Tuesday
Keeping Health Insurance Affordable With Co-insurance Options
I have found as an insurance agent for the past 10 years that most subscribers do not understand how co-insurance works. Most of these individuals are employees and have not had to pay their insurance 100%; or many are not aware how insurance works.
Let us take a look. First, you choose a deductible-500, 1000, etc. Second, and here is where many get lost, you choose a co-insurance option-usually 80/20, or 70/30, etc. What individuals do not understand is that not only do they pay the deductible for major services, but they also will be paying for co-insurance. If one has a 80/20 co-insurance option then they also will be paying 20% of $10,000 or $2000.00. It may be even more at 20% of $20,000 or less at $5000, depending on the plan. Therefore, the maximum out of pocket is not just the deductible but also the co-insurance. Let's say one has a 1500 deductible plan and they have a 80/20 of $10,000. Their total out of pocket will be $1500+$2000=$3500, not just the deductible.
So, when choosing a plan many times it is better to get a Higher deductible plan with 100%. What this does is lower your premiums and many carriers will give you a two or three year rate lock when choosing a higher deductible plan. It really is not much more out of pocket than a $2500 deductible plan, more than likely $500 dollars more, but the premium is much less-usually around $50-$80 less a month.
It just makes good financial sense to go with a higher deductible plan. Remember, you have to pay the premium every month if you use it or not. And, usually by ten month, you have made up the difference in the higher deductible by the savings on the premiums. And yes, those savings continue for as long as you have the policy.
[expert=Gary_M_Howard]
