Monday, June 16, 2008

Ground Your Medical Benefits Assumptions

[As I feared, this post ended up a bit long, but I hear so much discussion on this topic.]
A couple of previous posts ask you to consider what's the worst that can happen and obstacles you place in your path. A frequent objection I hear that prevents an alarming number of people from ever getting off the dime is health care benefits. I always encourage people to investigate their options and to consider their costs today.

Pull out your pay stub and remind yourself of the amount you pay in health care premiums today. It's typically more than you remembered. And it's been increasing at a rate much higher than your gross pay ... typically. Additionally, consider deductibles, co-pays, etc. that you incur. This doesn't have to be a higher order math problem. Simply jot some numbers on the back of an envelope.

Armed with this set of data, check out some web resources or contact an insurance broker who writes individual/family policies. Now, the big problem at this point is that the process is now stacked HEAVILY in favor of people/families with pretty good to great health records. The options and/or costs for those deemed "undesirable" by the health care companies are sadly limiting to say the least. This unfortunately drives some back to the safety of company/corporate plans that can absorb these individuals. Over time this has the potential to create a "negative selection" within company plans, but the insurers are constantly working to avoid this problem.

For those who have good health records, the options are more numerous and MUCH more cost-effective than you think. Beware, however, that the underwriting process with insurers is not necessarily logical or fair. (See plug for some form of universal health care below.) Plus, you can get these numbers before you take the plunge. Simply ground yourself and make the obstacle tangible. Sitting back and hiding behind this corporate benefit is doing yourself a great disservice. As your back of the envelope exercise is likely to reveal, this corporate "benefit" often costs you more than you think.

Two final points. Number one, in order for individual plans to make sense, you often need to change some habits around health care. "All you can eat for $20 copay" is a fading reality. Shifting family habits can be painful. This is particularly true with high-deductible/HSA plans. These are not for everyone, but they are definitely worth investigating. Again, do the back of the envelope. You may be surprised. You might also learn that it's not worth going to a doctor to have them say, "Your child has a cold. Good luck with that." whether you're paying $25 or $100.

Finally, small business has made me strongly consider the benefits of some form of universal health care. Are there budding entrepreneurs out there unable to make the leap due to some illness of theirs or a family members? Given the nature of the underwriting process (i.e. Have you sneezed in the past 5 years? If yes, please provide Kleenex samples with dates.), I can guarantee you that there are some. For those worried about the tax implications of universal health care, ... check out your paycheck, dude! You're being taxed now. I will stop short of commenting on the government's ability to run a health care system, but I can say that the current system is stacked against small business and entrepreneurs in many ways. That's it. No presidential endorsement follows. And after posting this, I'll certainly never be able to run for office!

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