A few weeks back we hosted our annual New Year's Day brunch for a few neighbors. The recent experience of one of my neighbors pointed out that even when an employer is picking up most of the tab for your health insurance premium, a pricier plan doesn't always turn out to be the best choice. Here's Joanne's (not her real name) story:

Joanne had opted for what she thought would be the best coverage her employer offered: one with a deductible (for the "big" things) and copays for certain services such as Urgent Care, ER, office visits and prescriptions. After a recent spill off a horse, she ended up at an Urgent Care Center and then in the hospital for several days (including two ambulance trips) for what turned out to be several broken ribs and a liver laceration.

When she chose her plan, she hadn't counted on running into a situation with seemingly endless copays (for example, $50 per office visit) to a number of specialists. The problem with copays is that they don't count toward the deductible so they don't ever end. There is (in insurance-speak) no stop-loss point.

Joanne says she now wishes she had opted for the much simpler HSA-qualified plan which just has a deductible (preventive care is covered at 100%) so she'd at least know that once she's met her, say, $2700 deductible, everything else is 100% covered. And she also would have been eligible to put income-tax-free dollars into a Health Savings Account.

Would I have recommended that Joanne opt for a different plan? Maybe, maybe not. She probably made a smart choice based on her health status at the time. But this story does highlight why choosing a health insurance plan is ALWAYS a "maybe, maybe not" choice. As I've said to many clients over the years, "You tell me what's going to happen to you and your family in the future, and I'll tell you the exact plan you should buy!"

Of course, unlike Joanne, my clients are normally picking up the full cost of the monthly premium, which certainly factors strongly  into the decision-making process. My general suggestion (in the absence of other factors, such as expensive prescriptions) is to keep the known expenses (premiums) as low as possible, within reason. Statistically, most people are going to have relatively few run-ins with the "medical industrial complex" in most years.

Sometimes, you just have to play the odds, knowing that occasionally you DO, unfortunately, come out on the short end of the stick. My goal for clients is to have that happen as seldom as possible!