For the last couple years, Jay and I have had a $3,000 family deductible HDHP with an HSA.  Of course the price went up when we added our son last spring, and then our annual rate increase last month brought our premium to $498/month.  This year, we’ve come out way ahead with our health insurance.  Jay had surgery on both knees, and Humana covered nearly all of it.  We paid our $3,000 deductible back in January, and then paid about $400 for the crutches and ice machine from an out of network supplier.  Since then, Humana has paid for everything – surgery, follow up visits, and physical therapy.

But with our premiums hitting the $500/month range, we decided that we needed to look at the possibility of a higher deductible.  Staying with Humana made the most sense, since Jay is only a couple months out from his second knee surgery.  Most carriers would want him to be at least six months out in order to consider him for coverage, and the ones that would consider him earlier than that would likely increase his premiums or exclude his knees.  A year from now, when our rate goes up again, we’ll be able to consider options from all Colorado carriers, but knowing what we do about medical underwriting on individual health insurance policies, we decided that our best choice would be to keep our current plan but raise our out of pocket exposure in trade for a lower premium.

We did the same math that we always encourage our clients to do when considering various deductible levels.  Our current policy has a $3,000 deductible, and costs $498/month.  We found an option with a $5,000 deductible for $341/month.   The coverage is the same on both policies – the only difference is the extra $2,000 in out of pocket exposure.  Switching to the $5,000 deductible saves us $157/month.  That’s $1,884/year in savings.  The trade off is that we pay an additional $2,000 if we end up having a major illness or injury.

Prior to this year and Jay’s knee injuries, we have never even come close to meeting our deductible.  We don’t have a crystal ball, but it’s reasonable to assume that we’re going to continue to be healthy for the foreseeable future.  If we keep the $3,000 deductible, we’re guaranteed to have to pay $5,976 in health insurance premiums for the next year.  And we might have to pay $3,000 to meet our deductible.  If we switch to the $5000 deductible, we’re guaranteed to have to pay $4,092 in premiums for the next year, and we might have to pay $5,000 to meet our deductible.  The difference in total exposure for these two scenarios is only $116 for the whole year.  (Total exposure being the premiums plus the out of pocket expense).  Since we’re healthy and have no reason to believe that we’ll be meeting our deductible again anytime soon, the $5,000 deductible is the obvious choice.  We will automatically save $1,884 in health insurance premiums next year.  And if we do end up having to meet our deductible, we’ll only be $116 worse off than we would have been if we had stayed with the $3,000 deductible.

So the choise was easy.  We submitted the paperwork to increase our deductible, and should see lower premiums as of January.