HEALTH INSURANCE

One of the most important parts of my job as a Nashville health insurance agent is to find the right coverage for my client’s needs. It would be unsettling to me to know someone that trusted me may end up in a very bad situation due to a failure on my part. Any insurance policy is an important part of a family’s financial scene and future, but health insurance, I feel, is in a category all in its own. So, if I know the plan is right for them and their situation I will encourage them to enroll on it. 

The second most important part of my job is making sure they understand the plan. Why is this second? Well, trying to get them to understand all of the aspects of a complex health insurance policy could be difficult and confuse them. We, as health insurance agents, study and are tested before we are licensed and we review the policies we write so we know what our clients are getting better than they do. I know that if something happened they would be taken care of and if there was an issue I would be there to make sure the benefits were paid out as they are supposed to be. 

Health insurance is very complex. Plans vary from company to company. If I show a policy from one company to an agent unfamiliar with the plan, they may have trouble understanding all of the finer points without studying it closely. So, that is why there are really just a handful of points to address for most folks. Like I said, if I am confident it is right for them, then I would let them know. I am always available to help them with the coverage at any time. I don’t disappear into the darkness once they signup.

I explain all of the salient points right up front so they understand what they are getting into. Usually this covers the monthly premiums, limitations, exclusions and waiting periods. That is enough even for the well informed consumer.

Part of understanding the insurance policy is the actual cost. This is probably the most difficult part of the process. The monthly premiums are only part of the cost of the health insurance plan. I am bringing this up because I get many calls from people concerned about economy. They want the “cheapest” plan and they don’t care what it covers.

The belief is that all insurance is the same.  From plan to plan and company to company it’s all the same. Like buying gas for your car. It’s 7 cents cheaper across the street so you could save a dollar by going there. Sure, I have done that. But gas does not change from pump to pump. Your car will not break down if you use Shell instead of Citgo. It is NOT the same for insurance. Not even close. I hate to say it, but only the most uninformed consumer would think this.

I had one fella hang up on me when I gave him the rates for his demographic. Which, were actually reasonable compared to what was available with other companies. Just before he hung up he said “Stop, I got a quote for half as much from someone else.” Click. So here is a 40 year old man that thinks he can get the same product for half price just down the street. This is not gasoline, people. This is an important financial decision.

The rule is “there are no deals in the private insurance market”. NO DEALS. None. Zero. Your uncle Charlie the car insurance guy can’t get you better rates. Your aunt the attorney can’t get you better rates. If you buy a $49/mo health insurance plan, you will get $49 worth of health insurance. Period. Unless someone else is paying a part of your premium, like the government or your employer, you are not getting a “deal”. You are getting cheap insurance. Anything cheap is, well, cheap. You get what you pay for when you buy your own health insurance. 

Any insurance is just a numbers game. Is the risk of insuring you worth the premiums the insurance company is collecting? If yes, then they will insure you. If not, they will tell you to kick rocks. The insurance company is not going to risk tens of thousands of dollars against your $49. They just aren’t. They need to keep as much cash as possible to maintain their credit standing and to be liquid in the event of a sudden influx of claims. 

If you have one of these super cheap plans and you have $14,000 accident claim, who do you think is going to pay the lion’s share of that bill. Yes, you are. Either you have a limited benefits plan that will cap your benefits at a few thousand dollars or you have a huge deductible to meet. Either way you are going to end up with a very large bill. If you bought an accident-only plan, you may come out pretty good. But, if your plan covers sickness and accident. You are going to be up the creek.

I have heard many complaints from clients that “My last insurance didn’t cover anything!” And they either had a cheap plan as mentioned above or they did not fully understand their plan to begin with. That is the reason for this article. What is the real cost of the health insurance? It’s not just the premiums. In fact low premiums can mask the real cost of your insurance. 

Would the extra $100/ month be worth it to cover an additional $10,000 in bills? I think so. What if the bill was $40,000. That is very real today for just a few days in the hospital. No surgery or procedures, either. Just an expensive hotel stay with doctors observing and bad food. 

So let’s do the math on a $40,000 bill. The $49/mo plan covers, let’s say $12,000 leaving you with a $28,000 bill. You can make payments forever to the hospital or let it go to collections and have lien put on your possessions. Maybe you pay $100/mo 20 years. That would pay it off. Or you could just buy a good plan at $249 with a max out of pocket of say $3000 and be done with it. It would take you 12 years at the higher premium to spend that $28,000. A good investment I would say.

So the actual cost of your cheap health insurance plan was MUCH more than you would have ever expected. And, truthfully, $40,000 is nothing in the health care world. Like I said, it’s a few days in the hospital. You haven’t ever seen a $2 million hospital bill for 11 month’s worth of chemotherapy or $350,000 for a triple bypass heart surgery. How would that $49 plan stand up to those.

If you had any assets you can kiss those good buy, even if you filed bankruptcy. The trustee is going to liquidate everything. Maybe you can keep your house and car, but that’s it. Then you have bankruptcy on your credit for up to 7 years.

So the real cost of health insurance is far more than you might expect if you are not looking at a bigger picture and fail to get educated or find an agent that will educate you. You may save up front on smaller bills, but in the long run it would be a mistake to invest in a cheap health insurance plan.

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