Tuesday
How to Save on Health Insurance Without Risking Your Health
The economy is tough right now, many people are considering changing there health insurance plans. There's a lot of options out there and most people don't understand what it all means. Here's some information to help you decide whats best for you and what to avoid:
Major Medical Vs. Defined Benefits:
One of the biggest area's that people get put into very bad insurance plans has to do with this. Here's the 2 concepts. A Major Medical Plan is going to offer comprehensive coverage in the event you become ill or seriously injured. To make these plans highly affordable most people elect to take higher deductibles $1,500-$10,000. Before your coverage will kick in and start paying bills you have to spend that, however, once that is met your covered typically for $2,000,000-$7,000,000 in expenses.
A Defined Benefit plan will typically seem very affordable with a very low deductible ($100-$500) however the fine print says that they will only pay a scheduled amount for any major surgery or treatment. For example an open Hear Surgery will be covered for up to $10,000 when the surgical expenses are closer to $100,000. This is a very realistic scenario in one of these plans and they really offer a false sense of security.
Would you rather have to pay the first $5,000 of your surgery or the last $90,000?
Take a Critical Look at your Monthly Premiums and Plan:
Ok, this is where most Insurance brokers will hate me for talking to you about. We don't believe that charging the most premium that you'll possibly take is a good way of doing business.
Now some people don't care if the monthly premium increases for certain benefits but most people just never do the math on it. For Example:
Lets say you want to add in a Physical Benefit that increases your benefits from $100 covered per year to $200 Covered per year. On an actual plan I just quoted this increases the monthly premium $11.84 per month. Not a bad deal just $11 right? Well... 11.84 x 12 Months=$142.08 In additional premium for a benefit of $100. Again some people would just rather pay more over the year. A lot of my clients look at this and say, "Let's Keep it at the $100 Level"
You really need to weigh the additional benefits against the cost of not having them and then make a decision. Another Huge example is a family that is 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 is $55/month to have unlimited visits that is an additional $660 per year to go to the Dr. Whenever you want.
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 the $120 out of pocket and save $540! Moral of this story is to consider all options from all sides.
How & Why Consider a Health Savings Account Plan:
Way misunderstood and undersold, I didn't know a thing about these when I started selling insurance. As I've learned more about them it's the only type of plan I will ever buy and after comparing the costs/tax savings/other benefits with my clients about 75% of people see this as the best coverage for there families.
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Note:
Health Savings Accounts are not for people who have a lot of health issues or go to the Dr.'s more than 1-2 times per year. To benefit you and your family should be generally healthy.
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Health Savings Accounts are plans that allow you to Self-Insure in exchange for lower premiums, basically you don't have any benefits until meeting your deductible short of state mandated benefits. You instead are able to put money into a HSA account that you keep at your own bank under your own control. You can deposit money tax deferred and use it for any medically necessary expense without paying taxes on it.
So here's how I look at it: An HSA Saves my family $175/month on premiums. I deposit $150/month into my HSA Account which comes to $1,800 year. I spend about $400 of it on Dr. Visits & other medically needed expenses. So I have $1,200/year in this account. My deductible is $5,800 on my HSA plan. After the 1st year of savings I only have $4,400 of risk because of my savings, after 4 years I only have $200 worth of risk if some one needs a major surgery or treatment!
I also combine this with an accident protection plan. In the event someone get's injured due to an accident it will pay $5,000 of my deductible so that I can keep my money in my HSA account.
In essence, you can make your High Deductible affordable plan turn into a no risk plan after time because the money is already set aside. Once your deductible is met you are covered 100% with most HSA Plans.
Can I Buy Insurance Cheaper Through The Carriers Directly:
The answer is a simple NO, Insurance rates are regulated by individual states. Carriers have filed these rates for Health & Life Insurance with the state before you ever see them. They are not allowed to charge more for using a broker or to charge less if you go to them directly.
So if you won't pay more for using a broker wouldn't you want someone who deals with Insurance every day to tell you the good, AND THE BAD, about an insurance plan you are looking to purchase. Do you think the Carrier is going to tell you that there are some limitations on this plan 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 my kids/spouse cost an enormous amount to include:
The solution to this is to put your spouse and children on a separate health insurance plan. It's very easy to find a plan with the same network of Dr.'s as your group plan so that you can all see the same physicians. This is where we see the biggest cost savings. Typically doing this will save between 40%-75% of your monthly premium's to do. There are also numerous carriers that will write a policy just for children if you don't need coverage for yourself.
My rates keep Increasing even though I never use my Insurance:
Here's how Health Insurance Works, rates are determined by pooling the risks together. When a carrier roles out a new plan there is no claims (Claims are what cause rates to increase) as people enroll they start to place claims, then some people in the risk pool get very sick. The rates have to increase after time to compensate. The healthy people leave and go to a carrier with better rates (Less claims in the risk pool) and the ones who stay with the carrier keep getting rate increases.
So what do you do? Well this is why it's important to check on your rates occasionally, your rates won't go down after 12 months, if someone tells you that they are lying! If you get a rate increase or just want to see what else is available it can literally save thousands in premium often without reducing your current coverage at all.
Select carriers are now offering rate guarantees of 18-36 months, you pay a little more per month however your rates are locked for much longer than the typical 12 months. I recommend this to everyone who finds the right plan with a carrier that offers it as it will have huge saving's over the life of the plan. However don't let this option decide which carrier to choose as there are more important factors to consider.
Ryan_Terry
