Should You Get the Health Care Plan with Co-Pays?

…No, probably no, but most will.

With the arrival of our latest tax deduction, my wife and I needed to reconfigure our health insurance.  I reviewed the plan comparison charts and was startled by two plans in particular. One plan was half the cost of the other plan and at first; I couldn’t locate the source of the price difference. Like a Roman Caesar, I was about to declare the cheaper plan the new Sparticus over all other health plans until I found the disparity; the more expensive plan had co-pays for my primary care physician and specialists and the cheap plan made me pay the full bill on my own, until I reached some astronomical deductible.

Without thinking, I nearly checked the box for the more expensive plan. A co-pay means comfort and predictability. I know that I will never pay more than $25 a visit; I can handle that and I’ll never lose sleep. But, is it really so bad having to cover your own doctor’s visits?

(I should note that both plans are identical on child well visits. They are completely covered, with no co-pay. The only difference was in the irregular visits and specialists)

Giving pause, I began thinking about what those co-pays were really saving me. My wife and I are still very young. I probably have visited my primary and a specialist a total of 3 times together in the last ten years, which translates into a mere $75 on the more expensive plan.

But, what is my cost without co-pay? Since the non-co-pay plan is still a negotiated rate, I’d pay $120 per visit on the cheaper plan, which translates into  $360 that I would have spent over the last ten years. Using my abacus, the difference between the $25 deductible and actual costs works out to $95 saved in out-of-pocket cost for every doctors visit. Putting down the abacus and grabbing my calculator, I figure out how much more I would pay over ten years in the difference between the premiums to earn this $285 savings over ten years. I won’t fill the page with zeros, but the answer was several thousand dollars.

In fact the co-pay plan, for me at least, is never worth the premium difference. I would reach the deductible on the non-co-pay plan long before I reach the break-even point for the difference in premium costs and once I reach the deductible, the non-co-pay plan benefit is $1 cheaper than the co-pay. There is no potential cost, even in my sickest hour, where the co-pay plan is more cost efficient.

In fact, if I was interested in the warm, fuzzy feeling of paying more out of my paycheck so that I never have to incur a high-dollar medical expense, it would still  do better on the non-co-pay plan. I could pay into an FSA account for the same amount as the non-co-pay plan deductible. This possibility is cheaper than the co-pay plan, but it is also superior. The FSA would make it so that I had no out-of-pocket costs; not even a co-pay.

This is not to say that a co-pay plan could never be more cost effective. It certainly isn’t in my situation. I recommend that you scrutinize your own health benefits and avoid assuming your health care situation is the same. However, it does seem likely that co-pay plans rarely pay for themselves.

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