The Logical Insurance Salesman Has Skinny Kids

I was recently talking to a Colorado client about her husbands health insurance options.  She had the option of adding him to her group plan for $415 per month.  They had been shopping all over the internet for an individual health insurance plan and had decided that they wanted the most comprehensive plan available and weren’t interested in hearing any logic explaining how a higher deductible might be better, that’s fine.  So we settled on a plan with Anthem Blue Cross Blue Shield with a $500 medical deductible, $25 office visit copays, and $15/$40/$60 prescription drug copays for $241/month.

The next day she revealed that her husband had a pending dental procedure that would cost $3,000, and the dental insurance on the group plan would cover $1,000 because that is the annual limit.  I explained that her husband could get individual dental coverage with Anthem Blue Cross that also has a $1,000 annual limit for $36.91/month, but it has a 12 month waiting period so he would have to pay the entire $3,000 if the procedure was done in the first year.  Without thinking, she said “well, maybe we’ll just have to stick with the group plan to have the dental procedure covered“.

I told her that we just need to do the math to see which way works better.  If he gets the group plan for $415/month, he will pay [($415 x 12 = $4,980) + $2,000 for the dental procedure] = $6,980 in the first year.

If he gets the individual plan for $241 + the dental for $36.91 ($277.91/month), he will pay [($277.91 x 12 = $3,334.92) + $3,000 for the entire dental procedure] = $6,334.92 in the first year.  In other words, he is saving $645.08 with an individual plan the first year and getting the exact same coverage.  Then after the first year, he is saving over $2,000 per year and still getting the same medical and dental coverage.

If the response I got weren’t so typical it wouldn’t be something to write about.  She said “Yeah, but I think I’d rather just pay the extra so that insurance is covering part of the dental.”  I went on for a while trying to explain the logic, but she was stuck with her gut feeling and I could tell my words weren’t sinking in.

Why is it so common that when you lay out the math in front of people and show them “there is no possible way you can get as much in benefit as you pay in premium with this plan“, that they still say “I’d like to get it though, because I feel better having it there.“?

About Jay Norris

Jay operates a health insurance brokerage in Colorado, where he helps individuals and small groups obtain and maintain health insurance coverage.
Complimenting his work as a health insurance broker, Jay also provides data analysis and creates visualizations that are easily understood by consumers and other stakeholders in Colorado’s health insurance market.

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