I spoke with a woman the other day who requested private medical insurance quotes from us. She had a zero deductible health insurance policy that cost her $1500 a month. I suggested a policy that had a $2500 family deductible that cost $1100 a month.
At first she balked. She said that the zero deductible policy was better than the policy with the $2500 deductible. I agreed that it was. However, the real question is:
“Is the more expensive health insurance policy, $400 a month better?”
We did a little math. (We are ignoring the fact that every policy has exclusions and limitations on benefits for the examples below.)
If she set aside $1500 a month for her overall health care expenses and bought the zero deductible policy that cost $1500 a month, she would have no money left over at the end of the year but no medical bills to pay.
If she set aside $1500 a year for the health insurance policy with the $2500 family deductible that costs $1,100 a year she would have $4,800 left over if her family had no medical expenses. She $2,300 left over even if her family had catastrophic medical expenses.
(She would do even better if she funded a health savings account with the “excess” money because of the tax advantages, but that is a post for another day.)
Buying the $2,500 deductible policy would actually create a scenario where she would in effect have a zero deductible policy with cash back.
Need help deciding on a policy? If you are a Connecticut resident give us call at 203-374-3645! We’re here to help!