Jordan's Two Health Plans, Thin Auto Limits and a Denied Claim
Jordan is 24, single, rents with a roommate and has $2,100 in savings. He owns a 2016 sedan worth about $7,800 outright. Open enrollment gives him two health plans: Plan A costs $180 a month with a $3,000 deductible, 20% coinsurance and a $7,000 out-of-pocket maximum; Plan B costs $310 a month with a $750 deductible, 20% coinsurance and a $4,500 out-of-pocket maximum. His daily prescription costs him about $45 a month under Plan A and $15 under Plan B. His doctor has recommended a minor outpatient procedure that will bill roughly $11,000, which he plans to schedule this year. On the auto side he carries only the state minimum liability limits ($25,000 per person / $50,000 per accident bodily injury, $25,000 property damage) plus collision at $420 a year with a $1,000 deductible. He has no renters insurance.
1. Compare the total annual cost of Plan A and Plan B this year, including the procedure. Which is cheaper, and how sensitive is that answer?
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Plan A (procedure year): premiums $180 × 12 = $2,160. Deductible $3,000, then 20% of the remaining $8,000 = $1,600, for $4,600 of cost sharing (below the $7,000 cap). Prescriptions $45 × 12 = $540. Total ≈ $7,300.
Plan B (procedure year): premiums $310 × 12 = $3,720. Deductible $750, then 20% of $10,250 = $2,050, for $2,800 (below the $4,500 cap). Prescriptions $15 × 12 = $180. Total ≈ $6,700.
Plan B is about $600 cheaper in a procedure year - but only by $600, and only because the procedure is happening.
Sensitivity - this is the real answer. Without the procedure: Plan A ≈ $2,160 + $540 + a couple of visits ≈ $2,800–3,100; Plan B ≈ $3,720 + $180 + visits ≈ $3,950–4,200. Plan A wins by roughly $1,000. The extra $1,560 a year in Plan B premiums buys a $2,250 lower deductible, so B breaks even only when his covered spending for the year is roughly $5,000–6,000 or more. High-user year → B; healthy year → A.
The constraint the arithmetic hides is cash flow. Plan A demands $3,000 out of pocket before the procedure, against $2,100 of savings; the hospital will want payment or a signed payment plan first. Plan B's $750 deductible is payable from savings. If he chooses A, he must accumulate $3,000 before scheduling - which may delay the procedure past the year and change the whole comparison.
2. Should Jordan raise his auto liability limits, and should he keep collision?
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Raise the liability limits - clearly yes. The state minimum of 25/50/25 is a floor set for affordability, not adequacy. One at-fault crash with a serious injury produces medical bills well past $100,000; everything above his limit becomes his personal liability, and a judgment can follow him for years and support wage garnishment. His assets are small - $2,100 in savings and a $7,800 car - which is precisely why he cannot self-insure. Moving to something like 100/300/100 typically costs an extra $15–30 a month for a driver his age, which is less than a single $1,000 deductible event. He should also price uninsured/underinsured motorist coverage, since a large share of drivers carry only minimum limits.
Keep collision. $420 a year against a $7,800 car with a $1,000 deductible means the maximum payout is $6,800, and it only responds once damage exceeds $1,000. On pure expected value, a $7,800 car is near the line where people drop collision. The deciding factor is affordability of the loss, not the odds: with $2,100 in savings he cannot replace the car, and he needs it for work. Cheaper alternatives: raise the deductible to $1,500 (lowers the premium, and he would have to fund it), and price comprehensive for theft, vandalism and weather if he parks on the street.
The coverage he is actually missing is renters insurance. $12–20 a month covers his belongings and, more importantly, personal liability and loss of use if the apartment is damaged. The landlord's policy covers the building, never his property or his legal liability for a kitchen fire. That is the single cheapest risk transfer on his list, and it should be bought before the auto upgrade.
3. The insurer pays part of the procedure but denies the rest as 'not medically necessary.' What should Jordan do first, and what are his options?
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First: do not pay the disputed portion, and tell the provider's billing office it is under appeal. Hospitals routinely hold disputed balances during an appeal; paying first weakens his position. Then get everything in writing.
Step 1 - read the denial and the EOB. Identify the exact reason code, the amount denied, whether the denial is for the facility, the surgeon or the anesthesia, and the appeal deadline - internal appeals are commonly available for around 180 days, and the plan must decide a post-service appeal within roughly 30–60 days.
Step 2 - ask whether it is a coding problem. A large share of 'not medically necessary' denials are wrong procedure or diagnosis codes, or a missing prior authorization that was in fact obtained. Ask the billing office to resubmit with corrected codes and the authorization number before spending effort on a formal appeal.
Step 3 - internal appeal with clinical evidence. Submit a letter of medical necessity from the treating physician, the clinical notes and the plan's own coverage criteria. A generic patient letter is weak; the physician's documentation is what moves these.
Step 4 - external independent review. If the internal appeal fails, he can usually request an external review by an independent reviewer, typically at little or no cost to him. This is the step most people skip.
Escalation: his employer's HR or benefits team can intervene directly with the plan, and a complaint to the state insurance department creates a documented file. If any part of the bill came from an out-of-network provider in an emergency, surprise-billing protections may cap his responsibility at in-network cost sharing and bar balance billing. Keep a dated log of every call, name and reference number - the paper trail is what wins.