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The Water Cooler
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Re-evaluating Health Insurance Options
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<blockquote data-quote="Jerryinokc" data-source="post: 1378706" data-attributes="member: 13222"><p>The good Doctor has a valid suggestion. Without knowing your age or general health, I would offer up the following (please forgive me now for the length of this one):</p><p></p><p>"Self insure" has numerous levels of meaning to different people. For some, $5,000 would be enough to break them, while others would only consider a catastrophic policy to protect their assets over a certain level (say, $10,000 or $20,000). I for one take the largest deductible I can on my homeowners/auto/health insurance because I don't care about the broken window or small claim; I only care about the tornado, fire, or semi-truck that just wiped out my GMC. </p><p></p><p>Your health is a different matter, but I apply the same principle - buy inefficient and exorbitantly priced insurance for the MAJOR health issues, not the minor ones. Believe me, there is a reason insurance companies won't let you take TOO HIGH a deductible, because that's removing all their profit (I'm talking about individuals or very small employers here, not Walmart). Remember the scenario on my homeowners insurance? They typically only offer a few % points difference in premium credit between a $1,000 and $5,000 deductible. Why? Because the chance of a loss between 1,000 and 5,000 is small and they don't want to give that profit away.</p><p></p><p>So, let's look at that suggestion of "self-insure". I'll wager the premium for you and your family (let's assume you have one, but just cut in half the estimates of the money I'm about to discuss if you don't) runs around $900 to $1,200 per month for a decent policy with a $1,000 deductible. Let's call it $1,000 per month. That policy also provides a "coinsurance" clause that makes you take part of the risk, even after you pay the deductible, and we'll say that's 80/20 (they pay 80%, you pay 20%).</p><p></p><p>So, you find yourself going to the hospital for a couple of days and it costs a total of $10,000. In addition to your deductible of $1,000, you also have to pay 20% of the remainder, or $1,800. So your total out-of-pocket experience for the year is $14,800 ($1,000 per month for insurance, $1,000 deductible, and $1,800 copay).</p><p></p><p>Now, here's where your age and health condition come into play, not to mention your ability to sleep at night knowing you're "self-insured". If you were to take a $10,000 large deductible plan, and buy catastrophic coverage over that, it might provide as much as a 30-40% credit over that current $1,000 premium, making the monthly charge $600 per month, or a savings of $4,800 a year. </p><p></p><p>IF YOU'RE HEALTHY AND DON'T HAVE MAJOR PROBLEMS:</p><p></p><p>- Each year you will save $4,800 while protecting against that MAJOR problem (pray you don't have it within the first two years)</p><p></p><p>- Go those two years, and the savings are $9,600, three years would be $14,400. Sounds pretty good, huh! What's the problem?</p><p></p><p>99.9% of all people WILL NOT SAVE that money in an account for when something bad happens, meaning they will have to dig for the $10,000 somewhere! That's when they get into trouble and can't sleep (see my earlier comment about sleeping through the night). </p><p></p><p>Sometimes, just the worry of having to come up with $10,000 is enough to cause fits at night. Sometimes, it's worth paying that high premium to know you're covered. Again, if you're fairly young, in reasonable health, and have the discipline to put the savings away, there is really no decision - take the high deductible and bank the savings in preparation for that bad event down the road. It also gives you the confidence that you've got the funds to deal with any major issue, and trust me, healthcare providers LOVE CASH! In fact, it's not unreasonable to negotiate huge discounts if you pay cash for your "small" healthcare.</p><p></p><p>Sorry for the lengthy email, but you're facing a fairly serious decision. Make sure you consider the TOTAL cost of risk, not just the premium (factors such as health, your ability to bank the savings, whether the premium credit is really worth the increased deductible, etc.). People today have forgotten that SOMEBODY has to pay these bills. Relying on ever-decreasing "insurance" is just not a sound plan anymore.</p><p></p><p>I wish you the best of luck. Being a small business owner that provides health benefits to his employees, I know the struggles. The changes that are coming down the road will not make it any easier.</p></blockquote><p></p>
[QUOTE="Jerryinokc, post: 1378706, member: 13222"] The good Doctor has a valid suggestion. Without knowing your age or general health, I would offer up the following (please forgive me now for the length of this one): "Self insure" has numerous levels of meaning to different people. For some, $5,000 would be enough to break them, while others would only consider a catastrophic policy to protect their assets over a certain level (say, $10,000 or $20,000). I for one take the largest deductible I can on my homeowners/auto/health insurance because I don't care about the broken window or small claim; I only care about the tornado, fire, or semi-truck that just wiped out my GMC. Your health is a different matter, but I apply the same principle - buy inefficient and exorbitantly priced insurance for the MAJOR health issues, not the minor ones. Believe me, there is a reason insurance companies won't let you take TOO HIGH a deductible, because that's removing all their profit (I'm talking about individuals or very small employers here, not Walmart). Remember the scenario on my homeowners insurance? They typically only offer a few % points difference in premium credit between a $1,000 and $5,000 deductible. Why? Because the chance of a loss between 1,000 and 5,000 is small and they don't want to give that profit away. So, let's look at that suggestion of "self-insure". I'll wager the premium for you and your family (let's assume you have one, but just cut in half the estimates of the money I'm about to discuss if you don't) runs around $900 to $1,200 per month for a decent policy with a $1,000 deductible. Let's call it $1,000 per month. That policy also provides a "coinsurance" clause that makes you take part of the risk, even after you pay the deductible, and we'll say that's 80/20 (they pay 80%, you pay 20%). So, you find yourself going to the hospital for a couple of days and it costs a total of $10,000. In addition to your deductible of $1,000, you also have to pay 20% of the remainder, or $1,800. So your total out-of-pocket experience for the year is $14,800 ($1,000 per month for insurance, $1,000 deductible, and $1,800 copay). Now, here's where your age and health condition come into play, not to mention your ability to sleep at night knowing you're "self-insured". If you were to take a $10,000 large deductible plan, and buy catastrophic coverage over that, it might provide as much as a 30-40% credit over that current $1,000 premium, making the monthly charge $600 per month, or a savings of $4,800 a year. IF YOU'RE HEALTHY AND DON'T HAVE MAJOR PROBLEMS: - Each year you will save $4,800 while protecting against that MAJOR problem (pray you don't have it within the first two years) - Go those two years, and the savings are $9,600, three years would be $14,400. Sounds pretty good, huh! What's the problem? 99.9% of all people WILL NOT SAVE that money in an account for when something bad happens, meaning they will have to dig for the $10,000 somewhere! That's when they get into trouble and can't sleep (see my earlier comment about sleeping through the night). Sometimes, just the worry of having to come up with $10,000 is enough to cause fits at night. Sometimes, it's worth paying that high premium to know you're covered. Again, if you're fairly young, in reasonable health, and have the discipline to put the savings away, there is really no decision - take the high deductible and bank the savings in preparation for that bad event down the road. It also gives you the confidence that you've got the funds to deal with any major issue, and trust me, healthcare providers LOVE CASH! In fact, it's not unreasonable to negotiate huge discounts if you pay cash for your "small" healthcare. Sorry for the lengthy email, but you're facing a fairly serious decision. Make sure you consider the TOTAL cost of risk, not just the premium (factors such as health, your ability to bank the savings, whether the premium credit is really worth the increased deductible, etc.). People today have forgotten that SOMEBODY has to pay these bills. Relying on ever-decreasing "insurance" is just not a sound plan anymore. I wish you the best of luck. Being a small business owner that provides health benefits to his employees, I know the struggles. The changes that are coming down the road will not make it any easier. [/QUOTE]
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