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Cheap health insurance because of higher deductibles

Someone somewhere once said a sucker never gets an even break. So the unwary need to be careful when reviewing their insurance cover. Sadly, insurers are for-profit organizations and that means your every last cent is at risk. The standard business model is for the insurers to pull in as much money as possible and then hold on to as much of it as possible. This is done, in part, through delaying payment on legitimate claims whether by asking for more information in support of the claim or disputing liability. However, the latest strategy is to persuade you to self-insure. This is, in a way, the ultimate scam. What the insurers say is that you are covered except you have to pay the deductible first. Up to a year or so ago, the deductibles were not unreasonable. Now, many of the policies are changing to significantly higher deductibles. The more the company get you to pay on individual claims, the less likely it is ever to have to return any of your money.

The trend is most obvious in the health plans offered by employers who are slowly abandoning traditional policies in favor of indemnity plans and health savings accounts (HSAs), both of which have high deductibles. The advantage to the employers lies in the cost. Any plan with a high deductible has a lower premium. But itís the marketing to the employees that wins a prize for subtle manipulation. These plans are described as ďconsumer-drivenĒ. This means the policyholder pays a lower premium and "stays in control of the treatment" ó a remarkable way of saying that, if you cannot afford the high deductible you decide not to have the treatment. The more you pay as the employee, the better for both the employer and the insurer.

You would imagine this strategy would be met with howls of complaint except, of course, all the young employees are strongly in favor. They are still optimistic about their health and believe they will never have to find the deductible. This makes the lower premium very attractive and a growing number of companies are now offering HSAs to all their employees either alongside traditional plans or as a substitute. The additional advantage to the employee is that the savings account belongs to them.

Some employers are selling HSAs by offering additional contributions if the employees go through a wellness program. The idea is simple. Preventive medicine saves longer term costs. The better the health screening, the lower the premium paid by the employer. In theory, therefore, everyone benefits except, of course, for those employees who are seriously injured or prove to have a chronic illness. Itís at this point the employee realizes the full weight of the higher deductible that must be paid before any benefit is claimable under the plan. The idea of cheap health insurance is very attractive. The more your household budget is under pressure, the more you are tempted into self-insuring by increasing the deductible. Assuming you are allowed a free choice, itís better to stay on the traditional group plan. It may not be the cheap health insurance you were hoping for but, should the worst happen, you are in a far stronger position.


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