I am evaluating new medical plans, and I'd like to figure out a formula that will give me some idea of the potential benefits of one vs another vs another.. etc..
I have these variables:
- Cost Per Year ($)
- Deductible ($)
- Co-Insurance Rate (%)
- Maximum Out of Pocket ($)
My thinking is, if you take all these into account then given $X in medical services, It will cost me $Y per year (including my premiums, deductible, co-insurance portion up to the OOP Max). I could then Apply this formula to a range of potential costs. Such that if I know i'll spend $2500/yr on medical costs what will be my effective costs vs if i'm going to spend $5000 or $30,000, etc..
Of course this doesn't take into account fuzzier benefits, like if preventative care is 100% but regular care is 80%.. or drug costs, so those are factors i'll have to just take into account ad-hoc. Also, let's ignore pre/post-tax issues and assume OOP expenses are paid with an HSA or FSA
I'm having some difficulty figuring out a formula to use for this. What formula would help me calculate the benefits of each plan?
1100/yr in premiums, $1000 deductible, 80% co-insurance, and $2500 Out of pocket max
$3100/yr, $750 Deductible, 90% co-insurance and $2000 OOP Max.
Let's calculate based on a spread of medical costs ranging from $1000-$30,000 in $1000 increments.