I just got done chatting with one of our Colorado health insurance clients. She and her husband have been our clients since 2001. They were self-employed when they got their first policy from us and switched to an HSA qualified plan in 2004. In 2005, their business was having a big slump and she had to take a job working for a company in order to keep up with their bills and their plans for retirement.
She called me up after getting the job and told me that her new employer provided health insurance benefits, complete with copays on doctors visits and prescription drugs. The employer paid a pretty big percentage of the premium and it ended up being less expensive than what she was paying for her HSA qualified plan (which had no copays). She called up to ask me if it was a good idea to drop her individual policy for the employer sponsored insurance, what would happen to the money in her HSA, etc, etc…
After explaining what would happen to the money in her HSA, I gave her the what-if’s of dropping her individual policy for the employer sponsored health insurance…
I explained that her individual policy was permanent and stable, as long as she kept paying the premiums. The health insurance company could never single her out for rate increases, they couldn’t drop her, and she had one of the health insurance companies that has the same rates for existing and potential clients – so she could always be confident that her rates would be competitive if she developed a health condition and got “stuck” on the plan.
On the flip side, she could drop her individual health insurance for the employer sponsored group health insurance plan. But the risky part of doing that is if she (or her husband) develops a health condition while they are on that group plan, they would be stuck with only guarantee issue options. Depending on how serious her health condition is, she would have the condition excluded from any individual health insurance she applies for, or if it was more serious she wouldn’t qualify at all.
She decided to pay a little extra to keep her individual health insurance just in-case.
In 2006, she started having a lot of fatigue. She was later diagnosed with Crohn’s Disease. In May, their business started getting real busy again and her husband needed her help running it. She was sick of going to work for that company anyway, and was ready to leave. The reason she just called me is because one of her friends from that job was laid off. Even though her friend was younger, her friend’s option for COBRA would have cost over $750/month – for just her!
– Our client currently pays $420/month for both her and her husband.
She realized that she wouldn’t have been able to qualify for underwritten Colorado health insurance again after being diagnosed with Crohn’s Disease. If she would’ve dropped her individual insurance for the group coverage, she would have been stuck working there to keep the coverage (and she would have just been laid off anyway), or she would have to buy a guarantee issue individual plan like Cover Colorado for 2-3x the price.
That’s why she just called me. She wanted to let me know that her Crohn’s is pretty well under control, they are putting a lot of money into their HSA for retirement, their business is thriving, and she is very happy working at home with her husband. She said she realizes that the money they’ll be saving on their health insurance now is much greater than what she would have saved by having the group insurance through her employer for the 2 years she worked there. And the freedom it gave her and her husband is priceless.
(I wouldn’t have shared her story without her permission. I told her that is was a very common situation and her story would make a good blog post. She said, “by all means, I hope it helps.”)