My health insurance plan’s grandfather status expires in 2014. Before the end of 2014 I will have to choose a new plan and since I can take advantage of the subsidy available from the exchange I will either purchase the new policy from the exchange or go without health insurance. Since I recently went without health insurance for nearly ten years both options are reasonable financial options for my family. For the past five years I worked for a small business who offered a $6,000 per year HRA to their employees. I used $4,700 of this money to purchase a silverish-bronze plan health insurance plan with $3,000 deductible and a $5,000 out of pocket cost. Since I had $1,300 still left in the HRA to cover miscellaneous health care costs my net financial liability was approximately $1,700. As a healthy family my out of pocket costs from 2008 to 2013 has been zero. Naturally I would like to duplicate this strategy in 2015.
When I look at the current premium costs available through the exchange I am confronted with this premium versus deductible versus out of pocket cost dilemma. Here are my choices using 2014 premium rates to guide me.
1. I can achieve the same results with the lowest cost bronze plan(Healthspan HMO) with a $6,350 deductible. I will still have $1,300 for miscellaneous out of pocket costs which may be pretty handy with a narrow network HMO. I view this insurance as catastrophic care coverage or a slightly improved version of Medicaid. In fact several insurance companies participating in the exchanges specialized in serving the Medicaid market. To achieve the same piece of mind I had in 2013 I will have to save an additional $4,650 and put that into an emergency fund to cover the larger deductible. The good news is that the first $1,300 is already covered.
2. To achieve the same results with a silver plan(Anthem PPO cbey) I will have to shell out an $124 per month in addition to the company contribution because the silver plan is more expensive. Since there will be no excess funds left in the HRA and the insurance deductible is $5,000, I will have to save an additional $3,300 to achieve the same piece of mind.
When I look at the out of pocket costs and the network restrictions both the bronze and silver plan are inferior to my 2013 plan but better than going without insurance. If the subsidy disappears or if health insurance premiums significantly increase then the going without health insurance plan becomes the better financial alternative. If I have to choose a new plan and I do not have problems with a narrow network HMO then it makes more financial sense for me to trade down to bronze plan than to trade up to the silver plan. Regardless of which plan I choose I will have to increase my savings to cover the additional uncovered risk the Affordable Care Act has brought to the table.