The economy is tough right now, with many people out there considering changing health insurance plans. There are so many options out there and most people don’t understand what that means. Here’s some information to help you decide what is and isn’t best for you:
Major Medicine Vs. Defined Benefits:
One of the biggest areas is that people get stuck in very bad insurance plans. There are 2 concepts here. A major medical plan is going to provide comprehensive coverage in case you become ill or are seriously injured. Most people choose to take deductibles in excess of $1,500-$10,000 to make these plans extremely affordable. Before your coverage begins and the bills begin to be paid, you will have to incur expenses, however, once that cover is completed, typically $2,000,000-$7,000,000 in expenses.
A defined benefit plan generally looks very affordable with a very low deductible ($100-$500), although the fine print says they will only pay a set amount for any major surgery or treatment. For example, an open ear surgery would cover up to $10,000 when the surgical cost is closer to $100,000. This is a very realistic scenario in one of these schemes and they actually provide a false sense of security.
Will you need to pay the first $5,000 or the last $90,000 before your surgery?
Take a Critical Look at Your Monthly Premium and Plan:
Well, this is where most insurance brokers would hate me for talking to you. We do not believe that the premium you charge is a good way to do business.
Now some people don’t care whether the monthly premium increases for some benefits or not, but most people never do the math on it. for example:
Let’s say you want to add a material benefit that increases your benefits from $100 covered per year to $200 per year covered. On an actual plan, I just quoted the monthly premium rises to $11.84 per month. Not a bad deal just $11 is it? Well… 11.84 x 12 months = $142.08 in additional premiums for a profit of $100. Again some people will pay more throughout the year. A lot of my clients look at this and say, “Let’s keep it at the $100 level”
You really have to weigh the additional benefits against the cost of not having them and then make a decision. Another great example is a family deciding between unlimited Dr. Visits covered with a co-pay or a plan that limits them to 3-4 visits per person. Well if the additional monthly cost for unlimited visits is $55/month which is an additional $660 per year to visit Dr.
Or, you pay for the plan with 3 visits and if you have to take 1 person an extra 2 times, for example, your network discount price is $60 and you pay $120 and save $540! The moral of this story is to consider all options from each side.
How and why to consider a Health Savings Account plan:
Way misunderstood and undersold, I didn’t know anything about these when I started selling insurance. As I learn more about them, this is the only type of plan I will ever buy and after comparing the cost/tax savings/other benefits with my customers, about 75% of people consider it the best coverage for families out there. see as.
Health savings accounts are not meant for people who have a lot of health issues or visit Dr. more than 1-2 times per year. You and your family must be generally healthy in order to benefit.
Health savings accounts are plans that allow you to self-insure in exchange for lower premiums, basically, no benefits to you until the deductible shortfall of your state-mandated benefits is met Is. You can instead put money in an HSA account that you keep under your control at your bank. You can collect deferred tax and use it for any medically necessary expenses without paying tax on it.
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So here’s how I see it: An HSA saves my family $175/month on premiums. I deposit $150/month in my HSA account which equals $1,800. I spend about $400 of this on Dr. visits and other medically necessary expenses. So I have $1,200/year in this account. My deductible on my HSA plan is $5,800. After the first year of savings, I only have $4,400 at risk due to my savings, after 4 years I only have $200 worth of risk if someone needs major surgery or treatment!
I also associate it with accident protection planning. This will pay my deductible of $5,000 in the event of someone being injured in an accident so I can keep my money in my HSA account.
In short, you can convert your high deductible affordable plan to a no-risk plan over a period of time as the money is already set aside. You are 100% covered with most HSA plans once your deductible is reached.
Can I Buy Cheap Insurance Directly Through Carriers:
The answer is not a simple one, insurance rates are regulated by individual states. Carriers file these rates for health and life insurance with the state before you see them. They are not allowed to charge more or charge less for using a broker than if you go directly to them.
So if you wouldn’t pay more to use a broker, wouldn’t you want someone who deals with insurance every day to tell you the good and the bad about the insurance plan you want to buy. Do you think the carrier is going to tell you that this plan has some limitations that you might not like, or that another carrier has the same thing for $300 less per year?
My employer pays for my plan, but it costs a sizable amount to cover my kids/spouse:
The solution is to put your spouse and children on a separate health insurance plan. With the same network as Dr., it is much easier to find a plan than with your group plan so that you can see all the same physicians. This is where we see the biggest cost savings. Doing so will usually save between 40%-75% of your monthly premium. There are also many carriers that will only write policies for children if you don’t need coverage for yourself.
My rates keep going up even though I never use my insurance:
Here’s how health insurance works, adding the risks together to determine the rates. When a carrier moves into a new plan with no claims (claims are the reason rates go up) as soon as people enroll they start making claims, then some people in the risk pool get very sick become. The rates have to be increased from time to time to compensate. Healthy people go and go to a carrier with better rates (fewer claims in the risk pool) and those who stay with the carrier continue to get a rate increase.
So what do you do? That’s why it’s important to check your rates from time to time, if someone tells you they’re lying, your rates won’t drop after 12 months! This can literally save you thousands of premiums without reducing your current coverage if you get a rate hike or just want to see what else is available.