For many companies, the annual benefit enrollment period is or will soon be under way. For most employees, figuring out which health insurance plan to choose is not one of the year’s more enjoyable experiences. But for those who are interested in taking a closer look at the real difference in costs between the plan options, we’ve developed a simple calculator to help you figure it out. You can download it at the bottom of this blog.

While the calculator will be suitable to compare any two plans, the primary goal is to get employees to take a closer look at the High Deductible Health Plan (HDHP)/Health Saving Account (HSA) combination.

We believe the HDHP/HSA combo is underutilized for several reasons.
•    It’s relatively new – The HSA has been around for less than a decade. Inertia leads many employees to stick with the plan they’ve always used instead of trying to figure out how yet another complicated insurance plan works.
•    Not every employer offers the option – We can’t blame you for that!
•    Someone told you not to use it – Most benefits departments have simple rules of thumb that advise only the young and/or very healthy to use the HDHP/HSA.
•    High deductible fear – The higher deductible scares people away and discourages them for taking on what appears to be a higher risk.

We’re here to tell you that the last two points are too simplistic. The only way to know for sure whether the HDHP/HSA combo is right for you is to crunch the numbers, which is what our spreadsheet aims to do. Consider this: your options might include a Traditional family plan option with a deductible of $2,500, while the HDHP has a deductible of $5,000. What if you don’t have that extra $2,500 available in the case of large medical expenses? Does that rule out using the HDHP?

Not necessarily! The reason is that your monthly HDHP premiums should be significantly lower than the Traditional plan. What if the HDHP premiums save you $2,500 per year, offsetting the higher deductible? Now you’re starting to see why the decision is not as obvious as the first glance would imply.

So we encourage you to download the calculator and fill in the yellow sections with details of your competing health plans. The only way to know which plan is right for you is to use the actual dollars you’ll spend, not a simple rule of thumb. One suggestion is to do a scenario analysis by changing the amount of healthcare costs higher and lower (question 6 & 7). You may find that at a low level of spending, one plan is preferable, while the other plan is preferable and higher levels of spending. You’ll need to gauge how likely you are to cross over the break-even point where that switch occurs.

In some cases, the HDHP plan will only appear favorable if you contribute to the HSA and receive the additional tax savings accordingly. The drawback is that it will require additional funds to put money in the HSA. The Analysis section of the calculator accounts for this by showing the total cash outlay for both plans. Keep in mind that, unlike Flexible Spending Accounts (FSA) you may have used in the past, the money in your HSA rolls over into the next year; it is not lost and instead serves as a savings vehicle for future years. So while contributions to the HSA represent a cash outlay, since the money is still yours it is not a cost. Thus, you can end up with a situation where you need more money during the year to pay for the HDHP/HSA, but you may still save money by doing so.

Here it is, then, the Health Insurance Cost Comparison calculator. Make sure you read all of the instructions and notes to properly use the calculator. The Analysis and Summary provide the conclusions of how much each plan will lighten your pocketbook each year.