● Money & small business
Family health insurance: my plan, my spouse's, or split? A worked example
When both parents can get health insurance through work, the family can go on either plan, or be split between them. The cheapest choice isn't always obvious: the plans charge different premiums for each tier, some employers add a surcharge for covering a spouse, and the deductibles work differently. Every figure below comes from our family health coverage calculator, which was checked against its spreadsheet and an independent calculation in 401 cases. Put in your own plans and costs there.
The example family
Two parents and two children. Expected care next year, before insurance: you $1,200, your spouse $6,500, the children $400 and $900.
| Your plan: PPO | Spouse's plan: HDHP | |
|---|---|---|
| Premium a month: employee only / + spouse / + children / family | $145 / $390 / $330 / $560 | $110 / $360 / $300 / $520 |
| Spousal surcharge | $100 a month | none |
| Deductible: individual / family | $1,000 / $2,000 (embedded) | $3,400 / $6,800 (aggregate) |
| Out-of-pocket maximum: individual / family | $4,500 / $9,000 | $7,000 / $14,000 |
| Coinsurance after the deductible | 20% | 10% |
| Employer HSA money a year: employee only / other tiers | none | $750 / $1,500 |
Four ways to cover the family
| How to cover the family | Premiums | Out of pocket | Employer HSA | Net cost | Worst case |
|---|---|---|---|---|---|
| Everyone on your PPO | $7,920 | $3,400 | $0 | $11,320 | $16,920 |
| Everyone on your spouse's HDHP | $6,240 | $7,020 | −$1,500 | $11,760 | $18,740 |
| You + children on the PPO, spouse on the HDHP | $5,280 | $5,810 | −$750 | $10,340 | $20,530 |
| You on the PPO, spouse + children on the HDHP | $5,340 | $7,940 | −$1,500 | $11,780 | $22,340 |
Splitting is cheapest here: $10,340, $980 less than everyone on the PPO. Most of the saving is the surcharge. Everyone on the PPO costs $560 + $100 = $660 a month, $7,920 a year; moving your spouse to their own employer's plan removes the $1,200 surcharge and drops your tier to employee + children. Your spouse, who has the biggest bills, pays more for care on the HDHP ($3,400 deductible, then 10% of $3,100: $3,710), but the premiums fall by $2,640 and the HDHP comes with $750 of HSA money.
The worst case goes the other way. With two plans, the family could hit two out-of-pocket maximums: $4,500 × 3 people capped at the $9,000 family maximum on the PPO, plus $7,000 on the HDHP. In a very bad year, the split costs $20,530 against $16,920 with everyone on the PPO.
How much surcharge changes the answer
Without the surcharge, everyone on the PPO costs $10,120 and is the cheapest option, $220 less than the split. Each $1 of monthly surcharge adds $12 a year to that option, so it stops being cheapest once the surcharge passes $18.33 a month: at $18 it costs $10,336 and still wins by $4; at $19 it costs $10,348 and the split wins by $8. A spousal surcharge usually applies only when the spouse could get coverage through their own job, so check the rule in your enrollment materials.
When one person's costs change
The same family and plans, with only your spouse's expected costs changed:
| Spouse's care | All on PPO | All on HDHP | You + kids PPO, spouse HDHP | You PPO, spouse + kids HDHP |
|---|---|---|---|---|
| $0 | $10,020 | $7,240 | $6,630 | $6,180 |
| $2,000 | $10,420 | $9,240 | $8,630 | $8,180 |
| $6,500 | $11,320 | $11,760 | $10,340 | $11,780 |
| $12,000 | $12,420 | $12,310 | $10,890 | $12,330 |
In a light year, the cheapest choice puts your spouse and the children on the HDHP: its premiums and HSA money matter more than its deductible. Once your spouse expects heavy bills, the children do better on the PPO. Everyone on the PPO is never the cheapest of the four here because of the surcharge.
Embedded or aggregate deductible
With an embedded deductible, each person stops paying deductible at the individual amount. With an aggregate deductible, common on HSA-qualified plans, the family pays the whole family deductible before coinsurance starts for anyone. On the HDHP above, with everyone covered and one child the only one with bills:
| Child's bills | Embedded: you pay | Aggregate: you pay |
|---|---|---|
| $2,000 | $2,000 | $2,000 |
| $5,000 | $3,560 | $5,000 |
| $10,000 | $4,060 | $7,000 |
At $5,000, the embedded plan charges the $3,400 individual deductible and 10% of the other $1,600; the aggregate plan charges all of it, since $5,000 is under the $6,800 family deductible. At $10,000, the aggregate family pays the $6,800 deductible plus 10% of $3,200, $7,120, but the $7,000 individual out-of-pocket maximum stops it there: under the Affordable Care Act, most plans can't make one person pay more than the self-only out-of-pocket limit, even on family coverage.
Worth checking before you choose
- HSA eligibility. You can put money in an HSA only if you're covered by an HDHP and no other general health coverage. If one of you is on the PPO and the other on the HDHP, the HDHP spouse can usually still contribute, unless the PPO spouse has a general-purpose health FSA that covers them.
- Networks. The calculator assumes in-network care. If a child's doctor is only in one plan's network, that can settle it.
- Copays. Count them in each person's expected costs.
- Children can generally stay on a parent's plan until 26.
The calculator prices all four options for your plans. For a single plan choice, see the health plan cost calculator; for what your elections do to your paycheck, the open enrollment paycheck calculator.