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Hitting the out of pocket max isn't that hard !
Old 12-21-2013, 12:06 PM   #1
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Hitting the out of pocket max isn't that hard !

I just reviewed the past three years of medical statements and see that hitting the OOP max isn't all that unrealistic.

My ER budget assumes DH and I hit the OOP max of 12.6k / year. I thought this meant I had a lot of "fluff" in budget and that I would be able to put the excess towards travel. After reviewing my actual medical statements for 2011, 2012 and 2013 I see I won't be traveling very far with my excess !

2 years ago the "your plan paid" plus "you paid" total was $3k. I thought this would be about the average per year "in reality" and that I'd have 10k for travel or whatnot.

Last year there was a major surgery so I knew we'd be at the OOP max there.

The shocker was this year. Other than a carpel tunnel surgery (9 minutes in the OR - 4 hours at the outpatient clinic), 9 visits to the eye specialist and routine blood work we're at about $8k.

Makes me wonder if I should just sign up for a Bronze policy with a low premium since it looks like I'll be at the OOP max more than I think.
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Old 12-21-2013, 12:40 PM   #2
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We have hit our $10k medical max oop every year since 2004. Plus there are other oop expenses such as dental, vision expenses, out of network, not covered medical and medicinal, etc. $$$$$!
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Old 12-21-2013, 12:46 PM   #3
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Makes me wonder if I should just sign up for a Bronze policy with a low premium since it looks like I'll be at the OOP max more than I think.
If you have a chronic condition that leaves you to reasonably expect to hit OOP max every year, the comparisons (before tax considerations) are easy. Just compare the annual premium difference and the OOP max differences of the plans available to you.

If an OOP max is $5000 less for Plan A than for Plan B, Plan A would be a better deal if it were less than $416 a month ($6000/12) more than Plan B. (This oversimplifies things, since there are tax aspects -- such as the ability to use an HSA in higher deductible plans -- that can also be very important, especially if you need ways to reduce your MAGI.)

But in reality, my experience is that the policies seem to be priced in a way that all but guarantees the Bronze plans will be the best deal in almost all scenarios I could construct*. At least with the plans I've seen in Texas, I could not construct a scenario where Gold or Platinum were *ever* better than the Bronze plan. The difference in monthly premiums more than eats up the lower deductibles and OOP limits. And it's even more lopsided considering Gold and Platinum are not HSA-eligible plans.

* -- Unless you have an income below 250% of the FPL and you qualify for lower deductibles and OOP maximums with a Silver plan. In that situation, Silver could be better. But as always, do the math, consider your own tax and income situation and run your own numbers!
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Old 12-21-2013, 03:13 PM   #4
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Originally Posted by Live And Learn View Post
I just reviewed the past three years of medical statements and see that hitting the OOP max isn't all that unrealistic.

My ER budget assumes DH and I hit the OOP max of 12.6k / year. I thought this meant I had a lot of "fluff" in budget and that I would be able to put the excess towards travel. After reviewing my actual medical statements for 2011, 2012 and 2013 I see I won't be traveling very far with my excess !

2 years ago the "your plan paid" plus "you paid" total was $3k. I thought this would be about the average per year "in reality" and that I'd have 10k for travel or whatnot.

Last year there was a major surgery so I knew we'd be at the OOP max there.

The shocker was this year. Other than a carpel tunnel surgery (9 minutes in the OR - 4 hours at the outpatient clinic), 9 visits to the eye specialist and routine blood work we're at about $8k.

Makes me wonder if I should just sign up for a Bronze policy with a low premium since it looks like I'll be at the OOP max more than I think.
For us, in low medical expenses years, the Bronze plan wins because the premiums are the lowest and there are few other medical expenses.

In high medical expenses years, the Bronze plan is the clear winner because we are going to hit our OOP max anyway, and the Bronze premiums are less than the other plans.

In some mid-expense years, the Bronze plan may or may not come out ahead. It still might edge out the other plans because of the tax savings associated with the HSA portion. But say it comes out ahead 50% of the time in mid expense years.

If we have equal probabilities between low, mid and high medical expenses years, then the Bronze plan will come out ahead 82.5% of the time -

(100 * .33) + (100 * .33) + (.50 * .33) = .825

Plus we only have to plan one year in advance. There is open enrollment every year so if our situation changes where we know a different plan will be less expensive, we can change plans for future years.
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Old 12-21-2013, 03:47 PM   #5
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I've never even met a deductible ( just lucky ), let alone OOPM.

It's more straight forward now as the OOPM is fixed across plans ( unless you pay for a lower one ). The only thing I can see the different levels doing is just spread out how long it takes to get to the OOPM. Someone posted a spreadsheet in another thread to compare plan cost.
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Old 12-21-2013, 09:27 PM   #6
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Yeah - don't forget about coinsurance. With a low deductible and low coinsurance, you can have pretty high medical bills until you finally reach your OOP max.

Example
  • Bronze 1: Deductible $6000, OOP max $6000. You hit your OOP max once you have $6000 in medical bills.
  • Bronze 2: Deductible $5000, 20% coinsurance after deductible, OOP max $6250. You don't reach your OOP max until you have $11,250 in medical bills.
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Old 12-21-2013, 11:07 PM   #7
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Originally Posted by audreyh1 View Post
Yeah - don't forget about coinsurance. With a low deductible and low coinsurance, you can have pretty high medical bills until you finally reach your OOP max.

Example
  • Bronze 1: Deductible $6000, OOP max $6000. You hit your OOP max once you have $6000 in medical bills.
  • Bronze 2: Deductible $5000, 20% coinsurance after deductible, OOP max $6250. You don't reach your OOP max until you have $11,250 in medical bills.
I think for ACA new marketplace plans, deductibles and co-apys are included in out of pocket costs -

"Under the law, the maximum amount a consumer with single coverage will pay out-of-pocket in 2014 will generally be $6,350 while a family could pay up to $12,700. Those totals include copayments and deductibles, but not premiums, and they apply only to plans that are not grandfathered under the law."

Federal Rule Allows Higher Out-Of-Pocket Spending For One Year - Kaiser Health News

There are some quirks where drug coverage may not be covered in some cases under the deductible until 2015, as explained in the linked article.
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Old 12-22-2013, 05:39 AM   #8
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I think for ACA new marketplace plans, deductibles and co-apys are included in out of pocket costs -

"Under the law, the maximum amount a consumer with single coverage will pay out-of-pocket in 2014 will generally be $6,350 while a family could pay up to $12,700. Those totals include copayments and deductibles, but not premiums, and they apply only to plans that are not grandfathered under the law."

Federal Rule Allows Higher Out-Of-Pocket Spending For One Year - Kaiser Health News

There are some quirks where drug coverage may not be covered in some cases under the deductible until 2015, as explained in the linked article.
Nothing in my post implies otherwise.

I said "you can have pretty high medical bills before finally meeting your OOP max" - I wasn't saying you would be paying for them 100% out of pocket. That's what the coinsurance after the deductible is there for.
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Old 12-22-2013, 02:11 PM   #9
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Yeah - don't forget about coinsurance. With a low deductible and low coinsurance, you can have pretty high medical bills until you finally reach your OOP max.

Example
  • Bronze 1: Deductible $6000, OOP max $6000. You hit your OOP max once you have $6000 in medical bills.
  • Bronze 2: Deductible $5000, 20% coinsurance after deductible, OOP max $6250. You don't reach your OOP max until you have $11,250 in medical bills.
I think what daylatedollarshort was saying is that for Bronze 2 you start paying 20% coinsurance (rather than the full cost) from $5k to $6,250. The co-pay is part of the OOP maximum. Once you hit OOP of $6,250 there are no additional costs to you , other than the premium.

EDIT ! now I get it .... 6,000 deductible + 20%(11,250 - 6000) = 6,250 paid OOP max. Just a coincidence that it looks like you were adding the numbers together. I missed the part where you said "11,250 in medical bills"
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Old 12-22-2013, 02:42 PM   #10
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I think what daylatedollarshort was saying is that for Bronze 2 you start paying 20% coinsurance (rather than the full cost) from $5k to $6,250. The co-pay is part of the OOP maximum. Once you hit OOP of $6,250 there are no additional costs to you , other than the premium.

EDIT ! now I get it .... 6,000 deductible + 20%(11,250 - 6000) = 6,250 paid OOP max. Just a coincidence that it looks like you were adding the numbers together. I missed the part where you said "11,250 in medical bills"
It's actually 5,000 deductible + 20%(11,250-5,000)=6,250 paid out of pocket.

I was just trying to point out that if you have a low deductible, much lower than your max OOP, and you have a low coinsurance rate like 20%, it takes a while to reach that max OOP.

One of the silver plans I looked at had a $3,000 deductible, a max OOP of $6,350 and 20% coinsurance. With this plan, you would have $19,750 in medical bills before finally reaching that $6,350 max OOP. I did not choose this plan because the premiums were much higher than the above bronze plans so total costs (premiums plus OOP) did not beat other plans (although it did win in the range of $6,500 to $10,000 in medical bills, but by less than $200). It also was not HSA eligible because of $30 doctor visit copays.

Total medical expenses before reaching max OOP was one of the characteristics I calculated for each plan I considered. This is where you started to see a significant difference in plans that otherwise seemed so close.

Attached below is my analysis over several plans that I had available to me. I have shared this before.

Some folks may be thinking they will easily hit max OOP but aren't taking into account the coinsurance. Sure - if your deductible and max OOP are the same you can hit it quickly. But if you have a lower deductible and low coinsurance, you might not hit it so easily.

Work out the numbers carefully!!!!
Attached Files
File Type: pdf Individual ACA HI Plans Analysis.pdf (37.4 KB, 14 views)
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Old 12-22-2013, 04:42 PM   #11
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Nothing in my post implies otherwise.

I said "you can have pretty high medical bills before finally meeting your OOP max" - I wasn't saying you would be paying for them 100% out of pocket. That's what the coinsurance after the deductible is there for.
Sorry, I didn't quite get what you meant by Bronze plan 1 and Bronze plan 2 with different OOP maximums. All of the Bronze plans I see on the California site have identical OOP max - $6350 / $12,700. The Coverage California site has a list of standardized OOP limits by each metal name plan type -

https://www.coveredca.com/hbex/toolk...-guide_Eng.pdf
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Old 12-22-2013, 08:42 PM   #12
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Sorry, I didn't quite get what you meant by Bronze plan 1 and Bronze plan 2 with different OOP maximums. All of the Bronze plans I see on the California site have identical OOP max - $6350 / $12,700. The Coverage California site has a list of standardized OOP limits by each metal name plan type -

https://www.coveredca.com/hbex/toolk...-guide_Eng.pdf
Yep - there are some slight differences here in TX. It seems the lower the deductible, the higher the max OOP by a very small amount.
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Old 12-27-2013, 11:08 AM   #13
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I've noticed some plans list a co-pay without mention of needing to hit the deductible first. I wonder how those plans work.
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Old 12-27-2013, 11:25 AM   #14
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I've noticed some plans list a co-pay without mention of needing to hit the deductible first. I wonder how those plans work.
My retiree health plan choices have historically included a plan with low deductible and included co-pays for office visits and prescriptions.

These co-pays were always in effect regardless of whether or not you met your deductible and did not count toward meeting the deductible.

The ACA requires changing those plans starting in 2015 to make these co-pays count toward meeting the deductible and max oop.
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