To begin with, let’s define what I mean by traditional health insurance. The traditional health insurance policy is made up of:
The deductible: This is the amount you must pay for a medical event before your health insurance begins to pay. In today’s world, that deductible is often $3,000 or more.
Coinsurance: After the deductible is met, most policies require the insured to pay a percentage of all medical costs up to a maximum. Typically, the insured pays between 20% and 50% of every dollar billed.
Copays – In an effort to make routine health care affordable, many policies include a copay for doctor visits and prescriptions instead of having to pay a deductible. An example of this is the $10 office visit copay.
Maximum Out-of-Pocket Costs – This is the most an insured can expect to pay, regardless of the amount of medical bills. As a general rule, the maximum out-of-pocket costs for one person are limited to around $7,000. This can be a very misleading number because it assumes that all of your providers are in your network. If they are out of network, your costs may be significantly higher.
And finally, the “Network”: Virtually all traditional individual health insurance policies are tied to a network of providers. The tighter the health care network, the lower the premium. There is too much wrong with “networks” for this article. Suffice to say that “networks” are the enemy of the health care consumer (you).
The problem facing American workers
The problem is simple: Health insurance premiums are too high for most Americans working in the absence of a subsidy, and when combined with extremely high deductibles and out-of-pocket costs, health care becomes unaffordable. Let’s look at a couple of examples right here in North Carolina.
A 62 and 63 year old non-smoking couple finds that their lowest premium option with BCBS of NC is $1,999 per month for a family deductible of $13,300 with no co-pays. A plan with a $7,000 deductible and $25 office visit copays would cost $2,682 per month.
Assuming the least expensive plan, the annual cost would be $23,988 per year. And if either person had a medical event like cancer, the actual cost of care would be $37,288. You have to ask, “Why even have health insurance?”
A nonsmoking couple in their 30s found that the least expensive plan would cost $787.84 per month with a family deductible of $13,300 with no copays. The least expensive plan that included copays was $1,056.88 but had a $7,000 deductible and the most restrictive network. Assuming the least expensive plan, if either member of this young couple had a medical event, their total annual cost (deductible + premium) would be $16,454.08. That is a devastating amount of money for a young couple.
The simple solution to this problem is fixed benefit health insurance. Unlike a major medical policy where the policy pays all eligible expenses after the deductible and out-of-pocket maximum, a fixed benefit health insurance policy states exactly how much will be paid for each specific service. Examples of specific services may include: a daily 24-hour hospital stay benefit, specific dollar benefits for specific surgeries, a specific benefit for doctor visits, and other specific charges. A great Fixed Benefit Health Insurance Policy will have very strong benefits, a wide range of specific covered charges, a very comprehensive surgical program, and more. The most important service that the Fixed Benefit Health Insurance Policy can include is the negotiation of medical bills, a service that can significantly reduce out-of-pocket expenses.
The really good thing about this type of policy is that it empowers the insured to be a better consumer. Knowing how much your policy will pay you for a specific medical service allows you to better shop and negotiate the price. But the best thing about this policy is the affordable premium.
The 62 and 63 year old couple is an actual client of mine who had been without insurance for 5 years as a result of high premiums. She was able to put them on a solid fixed benefit health insurance policy with a lifetime benefit of $5,000,000 for $683 a month. That’s an annual savings of $15,792. As I explained to my client, the Fixed Benefit Health Insurance Policy will do a great job of covering 70% to 80% of everything that might happen. If they actually saved the $15,792 difference in premium, they would have incredible access to healthcare with very little out of pocket.
In 2014 I was diagnosed with colon cancer and had my large intestine partially removed (CP44205). At that time, I was covered by a traditional major medical expense policy. My total out-of-pocket expenses were over $7,000. If I had had the Fixed Benefit Plan that I am selling today, not only would my costs have been zero, but I would have received a check from the insurance company for $4619. Not all medical events would have resulted in a check and many could have resulted in out-of-pocket costs of several thousand dollars, but overall the savings would have more than made up for those costs.
Therefore, before you choose to go without health insurance, I strongly suggest that you take a hard look at a fixed benefit health insurance policy.
