Betting on your health
Though what you pay for health insurance is not an IT subject, it affects all of us.
Having recently gone through the annual process of evaluating health insurance coverage and costs, our experiences may help you in your decision making. The change we are making is saving us about 50% on our premiums this year.
At Arden Education, one of our values is simplicity. As such, we keep decision factors as basic as is reasonable.
Based upon keeping decision factors simple, my thinking on health insurance is that it is similar in some respects to other insurance (life, auto, home). The company that provides the insurance wants to pay out less for the use of the service than is collected in payments (premiums). This allows them operating income and profits to invest.
Having recently gone through the annual process of evaluating health insurance coverage and costs, our experiences may help you in your decision making. The change we are making is saving us about 50% on our premiums this year.
At Arden Education, one of our values is simplicity. As such, we keep decision factors as basic as is reasonable.
Based upon keeping decision factors simple, my thinking on health insurance is that it is similar in some respects to other insurance (life, auto, home). The company that provides the insurance wants to pay out less for the use of the service than is collected in payments (premiums). This allows them operating income and profits to invest.
You want to pay as little as is reasonable for coverage in the case of an unexpected incident.
My feeling is that I should use health insurance like I use life insurance, auto insurance, and home insurance - to cover losses that are beyond my financial means. Being that I am not a frequent user of any of my insurance products, I opt to keep my payments to the insurance companies lower by opting to take on higher deductibles / higher premiums and higher risk on my part. One might call this a strategy of catastrophic insurance.
My feeling is that I should use health insurance like I use life insurance, auto insurance, and home insurance - to cover losses that are beyond my financial means. Being that I am not a frequent user of any of my insurance products, I opt to keep my payments to the insurance companies lower by opting to take on higher deductibles / higher premiums and higher risk on my part. One might call this a strategy of catastrophic insurance.
In years past, we were unable to find health insurance plans that were focused on insuring against a catastrophic loss. One reason was that we had an individual in our group whose pre-existing conditions necessitated with staying with low deductible plans. That individual is now on another company's plan.
With that freedom, we were able to freely shop options this year. That freedom has allowed us to select plans that are half the premiums of last year's plan. That sounds good, yes? The primary reason for this is that we are taking on more financial responsibility for our use of health provider's services. Last year, our deductible (with Anthem) was $2,500 for individuals. This year, it is $5,000 per individual.
For example, last year our family premium was $8,300 for a family of four. This year, our premium will be $4,100.
Here are some potential possible risks. If my eight year old daughter or our nineteen year old son breaks a leg, I will have to pay out an additional $2,500 ($5,000 total) for the care (assuming the total bill is $5,000+). If that is the only incident in a 12 month period, we are still $1,700 ahead. And with the health savings account, we have the option to bank that money in a protected account.
It sounds good doesn't it?
It might not be true for you and your situation. Here are some reasons it may not work for you. One is that we are a small business. The plans we are going to move to are individual plans for our employees (i.e. not group coverage). The individual plans allow us to opt out of maternity coverage (all the women in our group are past the child bearing stage in their life). A second reason is that we are a healthy group (no smokers, regular exercisers, etc.). Being a more healthy group helps us to feel more confident about taking on more of our own risk - with the possible reward of being able to build up a health savings account.
Realizing that your situation may have more details and complications than our, it is my hope that this article encourages you to look more closely at your health insurance options when your current plan expires.
