In our previous post we spoke about Obamacare, the Pros and the Cons. As we prepare for the insurance exchange and the employer mandate, I’ve had a lot of time to reflect what would be the best position for our clients. As I was thinking about how to best help our clients, both group clients and individuals, my thoughts began to drift to the balancing act of folks who were self-insured versus folks with high deductible plans versus folks with “Cadillac Plans”. Each one of these groups can make a strong argument for why they believe they are in the right for their current situation. Today, I’d like to focus on the numbers when buying health insurance.
We should first focus on what a deductible is; it’s the out of pocket amount of money you must put towards a claim before your insurance company puts in a dime. I think of it as the amount of risk you are willing to put into the game before your insurance company covers the risk. As you can imagine, the more skin you are willing to put in the game, the more reward. Most people only focus on deductibles with their car insurance and think $1,000.00 dollars is a high deductible. With health insurance, most high deductible plans reach $5,000 with some as high as $8,000 or $16,000 for a family. That makes $1,000 laughable!
In addition to deductibles, many plans expose patients to Annual out of Pocket Maximums. What is this extra money? It is money a patient must pay in co-pays and/or co-insurances. So once you’ve hit your deductible, you now must pay these extra charges until you’ve hit your max. Once that happens, your insurance company goes to work!
So why would someone of sound state and mind want to put $5,000 of their hard earned dollars at risk? The answer: the difference in premiums between a Cadillac plan and a high deductible plan. A very popular high deductible plan is the Anthem Tonik plan. It’s one a lot of younger folks buy as the premiums are not so high, it covers dental and vision and allows a patient 4 doctors office visits throughout the year. For a healthy 35 year old, single male, the monthly premiums are going to be around $220 a month. The deductible with this plan is $5000 and the annual out of pocket maximum is $0. Let’s then look at a PPO plan with a $1,000 deductible from the same company. This plan is going to run that same healthy 35 year old, single man, $403 a month. The biggest strength of this plan is unlimited office visits at $30 and $50 co-pays. The price difference reflects the deductible difference. However, the plan also exposes the patient to an annual out of pocket maximum of $4,500 bucks. The client is now exposed, if something were to happen, to 403 x 12 + 1000 + 4500 = $10,336. This is versus a client being exposed to 220 x 12 + 5000 = 7,640.
In addition to the numbers there are also some very important points one must consider when looking at their health insurance options. First, what insurance plans do your physicians accept? Do you want an HMO or a PPO? One important point, many HMO’s have zero deductible, but you pay for that $0 deductible in the premium difference! Are there well-being assessments available to reduce my premiums? What companies seem to raise their premiums versus a level premium history?
Remember, you only have one heart, two lungs and one brain! Take care of these over time and they’ll take care of you! Until next time, be well.