got seriously interested in when I took over management of 500 mathematically astute engineers. They challenged me daily to understand how the various plans stacked up against each other.

I spent a lot of time looking at various ways to assess the value of the different plan choices, and came up with a framework that worked for my family.

This is also the time of year when Chicago financial researchers Morningstar publishes its annual review of health savings accounts (HSAs). These are another favorite topic of mine because of their triple tax-deductibility. My wife and I were able to accumulate a decent sum that we’re now using in retirement to help pay medical costs while we wait to reach the Medicare eligibility age of 65.

I’ve spoken with dozens of people over the years about their benefit choices, and there always seems to be a group that wants the highest-priced plan, regardless of the underlying cost structure. They see plans with high deductibles and high out-of-pocket costs as unaffordable. They often pay so much more in premiums, however, that their total cost is greater.

My advice: As a first step when comparing plans, figure out each plan’s lowest possible cost and maximum possible cost. The lowest possible cost is the sum of your premiums for the year. The maximum possible cost is that premium total plus the maximum out-of-pocket cost.

Say you have two choices. The first is a top-notch health plan with monthly premiums of $700, maximum family deductible of $2,000, a 20% copay after meeting the deductible, and a maximum family out-of-pocket cost of $6,000. The lowest possible cost is 12 months of $700 premiums, or $8,400. The maximum possible cost is that $8,400 plus the $6,000 out-of-pocket maximum, or $14,400 total.

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Source: Compare and Contrast – HumbleDollar

5 comments

  1. Best advise is to try to find a ‘local’ independent agent to guide you through the process. Most independent agents represent more than one insurer and can guide you with the different guidelines for each insurer. They can also guide you with the difference between the Medicare Advantage Plans, Supplement Plans and the stand-alone prescription drug plans (PDP) available in your zip code.

    Don’t get me started on the stand-alone prescription drug plan antics for 2022. In my state, 3 insurers eliminated one or more of their current PDP plans and are moving those beneficiaries into the highest price plan they offer! if beneficiaries do not read thair Annual Notice of Change, (ANOC) and evaluate if the plan they have or is changing to is still the better plan for them, they pay more than necessary with no recourse once Januaary 1st comes. I contacted each of my clients in those plans and have been working with them to find out if they should stay in the higher price plan or move to another insurer. This is significant only to the ‘stand-alone’ prescription drug plans (PDP) that you need to go along with the Medicare Supplement plans.

    Ask your friends and or neighbors who they got their plan from! Get referrals from them. Call the agent they are working with. (Independent Agents are not allowed to call you).

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  2. When I tried to change from the F plan to the G plan I was informed that changes would have to go through underwriting. Having had several cancers I know that can be a problem. I even explained that this was during open enrollment but the advisor said that was necessary. If the change was not approved then it would revert back to the F plan. You will note there are several different G plans and F plans offered, in your area.
    Everyone case is different.

    As for Dental, the claims my wife and I had this past year showed substantial negotiated reductions in the charges by the Dentist and the actual reimbursements exceeded the premium costs. Obviously these were not cleaning claims just plain age related destruction of natural teeth.

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    1. The rules for medigap plan underwriting are not the same for all States. There are a couple that do allow for annual changes. Unfortunately where I live changing medigap plans require underwriting.

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    2. I am still 5 years away from Medicare. A few weeks ago, I stumbled onto several YouTube videos that was explaining the advantages and disadvantages of various Medicare plans types (not of the insurers themselves). If I remember correctly, at age 65 you can sign up for any of the private Medicare advantage plans. But if you switch plans any year after that you are subject to underwriting and maybe denied the switch. I was unaware that was possible until I saw that first video and confirmed it with several others. When I reach 64, I will study the current videos for restrictions and changes so that I ask the right questions when my time comes. Right now, I just have the basic understanding of the first 4 or 5 letter plans, which when I was working, I didn’t realize that they even existed or knew what it meant. Until reading “An” reply here, I didn’t know that the Medicap plans underwriting varied from state to state so I will now have to determine what applies in my state too.

      I will start studying in 4 years the fine details of insurers and plans because them might change a little bit so I don’t want to make any decisions on old information. For any pre-retirees or pre-Medicare people out there, YouTube has some good basic explanations of the Medicare plans and your costs in percentages of co-pays.

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