HEALTH INSURANCE

EGS would rather it's clients be informed buyers than to simply sell insurance and added benefits that the client may not need.  Therefore we are presenting this information as a helpful guide for you to make an informed decision on which plan to buy and which benefits to include. We are not attempting to persuade you to either include or exclude certain benefits from your health insurance plans.  We simply want you to make the right decision for you and be happy with your selection.  This guide is presented in general terms and attempts to explain how health insurance plans work.  Not all plans work equally nor does this imply that this information is valid in all states or situations.  It does however, give the general workings of many health insurance plans and how deductibles, coinsurance, and copays function.

Health Insurance Premiums   It is no breaking news that health insurance premiums are at an all time high.  There are many factors involved in this increase and many different opinions on what causes it.  There are also many ways to lower your insurance premiums significantly.  The insurance companies blame the doctors and the doctors blame the insurance companies, while others blame the legislature.  We do not argue that all these are factors in the high cost of health insurance.  However, the most obvious reason is that medical research, disease cure breakthrough, and the huge improvements in health maintenance are very expensive.  With that being said, we will leave that subject alone for now.  How do you lower your health insurance premiums?

There are lots of ways to decrease your health insurance premiums.  Health insurance plans today, have many bells and whistles or added benefits that you may or may not need.  By decreasing some of these extras, you can often significantly reduce your premiums and still have a very good policy.  Let's take the following example.

COPAYS

A $20 doctor office copay is much more expensive than a $25 doctor office copay.  A $30 copay is much less again, as is a $40 copay.  Let's assume that the premium associated with a $20 copay is an additional $38 per month in premium.  A $40 copay being an additional $12 per month.  No copay at all would of course be $0.

You would then be paying an additional premium of $26 per month to protect yourself against a "potential loss" or exposure of $20 each time you used the doctor office copay.  Please remember that these numbers are just made up for sake of example.  The point of this explanation is to encourage you to "do the math", when selecting benefits.

DEDUCTIBLES

Now let's put the Deductible under the glass and examine.  The higher the deductible, the lower the premium.  Make a judgment based on your own financial capabilities and not just on what "sounds" good on the surface.  Ok, now for the example with assumed numbers.

Let us assume a $250 deductible is more expensive by $100 per month, than a $750 deductible.  The deductible is probably the most effective way of managing your premiums as it impacts the premium more than just about any other optional factor.  In this example you are paying an additional $1200 per year to protect yourself against a "potential loss" or exposure of $500 more out of your pocket.  Once again, it pays to do the math.  Many insured's find that raising the deductible saves them hundreds and even thousands of dollars yearly without exposing themselves to much more risk.  Risk is really the subject here.  How much risk are you willing to take and at what price?  At what level does the insurance policy cost more than what it is worth?  At what level of premium does the insurance policy become a "bill paying service" instead of a "safety net" to protect you against significant financial loss.  

CO-INSURANCE

Co-Insurance levels should be looked at under the same magnification.  A health insurance plan with an 80/20 or 80% co-insurance level is much higher in general than is a 50/50 or 50% plan.  These co-insurance levels have cut offs or Maximum Out Of Pockets to protect you against a devastating loss.  Once again, risk is really the subject at hand.

A health insurance plan (X) that has a $750 deductible and 80/20 to $5000 for example is $280 per month.  A health insurance plan (Y) that has a $250 deductible and 80/20 to $5000 is $480 per month.  Both plans have 100% coverage up to $5 million after the Maximum Out of Pocket has been met.

Your Maximum Out of Pocket for Plan (X) would be $1750 per year.

Your Maximum Out of Pocket for Plan (Y) would be $1250 per year.

Your increased "potential loss" or exposure would be $500 in any given year.

You would be paying $2400 per year to protect yourself against this "potential loss" or exposure of $500.

Please remember that these numbers are not completely accurate and are only being used for showing how certain options within a health insurance policy can impact the premium.  Weigh out the risk and "potential loss" exposure along with the premiums associated with these options.  In order to compare benefits and risk against premium cost, you should get a quote that offers several different option levels for each of the above and calculate the differences in premium.  There are many differences in insurance policies as well as insurance companies.  Once you get a quote, please feel free to call EGS Brokerage and get more detailed information on the policy you are interested in.  Only a qualified insurance agent can really answer these questions for you and fully explain differences among policies.  Never shop for health insurance on the basis of premium alone.  We want you to make informed decisions and buy what is right for your individual situation.

egsbrokerage.com * P.O. Box 1459 * Dandridge, TN  37725 * 865.397.6181