Calculator
Example data table
| Item | Option 1 | Option 2 |
|---|---|---|
| Monthly premium | 280.00 | 380.00 |
| Deductible | 1,500.00 | 750.00 |
| Coinsurance % | 20 | 10 |
| Out-of-pocket max | 5,500.00 | 4,500.00 |
| PCP / Specialist copay | 25 / 45 | 20 / 35 |
| Generic / Brand copay | 10 / 35 | 8 / 25 |
| Utilization assumptions | ||
| PCP visits / Specialist visits | 3 / 2 | |
| Generic / Brand fills | 8 / 2 | |
| Lab tests @ cost | 2 @ 70 | |
| Imaging tests @ cost | 1 @ 350 | |
| ER visits @ cost | 0 @ 1200 | |
| Inpatient days @ cost | 0 @ 2500 | |
Formula used
Annual premium = monthly premium × 12.
Copay total = (visits × copays) + (prescriptions × copays) + extra copay services.
Allowed subject spending = labs + imaging + ER + inpatient + extra subject spend.
Subject-to-deductible payment = deductible paid + coinsurance paid, where: deductible paid = min(deductible, allowed subject spending), coinsurance paid = (allowed subject spending − deductible paid) × coinsurance rate.
Out-of-pocket (before cap) = copay total + subject-to-deductible payment.
Out-of-pocket (capped) = min(out-of-pocket max, out-of-pocket before cap).
Total annual cost = annual premium + out-of-pocket (capped).
Projection math (optional)
Premiums grow each year by the premium growth rate.
Allowed costs grow each year by the medical growth rate.
Discounted present value uses: PV = cost ÷ (1 + discount rate)^(year−1).
Copays can stay fixed or be inflated.
How to use this calculator
- Enter expected annual utilization and average allowed costs.
- Fill both options with premiums and benefit details.
- Click Compare costs to view results above.
- Review one-year totals and the multi-year projection table.
- Use CSV or PDF to share your comparison.
Why compare medical spending annually
Health costs are irregular, while budgets are monthly. Comparing options by annual totals helps you plan cash flow, evaluate affordability, and avoid surprises when a single hospital visit reshapes the year’s spending profile.
Annual comparison also prevents “premium blindness.” Two plans can feel similar, yet differ by thousands per year once premiums, copays, and cost sharing are added.
Key cost drivers captured in this model
The calculator combines premiums with out-of-pocket spending. It models fixed copays for visits and medicines, then applies deductible and coinsurance to allowed services like labs, imaging, emergency care, and inpatient treatment until the out-of-pocket maximum is reached.
Example: allowed services of 12,000 with a 1,500 deductible and 20% coinsurance produce 1,500 + (10,500 × 0.20) = 3,600 before any cap. Copays are added on top, then capped by the maximum.
Interpreting total cost versus risk exposure
A lower expected total can still carry higher risk. Compare each option’s worst-case exposure using the out-of-pocket maximum plus annual premiums. For example, an option with a 6,000 premium and 3,500 maximum exposure caps at 9,500 for the year.
Use the “savings gap” to judge resilience: savings gap = (worst case) − (expected). A smaller gap means less volatility and fewer tough tradeoffs if a major event occurs.
Using multi-year projections for budgeting
Multi-year views matter when premiums rise faster than income. The projection inflates premiums and allowed costs using your growth assumptions, and can discount future costs to present value using a discount rate.
Illustration: a 10,000 cost in year three discounted at 8% becomes about 8,573 today. If Option A is cheaper now but grows faster, Option B can become the lower present-value choice over longer horizons.
Common scenarios worth testing
Run at least three scenarios: routine care only, routine plus ongoing prescriptions, and a high-cost year with inpatient care. Adjust visits, medicines, and allowed amounts to match your household.
Stress tests are practical. Try increasing inpatient cost by 25%, doubling emergency visits, or adding one specialist visit per month. If Option A wins only in routine care but loses under stress, Option B may be safer when emergency savings are limited.
FAQs
Does this tool replace an official benefits summary?
No. It produces planning estimates from your inputs. Always confirm deductibles, copays, coinsurance rules, and the out-of-pocket maximum in the plan documents before making a final decision.
How should I estimate allowed costs for services?
Use prior explanation-of-benefits statements, provider cash-price lists, or insurer cost estimators. Enter the average allowed amount you expect per service category, then adjust upward for uncertainty.
Do copays count toward the out-of-pocket maximum here?
Yes, copays are included in out-of-pocket spending and then capped. Some plans exclude certain items, so treat this as a baseline model and validate your plan’s specific rules.
How can I model a family or household plan?
Combine expected utilization across members and use the plan’s family deductible and family out-of-pocket maximum. If members have very different needs, run separate scenarios and compare totals.
What does the discount rate do in projections?
It converts future costs into today’s value so long-term options are comparable. Higher discount rates reduce the weight of distant costs, while lower rates emphasize future spending.
Can I compare cash-pay care with an insurance option?
Yes. Set premiums to zero for the cash-pay scenario and enter expected spending as allowed costs with no deductible structure. This won’t capture negotiated network pricing, but it helps compare budget impact.