D405 Task 1 Health Plan Comparison Example

Choosing Coverage for Two Generations: Comparing an HMO, a PPO and a High-Deductible Plan for a Family With a Child Who Has Type 1 Diabetes, and Medicare Options for a Grandmother Turning 65

Student Name

Leavitt School of Health, Western Governors University

D405: Financial Resource Management and Healthcare Reimbursement, Task 1

Course Instructor

Month Day, Year

Choosing Coverage for Two Generations: Comparing an HMO, a PPO and a High-Deductible Plan for a Family With a Child Who Has Type 1 Diabetes, and Medicare Options for a Grandmother Turning 65

The Clients

Tom and Maria Brennan are a composite couple in their early forties with two children, Ellie, 12, who has type 1 diabetes and uses an insulin pump and continuous glucose monitor, and Owen, 9, who is healthy. Tom's employer offers three plans at open enrollment. Maria's mother, Linda, will turn 65 in four months and is moving in with them; she is retiring from a part-time job without health benefits and has high blood pressure and osteoarthritis. The family has asked a health and human services benefits counselor to explain their options. This paper compares the employer plans for the Brennans and the Medicare choices for Linda, and recommends a path for each.

How the Plan Types Differ

A health maintenance organization (HMO) limits coverage to a network of providers, usually requires a primary care physician to coordinate care and give referrals to specialists, and generally does not pay for out-of-network care except emergencies. Premiums and cost sharing tend to be lower in exchange for less choice. A preferred provider organization (PPO) pays for care both inside and outside its network, at a higher share outside, and does not require referrals, which costs more in premiums. A high-deductible health plan (HDHP) has a lower premium and a high deductible that the family pays before most coverage begins, except for preventive care; it can be paired with a health savings account (HSA), a tax-advantaged account for medical expenses that the family owns and keeps from year to year. Among workers with employer coverage, PPOs remain the most common plan type, with high-deductible plans paired with savings accounts next (Kaiser Family Foundation, 2024).

Cost sharing changes how people use care. When one large employer moved all employees from a plan with free care to a high-deductible plan, total spending fell by roughly 12% to 14%, but entirely because people used less care, including potentially valuable services such as preventive care, rather than because they shopped for lower prices (Brot-Goldberg et al., 2017). For a family whose child depends on ongoing care and supplies, that finding is a warning.

The Brennans' Employer Options

The table summarizes the three plans as offered, with an estimate of the family's total annual cost based on Ellie's expected use: quarterly endocrinology visits, pump and sensor supplies, insulin and one urgent visit, plus routine care for the rest of the family. Estimated use of covered services before cost sharing is about $19,000 a year, most of it Ellie's supplies and insulin.

Recommendation for the Brennans

Because Ellie's costs are high and predictable, the family will almost certainly spend past the deductible every year. Under those conditions, the HMO is the least expensive option, since its lower deductible and 10% coinsurance matter far more than the HDHP's lower premium and employer deposit. Its main drawback is the referral requirement, but Ellie's endocrinologist is in the network, and a standing referral can be requested for a chronic condition. The HDHP is the second choice: contributing their own money to the HSA before taxes would narrow the gap somewhat, but they would still pay close to the $8,000 out-of-pocket maximum every year, and the risk is that the high deductible may lead them to delay care for Owen or for themselves, as the research suggests. The PPO costs the most and offers flexibility the family does not need. The counselor should also confirm that the pump supplies and sensors are covered under each plan's medical or pharmacy benefit, since this varies and can change the totals substantially.

Two practical steps would protect the family under any plan. First, the counselor should ask the HMO for a standing referral to endocrinology in writing before the plan year starts, so that Ellie's quarterly visits are never delayed by paperwork. Second, the family should use a flexible spending account if Tom's employer offers one with the HMO, since the roughly $2,800 they expect to pay out of pocket is predictable and could be set aside before taxes. Linda cannot join the family's employer plan, because parents are not usually eligible dependents on employer coverage, so her coverage is a separate decision.

Medicare Options for Linda

Medicare is the federal program Linda becomes eligible for at 65. Part A covers hospital care and is premium-free for people who, like Linda, have worked long enough to qualify. Part B covers physician services and outpatient care and carries a monthly premium. Part D covers prescription drugs through private plans. Linda has two main paths (Centers for Medicare & Medicaid Services [CMS], 2025).

Original Medicare, Parts A and B, lets her see any provider in the country who accepts Medicare, with no network, but leaves her responsible for deductibles and 20% coinsurance on most Part B services with no annual cap. She would add a stand-alone Part D plan and would usually buy a Medigap supplement to cover much of the remaining cost sharing. Medicare Advantage, Part C, is an alternative offered by private insurers that bundles Parts A, B and usually D, often with extras such as dental or vision, a network like an HMO or PPO, and an annual out-of-pocket maximum.

Timing matters. Linda's initial enrollment period runs for seven months around her 65th birthday, and enrolling in Part B late can bring a lifelong premium penalty unless she has other qualifying coverage, which she does not. Her best window to buy a Medigap policy without medical underwriting is the six months after her Part B coverage begins.

Recommendation for Linda

With two chronic conditions that are well controlled and a new home in the same metropolitan area as her doctors, either path could work. Original Medicare with a Medigap plan and a Part D plan would cost more in monthly premiums but offers predictable costs and freedom to see any provider, which matters if she wants to keep her orthopedist as her arthritis progresses. A Medicare Advantage plan would likely have lower premiums but requires checking that her physicians are in network. The counselor should compare specific plans with Linda using the official Medicare plan finder, confirm her medications are on each Part D or Advantage formulary and make sure she enrolls in Part B on time.

Two recent changes to Medicare lower Linda's drug cost risk on either path. Since 2025, out-of-pocket spending on covered Part D drugs has been capped each year, with the cap rising with inflation, and cost sharing for covered insulin is limited to $35 a month (CMS, 2025). Neither affects her today, since her current medications are low-cost generics, but the cap removes the worst case if a new diagnosis brings an expensive drug later.

Conclusion

The right coverage depends on how a family actually uses care. For the Brennans, whose costs are high and certain, the plan with the lowest cost once care is used, the HMO, is the best value. For Linda, the decision rests on how she weighs predictable costs and provider choice against lower premiums, and on enrolling on time.

References

Brot-Goldberg, Z. C., Chandra, A., Handel, B. R., & Kolstad, J. T. (2017). What does a deductible do? The impact of cost-sharing on health care prices, quantities, and spending dynamics. The Quarterly Journal of Economics, 132(3), 1261-1318. https://doi.org/10.1093/qje/qjx013

Centers for Medicare & Medicaid Services. (2025). Medicare & you 2026. U.S. Department of Health and Human Services. https://www.medicare.gov/publications/10050-medicare-and-you.pdf

Kaiser Family Foundation. (2024). 2024 employer health benefits survey. https://www.kff.org/health-costs/report/2024-employer-health-benefits-survey/