Global Courant
To begin with, let’s define what I mean by traditional health insurance. Classic health insurance consists of:
The deductible – This is the amount you must pay for a medical event before your health insurance pays. In today’s world, that deductible is often $3,000 or more.
The co-insurance – After the deductible is met, most policies require the insured to pay a percentage of all medical expenses up to a maximum. Usually the insured pays anywhere from 20% to as much as 50% of every dollar billed.
The copays – In an effort to make routine health care accessible, many policies include a copay for doctor visits and prescriptions instead of having to pay a deductible. An example of this is the $10 copay for office visits.
Maximum out-of-pocket expense – This is the highest amount an insured can expect to pay, regardless of how high the medical bills are. In general, the maximum out-of-pocket cost for an individual is limited to around $7,000. This can be a very misleading number, as it assumes all of your carriers are in your network. If they don’t have a network, your costs could be significantly higher.
And finally the “Network” – Virtually every traditional individual health insurance policy is tied to a network of providers. The narrower the healthcare network, the lower the premium. There is too much wrong with “networking” for this article. Suffice it to say that “networks” are the enemy of the healthcare consumer (you).
The problem of working Americans
The problem is simple: health insurance premiums are too high for most working Americans without a subsidy, and when combined with extremely high deductibles and out-of-pocket costs, health care becomes unaffordable. Let’s look at a few examples here in North Carolina.
A non-smoking couple, ages 62 and 63, finds their lowest premium option with BCBS or NC is $1,999 per month for a family deduction of $13,300 with no copays. A plan with a $7,000 deductible and $25 office visit copays would cost $2,682 per month.
Assuming the cheapest plan, the annual cost would be $23,988 per year. And if either person had a medical event such as cancer, the actual health care cost would be $37,288. You must be wondering, “Why even health insurance?”
A non-smoking 30-year-old couple found that the cheapest plan would cost $787.84 per month for a family allowance of $13,300 with no copays. The cheapest plan with copays was $1056.88, but had a $7000 deductible and the most restrictive network. Assuming the cheapest plan, the total annual cost (deduction + premium) would be $16,454.08 if one of the members of this young couple had a medical event. That is an awful amount for a young couple.
The simple solution to this problem is health insurance with a fixed benefit. Unlike a large medical policy where the policy pays all eligible expenses after the deductible and out-of-pocket maximum, a fixed benefit health insurance policy specifies exactly how much is paid for each specified service. Examples of itemized services may include a daily fee for a 24-hour hospital stay, specific dollar fees for certain surgeries, a specific fee for doctor visits, and other itemized charges. A great fixed benefit health insurance plan has very robust benefits, a wide range of itemized covered costs, a very extensive surgical schedule and more. The most important service that defined benefit health insurance can include is negotiating medical bills, a service that can significantly reduce out-of-pocket expenses.
What’s really great about this kind of policy is that it empowers the insured to be a better consumer. Knowing how much your policy will pay you for a particular medical service will help you shop around and negotiate the price. But the great thing about this policy is the affordable premium.
The couple aged 62 and 63 is a real customer of mine who had been uninsured for 5 years due to the high premiums. I was able to put them into a robust, fixed-benefit health insurance policy with a $5,000,000 lifetime benefit at $683 a month. That’s an annual savings of $15,792. As I explained to my client, defined benefit health insurance covers 70% to 80% of anything that can happen. If they actually saved the $15,792 premium difference, they would have incredible access to health care with very little out of pocket.
In 2014 I was diagnosed with colon cancer and had a partial removal of the colon (CP44205). At the time I was covered by a traditional large medical policy. My total out-of-pocket costs were over $7000. If I had the Fixed Benefit Plan 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 every medical event would have resulted in an audit and many would have resulted in out-of-pocket costs of several thousand dollars, but overall the savings would have more than offset those costs.
So before you choose to go without health insurance, I highly recommend that you take a close look at a defined benefit health insurance policy.
The affordable alternative to traditional
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