The max out-of-pocket is a combination of costs between co-pays at the doctor's office, deductible before you hit big expenses like hospital stays and surgeries, and all the co-insurance amounts that you have to meet.
So I want to give you a little tip that helps you compare for yourself health insurance plans like a pro. There's a few things you got to know. First of all, the biggest number you have to consider when you look at a health insurance policy is what the max out-of-pocket on the plan is. Because really that's the number that matters the most when it hits the fan.
The max out-of-pocket is a combination of costs between co-pays at the doctor's office, deductible before you hit big expenses like hospital stays and surgeries, and all the co-insurance amounts that you have to meet. That's the true number at which your plan then pays a hundred percent. It was interesting to me I was talking to some friends of mine that were looking at their group health insurance offerings through work and they were really excited because they felt like their plan got better last year to this year because their deductible went from a thousand dollars down to five hundred dollars. And they thought they were getting a better deal.
But when we looked a little closer we found out that that same plan while the deductible went down from a thousand dollars to five hundred dollars, the max out-of-pocket for the year rose from five thousand dollars a year to almost eight thousand dollars a year. And what they thought was a good deal turned out this being something that was going to cost them three thousand additional dollars this year if they had to use it for something major. So when you compare health insurance plans you need to understand your out-of-pocket maximum cost and then your premium cost. What I like to do is add those two numbers together and if I have a bad year where I have a major event like a hospital stay or a surgery of some sort or wind up at the emergency room, when I take how much money I spend in my premium and how much money I spend in my out-of-pocket costs and I put those things together that usually is how I determine what the best plan for me is.
Even though sometimes that out-of-pocket maximum may also be the deductible, if it saves me three or four thousand dollars a year in premium I would much rather save that money and use that money as cost when I go to the doctor's office than have a low deductible plan that has a much higher out-of-pocket maximum. So how do you compare plans? You got to know the premium, you got to know the out-of-pocket maximum and then you got to make a good educated decision on what fits your needs the best for this upcoming year.
The biggest number you have to consider when you look at a health insurance policy is what the max out-of-pocket on the plan is. That's the true number at which your plan then pays a hundred percent.
What I like to do is add the out-of-pocket maximum cost and the premium cost together. This helps me determine what the best plan for me is in case I have a major event like a hospital stay or surgery.
Sometimes a lower deductible can come with a higher max out-of-pocket. For example, a plan with a deductible that went down from a thousand dollars to five hundred dollars might have a max out-of-pocket that rose significantly, leading to higher overall costs.
You need to understand your out-of-pocket maximum cost and your premium cost. Then, make a good educated decision on what fits your needs the best for the upcoming year.
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