Health Insurance Buyers Beware! Some of the New TV Advertised Health Plans Are NOT Insurance!

INSURANCE IS VITAL TO OUR FINANCIAL WELL$2500 in my emergency cash stash kept in the highest
BEING...yielding FDIC insured bank account at my favorite
Insurance of all types is a vital piece of everyone'sonline bank.
financial plan. We typically insure risks that, if theWhile $2500 is not pocket money for many I'm sure
unthinkable happened in any of these areas, wouldyou'd agree that it is a far cry more doable than
cause a financial hole that we, or our loved ones, may$300,000. The new healthcare plans, which are the
never be able to climb out of in our lifetimes. Forfocus of this article do things a bit differently.
example, we buy life insurance to protect our lovedIT SOUNDS GOOD AT THE OUTSET
ones from the awful consequences that would arise ifHey, what more can you ask? Nobody gets turned
the breadwinner(s) were no longer alive to "bring homedown, reasonable monthly costs, not limited to doctors
the bacon." We buy auto insurance for the chanceand hospitals, little or no waiting period for pre-existing
that we could be involved in a car crash in ourconditions, discount prescription drug and dental
everyday travels, and lastly, but far from finally, weprograms, and coverage for the aforementioned
buy disability insurance to protect against the awfuldoctor office and hospital visits, X-rays and lab tests,
consequences that could arise if we would incur anpregnancy, emergency room visits and much, much
injury that would prevent us from "bringing home themore. The only problem is...
bacon" in the manner that we are trained or educatedFIRST DOLLAR COVERAGE vs. CATASTROPHIC
in doing so.COVERAGE
Along the same lines, health insurance provides peace...this is what I call "first dollar coverage." The first dollar
of mind that a medical emergency followed by acoverage that most people have experience with is
lengthy hospital stay, won't force us into bankruptcy.their insurance "deductible." The purpose of the
While some may question the need or importance ofdeductible is to eliminate smaller "nuisance" claims. Not
many of the different types of insurance out on thehaving to pay these claims, of which there would be
market, I don't think many people would question themany, allows the insurance company to keep and
importance, or need for health insurance. I'm sure anyinvest the money they would otherwise have to pay
human resource professional would tell you thatout for what would be numerous small claims, and
questions about health insurance, its costs, and what itpass the savings, via lower premiums on to their
covers are among the most frequently askedcustomers. If one would purchase a policy that covers
questions of both new hires, as well as "seasonedeverything ( a $0 deductible policy), the premiums are
vets."typically much higher than a policy that has a
While we are licensed to sell health insurance here atdeductible, and as the amount of first dollar coverage
Halas Consulting, and have helped countless clients asyou as the insured agree to take on increases, your
well as friends and relatives obtain health insurance atpremium correspondingly decreases. While it is
a reasonable cost, it is not our primary business,. Wepossible, by paying additional premium dollars, to get a
typically gather the required information and turn it overconventional major medical insurance plan to provide
to one of our trusted independent brokers. However,first dollar coverage, it's primary purpose is to provide
we recognize it as a vital part of a complete financialprotection from catastrophic claims, which is what
plan, and we do ask about it and regularly reviewmost people expect their insurance to do. The trouble
coverages for all current as well as perspective clients.is, these new healthcare plans do things in reverse.
... BUT THIS IS NOT INSURANCEThey will cover you for your first dollar coverage and
The reason for this article is the new crop ofthen some, all the way up to thousands of dollars,
healthcare coverages that have arisen to solve thedepending on the set payout limit for the health issue
common coverage problems that we have here in theor service, but once that pre-determined maximum is
USA; people who can't afford conventional healthhit, then that's the end! You don't have coverage for
coverage, and/or can't qualify for conventionalthe larger, and potentially more painful financial loss.
coverage due to health issues. While there is no doubtTo be honest, many of the plans do, as I said above,
that these healthcare coverage problems are in diremention that the plan is not a major medical
need of a solution, these new plans aren't necessarilycatastrophic loss plan in the small print, in several
it. While I've known about these types of plans forplaces, but not everyone thoroughly reads the small
awhile now, and knew their pros and cons. I really hadprint. I just didn't like the one company using the term
no problem with them as the companies offering them"insurance" to describe what it is they are offering
were pretty blatant about the fact that these healthbecause it's NOT insurance.
plans were not insurance, the commercial that I sawCONCLUSION
on TV the other day set my blood to boiling thoughIs there a place for these plans? Absolutely! If you are
when I went to the advertising company's website andunable to procure major medical coverage at all or the
saw "health insurance" as a drop down item on theprice is just too cost prohibitive, then, as the old saying
tool bar across the top of the page. While what theygoes, "sumthin' is better than nothin.'"
are offering is a healthcare plan, it is NOT insurance,If you have a high deductible plan and want something
and I'm going to tell you why.to cover the gap between $0 and the deductible
HERE IS WHYamount and the premium of the healthcare plan is
The primary purpose of all insurances, as I mentionedreasonable, it might be worth it. The discounts for being
above, is to protect us against a catastrophic loss.a member in the group that typically have to join, to
That is, a loss that if we incurred it, would render uspurchase one of these healthcare plans, is usually
possibly unable to repay it in our lifetime. For example,pretty good. Just be careful if your health plan is a high
if I, a 38 yr old man, incurred a medical catastrophedeductible plan with a Health Savings Account
that cost say $300,000 when all was said and done,(HSA)attached to it. Some HSAs may not allow these
there is a great chance that it may take me years toadditional healthcare plans, and continue to give the
pay it off, if ever, and even if I did, there probablyHSA its tax advantages. It would be best to check
wouldn't be much there for me to enjoy retirementwith the high deductible plan provider to see if it can be
with. Golf and fishing excursions to Ft. Lauderdaledone.
would definitely be out of the equation. But if I have aCovering the health of you and your family, with
typical, off the shelf major medical plan offered by ainsurance, and the best way to do it is one of the
leading insurer, with a $500 deductible, and 80/20more important decisions that you will make If you are
co-insurance up to $10,000, with the insurancenot covered by an employer's plan, and are forced to
company paying the remainder up to the lifetimego out on your own to purchase health coverage,
maximum of say $1 million, the maximum that I wouldmake sure that you know what you're buying, what it
pay out of pocket would be $2500 ($500 deductible +costs, and most importantly what it covers. An
20% of $10,000 which is $2000.) I think that even if Iemergency is not the time to find out your coverage is
was hard up for cash at the time, I could probably paynot what you thought it was. If you need further
that amount back in my lifetime, so the bill would getassistance on this or any other insurance, tax or
paid even if I had to borrow the cash from a friend orinvestment issue, feel free to contact me at the email
relative if the need arose. If I'm following the adviceaddress listed below.
myself that I give to clients, I should have more than