FireEye Health Insurance 2016 Analysis

Individual Plans (Employee only)

Assumptions and Notes:

In-network procedures
All medical bills are paid pre-tax (via either HSAs or FSAs).
These cost calcuations do NOT take into account prescription drugs (which is something the PPO plans tend to be superior in).

Plan Details



In [2]:

    
%matplotlib inline
import matplotlib
import numpy as np
import matplotlib.pyplot as plt

class Plan: pass

# Plan 1 = Cigna HDHP/HSA
p1 = Plan()    
p1.family_deductible = 2000.00     # Same deductible for both family and individual for the HDHP
p1.individual_deductible = 2000.00
p1.family_oopmax = 3000.00      # Same out-of-pocket max for family and individual for the HDHP
p1.individual_oopmax = 3000.00
p1.premium_monthly = 0.0
p1.hsa_contribution = 1200.00
p1.coinsurance_rate = 0.1

# Plan 2 = Cigna PPO $1000
p2 = Plan()
p2.family_deductible = 1000.00 #N/A for individual simulation
p2.individual_deductible = 1000.00
p2.family_oopmax = 4000.00 # N/A for individual simulation
p2.individual_oopmax = 4000.00
p2.premium_monthly = 0
p2.hsa_contribution = 0.0
p2.coinsurance_rate = 0.2

# Plan 3 = Cigna PPO $500
p3 = Plan()
p3.family_deductible = 500.00 # N/A for individual simulation
p3.individual_deductible = 500.00
p3.family_oopmax = 3500.00 # N/A for individual simulation
p3.individual_oopmax = 3500.00
p3.premium_monthly = 21*2 # price/pay period * 2 pay periods/month
p3.hsa_contribution = 0.0
p3.coinsurance_rate = 0.1

Helper functions



In [3]:

    
# For the purposes of this estimation, we are assuming the deductible
# is always larger than the HSA contribution amount
def apply_deductible_and_hsa(cost, deductible, hsa):
    cost_to_you = 0
    cost_remaining = 0
    
    # Apply HSA
    deductible_minus_hsa = deductible - hsa
    
    if cost <= hsa:
        cost_to_you = 0
        cost_remaining = 0
    elif cost <= deductible:
        cost_to_you = cost - hsa
        cost_remaining = 0
    elif cost > deductible:
        cost_to_you = deductible_minus_hsa
        cost_remaining = cost - deductible

    return (cost_to_you, cost_remaining)

def apply_coinsurance(cost, coinsurance_rate):
    return cost * coinsurance_rate

def apply_oopmax(cost, oopmax):
    if cost >= oopmax:
        return oopmax
    else:
        return cost
    
def setup_graph(title='', x_label='', y_label='', fig_size=None):
    fig = plt.figure()
    if fig_size != None:
        fig.set_size_inches(fig_size[0], fig_size[1])
    ax = fig.add_subplot(111)
    ax.set_title(title)
    ax.set_xlabel(x_label)
    ax.set_ylabel(y_label)

Plan cost functions



In [4]:

    
def individual_cost(plan, gross_cost):
    (cost_to_you, cost_remaining) = apply_deductible_and_hsa(gross_cost, 
                                    plan.individual_deductible, 
                                    plan.hsa_contribution)
    cost_to_you += apply_coinsurance(cost_remaining, plan.coinsurance_rate)
    cost_to_you = apply_oopmax(cost_to_you, plan.individual_oopmax)
    
    # Apply yearly premiums - note that the out-of-pocket max doesn't include
    # the premiums; thus, we apply them after applying out-of-pocket max.
    cost_to_you += (plan.premium_monthly * 12)
    return cost_to_you
    
    
def family_cost(plan, gross_cost):
    (cost_to_you, cost_remaining) = apply_deductible_and_hsa(gross_cost, 
                                    plan.family_deductible, 
                                    plan.hsa_contribution)
    cost_to_you += apply_coinsurance(cost_remaining, plan.coinsurance_rate)
    cost_to_you = apply_oopmax(cost_to_you, plan.family_oopmax)
    
    # Apply yearly premiums - note that the out-of-pocket max doesn't include
    # the premiums; thus, we apply them after applying out-of-pocket max.
    cost_to_you += (plan.premium_monthly * 12)
    return cost_to_you

Sanity Tests

Zero costs



In [5]:

    
# Should be the monthly premium times 12 (to make up the yearly premium).
family_cost(p1, 0)









    Out[5]:





0.0



In [6]:

    
p1.premium_monthly * 12.0









    Out[6]:





0.0



In [7]:

    
family_cost(p2, 0)









    Out[7]:





0.0



In [8]:

    
p2.premium_monthly * 12.0









    Out[8]:





0.0



In [9]:

    
family_cost(p3, 0)









    Out[9]:





504.0



In [10]:

    
p3.premium_monthly * 12.0









    Out[10]:





504.0

Cost greater than HSA and deductible



In [11]:

    
(p1.premium_monthly * 12) + \
(p1.family_deductible - p1.hsa_contribution) + \
(6000 - p1.family_deductible) * p1.coinsurance_rate









    Out[11]:





1200.0

Individual Cost



In [15]:

    
# Calculate costs
gross_costs = range(0, 40000)
p1_costs = [individual_cost(p1, cost) for cost in gross_costs]
p2_costs = [individual_cost(p2, cost) for cost in gross_costs]
p3_costs = [individual_cost(p3, cost) for cost in gross_costs]

# Do graph
setup_graph(title='Individual costs', x_label='Gross cost', y_label='Cost to you', fig_size=(12,7))
ax = plt.subplot(1,1,1)
p1_graph, = ax.plot(gross_costs, p1_costs, label="Cigna HDHP/HSA")
p2_graph, = ax.plot(gross_costs, p2_costs, label="Cigna PPO $1000")
p3_graph, = ax.plot(gross_costs, p3_costs, label="Cigna PPO $500")
handles, labels = ax.get_legend_handles_labels()
ax.legend(handles, labels, loc='upper left')
plt.show()

Conculsion

For employee-only insurance, buy the High-Deductible Health Plan!

NOTE: As these calculations don't factor in prescription drug benefits, and the PPO plans tend to be better for prescription drugs, if you are likely to use many prescription drugs, you should look into those details.