I was recently going over some health insurance options with a client. We were comparing some high deductible HSA qualified plans with some lower deductible copay plans. She then asked about some of the really cheap plans she saw on our instant quote engine like Right Start from Assurant. I explained that we don’t recommend those plans because they have such bad coverage (annual maximum of $150,000, $2,000 annual limit on prescription drugs, $15,000 annual limit on outpatient coverage), but she said she wasn’t concerned with having a big claim because they are healthy and would prefer to have doctors visits covered with a copay just in-case they get a cold, the flu, or strep throat. And she couldn’t afford some of the more expensive plans from Anthem Blue Cross or Humana because she was on a budget.
We’ve talked about the definition of insurance on the Colorado Health Insurance Insider before. When a lot of people are switching from an employer sponsored group plan with rich benefits to their own self-pay health insurance, they expect to get some use out of it – like when they buy an Ipod. This just isn’t cost effective for the health insurance company or for the insured. And if you want coverage for small things that can be easily paid for out of a savings account, you’re either going to have to pay more in extra premiums than it’s worth, or sacrifice coverage elsewhere in the plan. The actuaries for the health insurance companies know that if you’re getting extra benefits like this, you plan on using them. And to be profitable, they need to charge you accordingly. You’ll almost always pay more in premium for copays on doctors visits and prescription drugs than you’ll get in benefit.
And if you cut corners on the catastrophic part of your policy, you’ll be in a world of hurt when the unexpected really does happen. As Bob Vineyard from InsureBlog puts it:
While it is nice to be able to see a doc for $10 you should be more concerned about how you are going to pay $150,000 for a liver transplant. If you get a sore throat and don’t have $100 or so to see the doctor, chances are your throat will get better in a day or so.
If you need a new liver, you really can’t put that off and there are not many doctors (and hospitals) willing to sell you a used liver on the monthly installment plan. The health insurance plan collateralizes your liver transplant, making it possible for you to live a long and healthier life.