Health insurance costs

0:00- [Narrator] We are comparing the total yearly cost of two health insurance plans. So we have Plan A, which is a high deductible health plan and Plan B, which is a PPO, and they give us the premium, the deductible, the copay, and the out-of-pocket maximum. Which plan would cost less for the year if, and they give us four different scenarios.

0:20And let's just assume that you are paying the premium for these plans. There's obviously, it would change things on how much you would pay if your employer is paying the premium. But look, for the sake of this question, let's assume that you are paying the premium.

0:32So pause this video, have a go at that. All right, so let's just think about how much you're gonna pay for each plan in each scenario. So let me actually just draw some lines here. Make a little bit of a table and then we will circle whichever one would cost less.

0:48So that we have that. Lemme make one more right over here. And then we make two columns, one for Plan A, and then I'll give myself some space for calculations. And then I'll do one for Plan B. All right, if we don't need any healthcare this year, we're only going to pay the premium.

1:08Once again, we're assuming we're paying it, not our employer. So Plan A is $3,000. Plan B is $5,000. So which one is going to cost less? Well, the high deductible health plan, if we're paying the premiums, is going to be the one that costs less. Plan A. Now let's do scenario B.

1:31You had three visits that only required copay, so we're going to pay the copay plus the premium here. So Plan A is going to be, let's see, three visits. So it's gonna be $30 times three, which is 90, plus the premium. So this is going to be $3,090. And with our PPO, we're going to have the premium, plus the three visits that are $20 each.

1:57So that's $60 of copay. So that is going to be $5,060. So in this scenario, our high deductible health plan is once again, going to cost less. Now, let's look at scenario C. Your medical costs reach the deductible. All right, this is interesting. Here, we're going to pay our premium and we're essentially going to have to pay out-of-pocket all the way up to the deductible.

2:25So with our Plan A, we're gonna pay the premium plus the $4,000 deductible. We had to spend that much out-of-pocket in order to reach the deductible. So 3000 plus 4,000 is going to be 7,000, $7,000. Now, we're assuming that there's nothing else other than the cost that directly go towards the deductible, at least for this simplicity.

2:48Now, Plan B, reach the deductible. It would be the premium cost plus the total cost that we would have to pay out-of-pocket until we hit the deductible. So that's gonna be 5,000 plus $750. So this is going to be $5,750. And so in this scenario at least, it looks like our PPO, Plan B, is actually going to cost us less.

3:13And then last but not least, your medical costs reach the out-of-pocket maximum. And you might say, "How is the out-of-pocket maximum higher than the deductible?" Well, even after you meet the deductible, oftentimes there's going to be co-insurance that makes you pay a percentage of things.

3:30Sometimes you still have to pay copays even after you've met the deductible. So that's how your cost could go higher. So if you meet the out-of-pocket maximum, you're essentially paying, assuming your employer isn't paying, the premium, plus the out-of-pocket maximum.

3:45So in scenario A, it would be $3,000 plus $6,000, which is going to be $9,000. In scenario B, it would be $5,000 plus $5,000, which is $10,000. So here, in this scenario, scenario D, Plan A, once again, looks like the one that costs less.