Dr. Wacasey’s Equation
I HOPE YOU’LL AGREE that there needs to be an easier way to compare different plans when shopping for health insurance. I mean, I consider myself a health care (and health insurance) expert, but even I get confused by all the different copays, deductibles, and other options offered by health insurers.
To start, I will give you a few simple rules to always follow.
When it comes to health insurance, you must:
Instead, all you need to remember is one simple formula:
P + O = W
Where P is the annual Premium you’ll pay to have the health insurance. You can think of P as being your best case scenario, or how much it will cost you to stay well – if you don’t have any health care expenses throughout the year.
On the other hand, O is the Out-of-pocket maximum, and can be thought of as your worst case scenario. Because this is how much you’ll have to spend on health care if you get really, really sick (or as I say, if you get hit by a train).
Finally, W is the What you might have to spend on health insurance and healthcare, for any given year.
To phrase this another way, add up your best case scenario (P) and you worst case scenario (O), and you’ll see What you might be on the hook for if you pick that plan and get hit by a train.
And when you start comparing the W’s, it all becomes very, very clear.
Surprised to see how little difference there is in WHAT you might spend between the $6,000 and $1,000 deductible policies? Still think that a plan with a $12,700 deductible is so terrible compared to one with $3,000 instead?
And did you notice? The deductible doesn’t matter when it comes to shopping for health insurance. Instead, only two terms – the Premium and the Out of Pocket Maximum – are needed to give an idea of what you might have to spend if you were say, hit by a train in any given year.
Look at it this way: P represents what you will pay if you stay well, and O is the amount you might have to spend if you get really, really sick.
Try it for yourself, and I’ll bet that in most case you’ll find that, when it comes to health insurance, less really is more.
So leave the labels of Platinum, Gold, and Silver to Olympic Medals, or music awards. Get the best deal on your health insurance by using the Wacasey Equation.
It’s not the COSTS of health care that are outrageous…it’s the CHARGES.