I’ll admit it – I am a worst-case scenario thinker…something that drives my husband (and probably my colleagues) crazy. I’m always imagining the “what if” scenario, and trying to devise a Plan B for it (…and usually a Plan C. Did I mention I’m a worrier?).
Aside from just worrying, though, there is a valid role for worst-case scenario thinking in insurance decision-making, especially as options like high-deductible health plans become more prevalent. For most of us, the relevant worst-case scenario in health care (financially speaking) is that we end up needing a lot of services (or just several expensive services), pushing us to hit the out-of-pocket maximum on our insurance plan.
The out-of-pocket maximum is a dollar amount higher than your deductible, and it is the point at which the insurance company starts to cover everything. (For some plans, the out-of-pocket maximum is the same point as the deductible, and once you hit it the insurance pays for everything.) Most people don’t reach the out-of-pocket maximum, but if you use a lot of health care in a given year, it is a possibility.
For people who make a point of receiving their care within the plan’s network, the number to focus on is the in-network out-of-pocket maximum. (Be aware that there is often an additional out-of-pocket maximum for care you receive out-of-network, and there may be other exclusions and limitations that may add to this worst-case scenario.)
Even if you have a stronger stomach than I do, before you make the final choice on your health plan it’s worth thinking through whether the worst-case scenario would cause a personal financial disaster.
Saving money on premium by choosing a higher-deductible plan can be a smart and cost-effective strategy, and more and more people are choosing these types of plans. But do your inner worrier a favor and make sure it’s a good move for you.