THURSDAY, JANUARY 13, 2011
Brian L. Platte, Platinum Benefit Advisors, Inc., January 13, 2011
When it comes to health insurance, one question I am consistently asked is, "How can lower I lower the cost of my insurance without sacrificing my coverage?"
There are several ways to accomplish this, however, my personal favorite is to spread the risk over several companies.
When I say spread the risk over several companies I'm not referring to buying several Major Medical policies either. Let me explain further:
In the world of insurance we as consumers have a tenancy to equate the size of our deductible with the overall quality of our coverage. A $1000 is better then a $2000 deductible and a $500 is better then a $1000 deductible, right? Well this is true to a point unless that is you don't have to use your coverage. It's pretty common knowledge that the higher your deductible is the lower your monthly premium is, right? So how can we increase our deductible and at the same time make sure we don't go bankrupt if we have a major claim?
Statistically, 70-80% of the most common major claims are related to accidents and critical illnesses such as a heart attack, stroke, cancer, or terminal illness to name a few. Many people are unaware that you can actually purchase stand alone supplemental benefits to cover these items. Best of all these plans are portable (you can keep them as your Major Medical policies change over the years), the benefits are customizable to work in conjunction with your Major Medical policy and best of all the premiums are typically locked in long term.
So how exactly does this work? First, I would highly recommend taking a high deductible plan, either an HSA (Health Savings Account) or a traditional copay plan. How high of a deductible? Depending on the size of your family and circumstances I would recommend a $4000 or above. This may seem very little high to a lot of folks but stay with me and I will show you how you to actually lower your costs, increase your coverage, and actually lower your out of pocket expenses by doing this.
Let's assume you are 40 years old, married and have 3 children. For simplistic examples sake you currently have a $1000 deductible with a copay for office visits and Rx, and you pay $1000 mo. By moving your deductible up to $5000 your premium would go down to roughly $550 saving you $450 mo. Now with that savings you purchase an accident policy for $50 mo. that covers you up to $5000. You then purchase a critical illness policy for $100 mo. that will pay you or your spouse a lump sum of $50k if you have a critical illness or $10k if your children do.
So let's summarize what you just accomplished:
You now have a $5000 deductible and have saved $450 mo. Keep in mind even though your deductible is $5000, this doesn't apply to your office visit copay, Rx coverage, or preventative benefits.
You then took $50 month from your $450 savings and purchased a accident policy which will cover the $5000 deductible on your Major Medical policy for anything accident related. For example broken bones, stitches, burns.
You also took $100 from your $450 savings and purchased a critical illness policy which will pay you and your spouse a lump sum of $50k or $10k for your children if any one were to have a critical illness. This will more then cover the deductible on your Major Medical policy and provide you an additional $45k to live on while you're recovering. This reminds me, have you ever wondered why families put on benefit dinners to raise money for a loved one with a critical illness, especially when you know they had good health insurance? It's not necessarily to raise money for their medical cost but rather all of the out of pocket items we don't consider such as:
- Replacing a paycheck
- House payment or rent
- Co-pays and deductibles
- Car or truck payments
- Credit card payments
- Lost income of self or spouse
- Non-covered “experimental” treatments
- Home health care needs
- Home and auto modifications
- Groceries and utilities
- Keep your business going
- Maintaining your family’s quality of life
- Housekeeping or childcare expenses
- Expenses associated with training for a new profession
So for the most common reasons you would use your coverage you actually have nothing out of pocket, have more coverage then before and have an overall savings of $300 mo. or $3600 year!!!!! Even if you happened to go to the hospital and it wasn't the result of an accident or critical illness, in less the a year and a half you will have saved up your $5000 deductible in savings alone.
Pretty neat, huh? Of course you maybe paying more or less then this particular example but I can honestly tell you I've done this for a countless number of individuals and families and there is always a significant savings.
So a smaller deductible doesn't necessarily mean you have better coverage. You might just be paying a lot more for a lot less coverage.
If you want to learn more please request a quote HERE.
To learn for about accident policies, click HERE.
To learn more about critical illness policies, click HERE.
|
Blog Archive
|