Tuesday, February 01, 2005

Why I Recommend High Deductible Plans

Over the past few years, more and more of my practice has involved individual medical plans. There are myriad reasons for this, but for now I’d like to focus more on the “what” than the “why.”

For example, yesterday a young lady called about medical coverage for her family (mom, dad, son). She had called a number of places before getting to me (hard to believe!), and every one of those places gave her a quote for a generic co-pay plan. I know that it’s easy to do that, and to fall in the rut of cookie-cutter offerings, but I’ve found that this isn’t always (or even usually) the best way to go.

So I recommended a plan with a $2500 (per person) deductible, with a drug card but without office visit co-pays, and – best of all – no co-insurance.

As an aside: I’ve been in this business for over 20 years, and the single most difficult item to explain is co-insurance. “It’s 80/20 coverage!” Oh yeah, 80/20 of WHAT? Oh, today it’s 60/40 but only if you go to Doctor Kildare. Sheesh!

Anyway, as I explained to this potential new client, her family would save well over $100 a month with this plan; it seemed pretty far-fetched that they’d accrue anything close to $1,200 in doctor’s office visits over the year. And on a large claim, she’d actually SAVE money.

How’s that?! Well, today’s generic plans include a $1,000 deductible, then 80/20 (ahah, there’s that co-insurance again!) of the next $10,000, and then 100% coverage after that. So that means on a big-ticket claim (say $50,000), her out of pocket exposure would be $3,000 ($1,000 deductible + $2,000 co-insurance). But the plan I proposed limited her out of pocket maximum to only $2,500. And she saved $1,200 along the way!

Okay, that’s my soap-box for today….

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