Most Chicagoans that pay for their own health insurance typically want a low deductible, but they don’t want to pay the higher premiums. Many people and business owners feel they are losing out on coverage when they raise the deductible. It all becomes clear when they realize its just a math problem.
Most Chicagoans are scared by higher exposure and they look at the big dollar amount as something they have to pay out all of time. The truth is most people use very little of their health insurance. In fact, many families typically do not even break $1000 a year with out-of-pocket exposure.
Insurance is always a necessary evil. This is with auto and homeowners insurance as well as health insurance. Even though we may never actually use it, it gives us a piece of mine. Most families will pay the extra premiums, when necessary, to make sure the family has health insurance. No one wants to over pay in their premiums. By anticipating medical claims from the past experience, we are forced to make an educated guess on what is the most reasonable for the family. What brings us to that educated guess is applying some basic math skills you use every day.
Many families are afraid to go from $1,000 deductible up to a $2,500. Rightly so. However, by raising the deductible, the average family will save roughly $1,500 per year*. That’s the same difference in deductibles ($2,500 – $1,000 = $1,500). If only one thing occurred for that year they would break even based on the cost savings. Most families can get by for 12 months, or more, before anything occurs. This is one reason why health insurance premiums go up as time goes on based on the anticipated future risk. So, if nothing occurs you just saved your family $1,500 for the year. I’m sure you could think of better things to spend $1,500 on for the family. Again, it is just a math problem, not a benefits problem.
Now there are those people that would rather reinvest the extra money and have additional coverage in areas they may not of had before. In today’s tight economy people would rather conserve their dollars. How do we do that with insurance?
Most families have a concern of having injuries, not necessarily car accidents, but injuries themselves such as sports, if someone falls or your grandmother chases you with her broom stick. By adding an accidental supplemental insurance to reimburse you at claim time will offset your exposure of the higher deductible. By reinvesting part of the savings back into an insurance product to help virtually eliminate any type of exposure at claim time for an accident only helps the family get ahead.
You can also put some of the savings into a policy that pays you tax-free dollars in the event you are seriously I’ll, such as cancer or a stroke. What kind of impact would it make on you to receive a check for $10,000, $25,000 or even $100,000 when you are diagnosed with a serious illness? Would you be able to focus on your health and family and not worry about going to work to earn money to survive financially?
Paying a portion of the savings back into a program that could virtually eliminate someone’s out of pocket expenses is better than having a lower deductible. One reason is you will be paying higher premiums and still have to pay out-of-pocket at claim time. Two, there is still a little extra savings that one can put back into savings or another investment to make your money work harder. All of this is done by doing a little math to make sure you money is going to all the right places.
*Numbers are based on individual plans, not employer sponsored plans. With the right expert advice, employer sponsored plans can save significantly on their premiums with proven strategies.