Save Money On Insurance By Insuring Yourself

 

Just a quick word today on health insurance. I regularly talk with folks looking into their health insurance options (especially those starting new jobs), and I often recommend they choose the HDHP (High Deductible Health Plan) option instead of the normal PPO plans that everyone is used to. Especially if they are young and/or fairly healthy. I keep thinking that everyone knows about these plans by now (I’ve had mine for around 10 years) but lots of people don’t! Here’s why I think they are well worth looking into.

Insurance Is Important

Health insurance is not only going to be required by law soon, it’s just plain important to have. Some lines of insurance aren’t quite as essential as health insurance– for instance, you could recover pretty quickly, financially, from a root canal without dental insurance. But health insurance can help you take better care of yourself and protect you from catastrophic medical bills that absolutely no one can predict.

All the numbers and math of buying insurance can make your head spin a bit, but take your time and look at your options. Insurance carriers count on confusion and policy misuse in order to make money, don’t let yourself be on that side of the pool!

What Is A Deductible?

Insurance - High Deductible Health PlansThe deductible in an insurance policy is there so that the insurance company is not exposed to the risk of paying every little trivial claim that an insured person might incur, at least until the insured has paid out of pocket for a bit. That makes the insured think twice about rushing to the doctor’s office over everything, and helps control costs for the insurance company.

The cost of any insurance plan is going to be heavily influenced by the level of the deductible. The more exposure the insurance company has (i.e. the lower the deductible) the higher the price for the policy.

High Deductible Health Plans

HDHPs come with a slightly different set of rules by law, but the major difference in them is their (you guessed it) high deductibles. You can buy policies with deductibles in the range of $5,000 or more, and these policies are going to cost well below a policy with a $1,000 deductible. The insurance company is exposed to less risk, so that makes sense, right?

Some HDHP policies will pay 100% of the charges after the deductible is paid, too, so even though the policy is priced much less than a low deductible, the buyer can also save money on large, expensive operations that would normally cost them a percentage above the deductible in a PPO plan. For example, a PPO may be set up so that the insured has to pay 20% of the costs above the deductible (i.e. $2000 for a $10,000 bill) but the HDHP plan would be 100% paid after the initial deductible is met, so no unexpected costs to the insured.

How This Makes Sense – Insure Yourself!

If you are a person living paycheck to paycheck, with no thought towards tomorrow, then an HDHP might be a scary proposition. Thousands of dollars more risk to save a few hundred dollars a month? No way!

But think about it, all it would take for you to reap the benefits of the HDHP would be for you to save up the amount of the deductible (to absorb the risk of the major occurrences from hurting you) and save the hundreds per month that you save on your insurance plan! You maintain an insurance policy for the big events and insure yourself for the rest.

Turns out that for some reason you don’t need that money a few years down the road? Well, since you haven’t paid it all to the insurance company, it’s still in the bank waiting for you. You have reaped the rewards of becoming your own insurance provider.

Insurance is important to have, but make sure you’re exploring all your options and choosing the right plan for yourself and your loved ones!

 

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