Pros & Cons of common medical plan types
Use this table to get a sense for common plan types to help assess which may be best for you and your employees. Then, see below for how these plans cover real-life scenarios.
|This plan is best for a business with…||…many single and/or healthy employees with low healthcare use.||…employees who want flexibility to receive care from in- or out-of-network doctors or hospitals.||…employees with regular healthcare needs, because there’s no deductible to meet before insurance kicks in when in-network providers are used.|
|This type of plan…||…offers a lower monthly premium in exchange for a higher deductible.||…helps pay doctor bills, lab tests and prescriptions from the first day.||…lets members know the upfront costs for medical services, from specialist office visits to having a baby.|
The lower upfront cost means employees pay for medical services until they meet the (high) deductible and insurance kicks in.
Generally, the insurer pays 80% of the cost for medical services and the member is responsible for the rest, plus the copay.
||A deductible typically applies when out-of-network doctors and facilities provide medical services.|
|Ways to drive down cost||
Pair with a Health Savings Account (HSA) so employees can contribute pre-tax dollars to help pay for healthcare expenses now, and in the future.
||Employees can pay less for care by choosing in-network providers.||
Reduce premium costs by opting for a “narrow network” which has a smaller group of medical providers, and often relies on a primary care physician to direct care.
See how different plan types cover three real-life scenarios
Learn how these common plans types – copay only, traditional, and HDHP — cover three real-life scenarios.
1. Having a baby
The average cost to welcome a child to the world is $13,540.
- $3,900 with a traditional plan: The member is typically responsible for 20% of her medical costs up to the deductible ($2700)—and a percentage of the costs after that, including hospital charges for herself ($200 coinsurance) and the baby ($200 coinsurance), obstetric care ($200 coinsurance), and lab tests ($800 coinsurance). All of which totals $3,900 for a two-day stay.
- $2,500 with a copay plan: With a copay plan there is no deductible, so the member will pay one charge for her entire hospital stay—about $2,500.
Net-net: The member fares better with a copay plan, in addition to knowing labor and delivery costs up front.
2. Making a sick visit to a primary care doctor
The average cost to visit a primary care doctor when your child has strep throat or an ear infection is $200.
- $200 with a high deductible health plan (HDHP): The member the pay full out-of-pocket price ($200), unless he’s already met his deductible for the year. In 2018 HDHPs must have a minimum family deductible of $2600.1
- $45 with a copay plan: With a straight copay plan the member would pay an average of $45 for an office visit copay.
- $40 with a traditional plan: With a traditional plan the member would owe about 20% of the doctor's services, or $40.
Net-net: The member pays about the same with a co-pay or traditional plan, both of which cost less than the HDHP amount.
3. Visiting an emergency room
In an emergency you're probably not comparing costs, but a trip to the ER averages $6,600.
- $2,760 with a traditional plan: You'll pay about $2,760 for services after you pay your deductible, plus coinsurance for the emergency room doctor, X-rays and lab tests, among other things.
- $1,200 with a co-pay plan: You'll owe about $1,200 for everything, including straight copays for the ambulance, ER and any advanced imaging.
Net-net: You'd fare better with a co-pay plan, even with unexpected medical issues.
Disclaimer: These examples are for illustrative purposes only. Services based on average costs and average copays (what you pay) if you use in-network providers. Actual costs for medical services will vary by plan and geography.
- 1. IRS announces 2018 limits for HSAs and HDHPs; Willis Towers Watson; 2017. www.towerswatson.com/en/Insights/Newsletters/Americas/Insider/2017/05/irs-announces-2018-limits-for-hsas-and-hdhps (link opens in new window)
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