Does this sound like a good business deal? You give me one thousand two hundred dollars and I promise to give you no more than one thousand dollars back if you get sick. If that does not sound like a good deal, make sure that you have not made that kind of a deal when you purchased your last health insurance policy.
Chances are your health insurance policy has no resemblance to the scenario outlined above. Your plan probably promises to pay much more than that in the event of a major injury or sickness.
However if you look at the difference between the policy you have and another policy from the same company with a higher deductible, you may find that you have made one of the worst deals of your life.
If you have a zero deductible policy that costs you an extra $100 in premiums month more than an otherwise identical policy with a one thousand dollar deductible, the difference between the two policies is very similar to the bad deal outlined in the first paragraph of this blog post.
Although the math can get more complex than this, most zero deductible programs are horrible when compared to similar policies with low and moderate deductibles but lower rates. Please take the time to do the math to determine which deductible makes the most sense for you and your families.
Zero Deductible Policy Gotchas
When the average person hears that a policy has no deductible, they think that they can use it for medical services and pay nothing for those services besides the monthly premium. They often do not realize that the deductible is only one of the three cost shares that are part of the typical health insurance contract.
Copays are often small. They are not always small. You may be used to paying a $10 copay for prescription medicines and think that copays are no big deal. Your zero-deductible plan may have a $500 copayment for each day in the hospital. Insurers often find other ways to get you to share the cost of medical services and high copays are one of those ways.
Coinsurance is the third major cost share. Coinsurance is a percentage of the cost of an expense. The most common coinsurance percentage is twenty percent. You may, however find that your policy has a fifty percent coinsurance provision.
Be sure to ask about the other cost shares before you enroll in a health insurance policy. They may be small and reasonable. They may be large and unreasonable. Read the contract or at least review the outline of coverage before you sign on the dotted line.
I Would Not Buy One of These Policies Unless…
The only time I would buy a zero deductible medical care policy was if I were able to use someone else’s money to do so. However, since these policies are so overpriced when compared to the benefits, I would try to get the person on company that wanted to pay for the policy to get me a cheaper policy and give me something else in return.
When buying individual, family or business health insurance, be sure to compare policies before you complete the enrollment paperwork. Many policies are overpriced when compared to other similar policies offered by other companies and even when compared to higher deductible versions of the same policy offered by the same insurer.
There are other things to consider besides a policy’s deductible. Not all are listed in this post, but some of the important ones follow:
Be sure to check the provider lists the lists of hospitals includes one convenient to you. Also, check to see if your policy covers treatment received from the doctors you want to go to. You will want to see how any drug you take is covered. You will want to see what the limit is for your cost shares each year. You will want to know how emergency care is covered if you seek it when you are in another state.
Finally, you will want to make sure that your policy is affordable. If your income forces you to purchase a higher deductible policy than you would like, remember that it is important to look at your personal finances as a whole than to focus on getting the best policy. People who purchase insurance plans that strain their budgets may not have them in force when they need them.