Today’s blog covers one of the big hitters in the insurance world: the deductible. We know that one of the most important financial decisions we make comes in the form of how we and our families are covered when the unexpected happens. Here at Health Benefits Now, we want you to have your best health coverage plan.
Did you know that more than ⅗ of Americans don’t have enough money saved up for unexpected medical emergencies (averaging $1000)?
Want to be part of the ⅖ that do? We can help with that. Take a peek at our little cheat sheet: we’ll break down how deductibles and premiums really work for you and help you find the peace of mind that excellent and extremely affordable health coverage can bring.
Why You Shouldn’t Be Asking About High vs. Low Deductibles
If you’re already weighing the pros and cons of a high vs. a low deductible, we’ll help you cut to the chase: in our opinion, a high deductible with a low premium is the way to go. Which isn’t the answer you’ll hear from the average agent. See, a lower deductible and a higher premium means more kick-back for them (though not necessarily for you). But this combo isn’t always advised with ill intentions, either. Sometimes we humans just go by what looks good.
Lots of things look great on paper, right? Novels, for one. Grocery lists, within reason. But insurance is neither the great American novel nor a simple list of items you need and therefore you get. The good news is, on a complexity scale, we are somewhere in-between. But one of the things that sounds good on paper is getting a low deductible that will (finally) pay off should you find yourself in the hospital, right?
Think about who this actually benefits. Let’s go with a more extreme example. Say you have some major concerns because your daughter has extremely volatile asthma. She’s been hospitalized at different junctures already and you’re concerned that she also see the doctor as often as is necessary. You tell your agent that doctor’s visits and hospitalization are important to you, and on the technical side of things it seems like you’re one of those people who needs a lower deductible to help offset the costs.
Though on paper you are an “ideal candidate,” the reality is that almost nobody is an ideal candidate for a low deductible. Why? Premiums are designed to rise, and using up your deductible is going to raise it regardless. An asthmatic is a high-risk client, to go back to our example. Most Americans only find themselves hospitalized after an accident or similarly unexpected, short-term emergency. This is the pool of people underwriters are comparing high-risk clients with.
But, really, we’re all in the same boat when it comes to premiums: we need to make them serve us, not the other way around.
What Makes Premiums Rise?
Can you imagine how much car insurance would cost if consumers began demanding that their auto coverage cover every oil change, every nick, scratch, and dent--that they provide replacement tires and about a tune-up every year? Prices would spike, for one. But before the 1980s, health insurance worked a lot like car insurance. Nobody goes bankrupt over a $100 doctor’s visit or a $1000 whoops-a-daisy. What people really want (and need) coverage for is potential money sinks like $100,000 hospital bills that nobody could have anticipated needing.
Somewhere along the line, health insurance became about providing not only for the expensive and unlikely but also the affordable and guaranteed--and if a service is guaranteed to take place, the money has got to come from somewhere. Health coverage plans now help cover for doctor’s visits and other yearly “tune-ups.” So the insurance companies charge. Premiums are now, necessarily, higher. But what we all really need, should the rubber hit the road, is help paying for a hypothetical monster-of-a-medical-bill. And so the lower deductible feels like a cushy safety net. Again, it looks good.
We’re aren’t just saying to get a high deductible/low premium and leave it at that. There are affordable ways to bolster that set-up. We’ll help you find a comfortable premium that you can combine with ancillary products (more on that in a minute)--and this is where we start to play smart.
An Example Case
Every plan is balanced differently, and every quote we provide takes into account your specific priorities. Saying that, the following is a generic example of how a high deductible plan has worked out in our clients’ favor when combined with a little something called ancillary products.
Ancillary products are insurance add-ons such as dental, accidental death, and/or bill negotiation. They are not necessarily riders; you can have ancillary products from an insurance company that is not your primary insurance company.
So we’ve brought your primary premium down by choosing the high deductible option, right? You still want to make sure you and your family are covered for your specific needs. Say you know you are planning to have a child within a year or two and are concerned about hospital costs, or you want the extra cushion that AD&D coverage can provide. There are products that are even more specific, such as reducing out-of-pocket costs for heart-related hospitalizations and stroke. Whatever it is--it’s worth asking about.
For example, a bill negotiation group like Karis (more on that in next week's blog) can help negotiate high deductibles when you find yourself in a serious and unexpected situation, such as being hospitalized after an accident. Supplemental hospital products are often more affordable when combined with a low premium than if you try to play the numbers game with a low deductible/high premium.
We care about the nitty-gritty because we care about finding a plan that makes sense for you. Our agents are available to answer any of your questions and get down to crafting a plan as custom as your daily latte. You can even start sketching out some numbers yourself!
Peace of Mind (Or, The Real Reason for Insurance)
There are two ways of looking at anything that costs money: an expense or an asset. Unlike TV subscription services and daily caffeine pit-stops, insurance isn’t an inherently relaxing or stimulating enterprise to think about spending moolah on. The fact of the matter is, who wants to think about sickness and death?
Your family doesn’t; that’s for sure. We know, we pulled out the guilt stick with that one. There’s a positive reason for thinking about insurance today, however, and this one’s for you: peace of mind.
Let’s sum it up this way. Every day we make a decision to get up, go to work, brush our teeth, and fulfill any number of obligations. It all costs time and money, and most of it has to be repeated ad nauseum to do any good. Unlike all of that, however, insurance is a decision you make once--and it keeps taking care of you afterword. Now that’s peace of mind.