Health insurance has been a hot topic ever since costs began rising faster than inflation – certainly long before the debate began over the Healthcare Reform Act, now referred to as Obama-Care. Today, as our population ages and health care costs continue to rise, more of us are wondering how to separate fact from fiction as the insurers continue to jockey for position in the marketplace.
This environment has lead to the creation of some myths, according to industry experts, that have left many consumers somewhat confused.
To sort out fact from fiction, I asked Brad Burch, District Manager of Health Plans 4 Less, based in Simi Valley, California, to help clear-up some of the confusion and misconceptions. Brad and I are both members of The Simi Valley chapter of Business Network International (BNI), so I’m familiar with his work.
When it comes to saving money, Brad says it’s mostly about knowing HOW to buy. Most insurance products are bloated; and, sometimes, people are sold bells and whistles they really don’t need. It’s about smart buying and many people are simply overpaying.
A Good Place to Start
For example, according to Brad, a good starting place for savings is in avoiding the low co-pay trap. Low co-pays virtually always result in higher premiums; but those high premiums will almost always outweigh the difference in doctor visit charges. And, now with the new health care reform provisions in-place, all plans now cover your annual preventative care doctors visit for every member of your family.
A Factor Few Consider
Brad pointed out another misconception: Many people believe their plan will cover all their medical bills once the deductibles and co-insurance has been met. The reality is that besides the deductibles and co-insurance, which is typically between $4,000 and $7,000 out-of-pocket, there are other costs few people consider. For example, if someone were to have a prolonged illness like cancer, s/he can be out of work for months. Few people consider how their bills will get paid. The doctors and hospitals may be covered, but they can still go broke fighting the illness.
According to a Harvard Business School study, the number one reason for bankruptcy in America (55% of all bankruptcies) is people being out of work for extended periods due to a critical illness – believing that their health plan was enough.
The Solution: Smart Purchasing
Is the Government program the answer to all these problems? Maybe. Maybe not. The Healthcare Reform Act isn’t designed to be free or even close to 100% coverage.
While many will argue the eventual cost, the math is pretty simple: When you add 30 million people to the rolls and include coverage for pre-existing conditions for them, as well as everyone already in the marketplace, you’ve increased demand for services.
When there’s no expansion of the supply of new doctors – indeed, some are leaving or changing their business models – it becomes simple economics. Increased demand with static supply equals higher prices; and, as noted earlier, there’s still the lost wages issue many never address.
But, health insurance is expensive, isn’t it? Well, it depends on how you look at it. Bankruptcy is expensive, too! Not having it can prove financially disastrous.
Brad says, it’s all about knowing how to buy. The problem is many people simply overpay because they don’t know how to buy it! Health insurers love to sell us all kinds of ‘bells and whistles’ they say we need when we really don’t.
It pays to do your homework, and talk to an expert.
Health Plans for Less: https://www.healthplans4less.com/;
Brad Burch: (805) 876-4193
[Note: IFG and HealthPlans4Less are not affiliated and no referral compensation agreement exists to provide a referral incentive.]
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Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® in his 21st year of private practice as Founding Principal of The Independent Financial Group, a fee-only registered investment advisor with clients located in New York, Florida, and California. He is also licensed for insurance as an independent agent under California license 0C00742. IFG helps specializes in crafting wealth design strategies around life goals by using a proven planning process coupled with a cost-conscious objective and non-conflicted risk management philosophy.
The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.