As a way to begin let’s define what I mean by traditional health insurance. The traditional health insurance policy is composed of:
Here are some Alternative to Traditional Individual Health Insurance
The deductible –
This is the amount that you have to pay for a medical event before your health insurance will start to pay. In today’s world that deductible is often $3000 or more.
Think of this combo as a dynamic duo. An HDHP has lower monthly premiums but a higher deductible – you pay more out-of-pocket before insurance kicks in. But here’s the magic: pair it with an HSA, a tax-advantaged savings account you can use for qualified medical expenses. Think co-pays, prescriptions, even acupuncture! Contributions are pre-tax, lowering your taxable income, and unused funds roll over, building a safety net for future healthcare needs.
The coinsurance –
After the deductible is met most policies require that the insured pay a percentage of all medical costs up to a maximum. Usually the insured pays anywhere from 20% to as much as 50% of every dollar billed.
The copays –
In an attempt to make routine health care accessible many policies include a copay for doctor visits and prescriptions in lieu of having to meet a deductible. An example of this is the $10 office visit copay.
Direct Primary Care (DPC):
Imagine a monthly membership for your doctor! DPC practices offer unlimited primary care visits for a flat fee, often significantly cheaper than traditional insurance premiums. Think routine checkups, managing chronic conditions, and even basic urgent care. While DPC doesn’t cover major medical expenses, it can significantly reduce your overall healthcare costs, especially if you visit the doctor frequently.
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Medical Cost-Sharing Programs:
Think of this as a community healthcare piggy bank. These non-profit groups share medical expenses among members, spreading the financial burden. You pay a monthly membership fee and share the costs of major medical expenses above a pre-determined deductible. While not technically insurance, it can offer significant savings compared to traditional plans, especially for healthy individuals.
Short-Term Medical Insurance:
Need temporary coverage for a specific period, like between jobs or during a gap year? Short-term plans offer limited coverage for a few months, often at lower premiums than traditional plans. However, be aware of pre-existing condition limitations and coverage restrictions. Think of it as a bridge, not a long-term solution.
Government Assistance Programs:
Depending on your income and family size, government programs like Medicaid and the Children’s Health Insurance Program (CHIP) can offer low-cost or free health insurance coverage. Don’t hesitate to explore these options if you qualify – healthcare shouldn’t be a financial burden for anyone.
Maximum Out-Of-Pocket Costs –
This is the most that an insured can expect to pay regardless of how large the medical bills are. As a general rule the maximum out-of-pocket costs for an individual are limited to around $7000. 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 can 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 “networks” for this article. Suffice it to say that “networks” are the enemy of the healthcare consumer (you).
The Problem Facing Working Americans
The problem is simple: health insurance premiums are too high for most working Americans in the absence of a subsidy and when combined with extremely high deductible and out of pocket costs, healthcare becomes unaffordable. Let’s look at a couple of examples right here in North Carolina.
A non-smoking couple ages 62 and 63 find that their lowest premium option with BCBS of NC is $1999 a month for a $13,300 family deductible with no copays. A plan with a $7000 deductible and $25 office visit copays would cost $2682 per month.
Assuming the least expensive plan the annual cost would be $23,988 annually. And if either person had a medical event such as cancer, the actual cost for healthcare would be $37,288. You have to ask: “Why even have health insurance?”
A non-smoking 30 year old couple found that the least expensive plan would cost $787.84 a month for a $13,300 family deductible with no copays. The least expensive plan that included copays was $1056.88 but had a $7000 deductible and the most restrictive network. Assuming the least expensive plan, should either member of this young couple have 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 a Fixed Benefit Health Insurance. Unlike a major medical policy where the policy pays for 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 specified service. Examples of specified services might include: daily benefit for in-hospital stay of 24 hours, specific dollar benefits for specified surgeries, a specific benefit for doctor visits and other specified charges. A great Fixed Benefit Health Insurance Policy will have very robust benefits, a wide range of specified covered charges, a very comprehensive surgical schedule and more. The most important service that Fixed Benefit Health Insurance Policy can include is medical bill negotiation, a service that can significantly reduce out-of-pocket expenses.
What is really great about this type of policy is that empowers the insured to be a better consumer. Knowing how much your policy will pay you for a specified medical service allows you to better shop and negotiate the price. But the really great thing about this policy is the affordable premium.
The couple ages 62 and 63 are an actual client of mine who had been uninsured for 5 years as a result of the high premiums. I was able to put them into a robust Fixed Benefit Health Insurance Policy with a $5,000,000 lifetime benefit for $683 a month. That is 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 can happen. If they actually saved the $15,792 difference in premium they would have incredible access to healthcare with very little out of their own pocket.
Back in 2014 I was diagnosed with colon cancer and had a partial removal of large intestine (CP44205). Back then I was covered on a traditional major medical policy. My total out-of-pocket costs were more than $7000. Had I had the Fixed Benefit Plan that I sell 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 a check and many might have resulted in out-of-pocket costs of several thousand dollars, but in general the savings would have more than offset those costs.
So, before you choose to go without any health insurance I strongly suggest that you take a hard look at a Fixed Benefit Health Insurance Policy.
