Health Insurance Money Saving Strategies – How Combining Health Insurance Saves Money

How does anyone get the best value with health insurance? Answer: Combine Health Insurance Plans. To explore the principles at work, many people should understand how combining health insurance is a sound solution to a serious problem. It may appear obvious that combining insurance improves coverage, but few people truly understand how combining plans leads to thousands of dollars in potential savings over time. With so many health insurance plans available and over 1 million insurance agents actively licensed today, it leads one to question why no one knows how combining plans saves money.

Today, too many people are learning the hard way that they are under-insured when it comes to health insurance. This happens because competitive health insurance agents bid lower and lower amounts in an inflated market, leading to more gaps in coverage that less experienced agents often fail to comprehend well enough to explain. There is a simple truth to understand about the rising costs of health care.

Health Care Costs Will Continue to Rise When No Regulation is in Place

Hospitalvictims.org conducted research on hospital charges nationwide. These charges were compared to those of Johns Hopkins Hospitals, one of the most respected health care institutions in the nation. What were the results?

The vast majority of hospital charges average between 300% and 400% above the institutions’ costs for treatment. Johns Hopkins Hospital’s average charges are 117% above its costs. For every $1 charged, Johns Hopkins pays $0.85, or earns a profit of $0.25 for every dollar charged.

The average U.S. hospital pays $0.27 for every dollar it charges. The average hospital is paying $25 Million in costs while charging $95 Million to patients. The average profit margin is around $70 Million annually. The greatest of these charges are credited to surgical supplies and the administration of anesthesia.

In an ever-inflating health care industry, a solution does exist. While politicians continue making promises to solve the health care crisis, individuals and families continue to expect more than the insurance market can bear. But many self-employed individuals and families can find comfort in knowing they can do something to secure assets by simply doing the legwork and becoming informed about health insurance.

The solution is based on a very simple principle of insurance. Insurance is an Agreement to Share the Financial Risk of Loss Between Individuals and Companies

This basic concept is more important for individuals to understand now than ever. Health insurance companies, like individuals, cannot afford the rising costs of health care on their own today. Many health insurance companies have developed their focus to specific areas where they can offer more competitive coverage at very affordable prices. This is where people can save significant amounts of money by adjusting to this trend. It is no longer the case that a single health plan can offer full, comprehensive coverage at a competitive price because health care costs are out of control.

Today it takes multiple health plans from multiple health insurance companies to have the best coverage at the lowest price. This follows the trends associated with investing in the economy. One creates greater risk for their financial performance in the market by investing all funds in one stock or trade. The safest, most secure investment is a diversified portfolio. Health insurance is no different today.

Why You Do Not Know

Is it surprising to learn that many insurance professionals have no idea how to give individuals and families the best coverage and the greatest savings on health insurance? The majority of health insurance agents today are captive to one company. This means that most insurance agents are only trained to present the products of the health insurance company they represent.

Independent agents are less restricted to one plan, but a large number of these professionals still have limited access to the competitive plans available to individuals and families. While this explanation is complicated, the simple answer is that most agencies earn the majority of their profits from the volume of product sales per company, not the volume of sales overall. Some general agency contracts offer higher incentives to the agency, which can influence what products agencies offer.

The Pros and Cons of Group Health Insurance

The health insurance marketplace is certainly challenging, but count your lucky stars that at least you have choices. To that end, this article is going to explore the pros and cons of group health insurance.

Group Health Insurance Pros

Group health premiums are subsidized by the employer. Generally, an employer must contribute at least 50% of the “employee only” premium. As such, if you are the employee, you can likely get a richer health plan for less premium than you would pay in the individual health marketplace. However, the cost to add your dependents to the employer’s plan, may be cost prohibitive. In this case, and assuming that your dependents can qualify, then you may want to put them on an individual health plan.
Group health premiums for large families are the same as for small families; whereas in the individual market, you pay a separate premium for every family member. So, if you have a large family, you may be able to get a better deal by adding them to your employer’s plan. As with any insurance change though, don’t make any changes without consulting with an experienced insurance advisor in your state.
Group health insurance in most states is guaranteed issue – meaning that you can’t be turned down because of pre-existing health conditions. This is a real blessing if you or a family member has a medical condition that prevents you from qualifying for a individual plan. But, this is a double-edged sword. While being guaranteed issue is a huge benefit for those with pre-existing medical conditions, it does come at a price. This one feature alone accounts for most of the disparity between group and individual insurance premiums. Yes, that is right – in most states, individual health premiums are almost always less expensive than group health premiums.
Most group plans cover maternity. So, if you are planning on having more children, you should definitely consider hopping on to a group plan. While you can add a “maternity rider” to individual plans, these riders tend to be expensive, restrictive, and otherwise provide less value than the coverage you can get in a group health plan. That being said, if you are considering having more children, we recommend that you contact a health insurance advisor in your state for advice about what is best for your family. The right answer is different for each unique family.
Economies of scale can benefit employees of large employers. It is true that the larger the group, the larger the risk pool is in which to share the risk which CAN result in lower premiums than are available in the individual health market. However, the guaranteed issue “issue” CAN wreak havoc on this type of plan. For example, a large employer with good benefits tends to retain employees for long periods of time. Eventually, the average age of the group starts to creep up and so do premiums. In addition, people with large medical needs (expensive medical conditions) tend to be attracted to large plans because they are guaranteed issue with good coverage. And so, over time, not only is the group’s average age increasing, but the group is also attracting employees with large expected health costs. This is the dilemma that we see with large health plans like the U.S. auto-makers and even government plans. Eventually, those with lots of medical needs begin to outnumber those with little or no needs and so premiums are driven higher and higher.

Group Health Insurance Cons

Group health insurance can be more expensive than individual health insurance. ln fact, if you don’t factor in the employer’s contribution towards premiums, then individual plans are almost always more affordable than group plans. However, as we discussed earlier, not every one can qualify for an individual plan.
What happens if your employment is terminated (by you or your employer)? Yes, you will likely have some benefit continuation rights (through COBRA or state continuation programs), but these benefits can be very expensive and the term limited. So, eventually, you either have to secure another job with benefits, an individual health plan (assuming you are insurable), or possibly join a government health insurance program for the uninsured (if you are not insurable). Let me emphasize, that you should NEVER be without some form of major medical health insurance. Being without this insurance puts you and your family in serious financial jeopardy. In fact, a recent Harvard University study found that 50 percent of all bankruptcy filings were partly the result of medical expenses.ยน To the same point, every 30 seconds in the United States, someone files for bankruptcy in the aftermath of a serious health problem. Don’t let this happen to you.
Group health insurance premiums are rising faster than individual health insurance premiums. Why? Because most group plans are guaranteed issue and since they accept “all comers”, they tend to attract those with high medical costs. On the other hand, most individual health insurance plans are medically underwritten. This means that the insurance company can say “no thanks” to any application that it deems to not be in its interest. Put yourself in their shoes – would sign a contract to provide $30,000 in annual benefits to someone that was only going to pay $3,000 in premiums (for a net loss of $27,000) if you didn’t have to? Hmm…let me me think about that one. The answer is a resounding “NO!”. Because of this underwriting process for individual health insurance, insurance companies can control their risk and more effectively manage their profitability, resulting in more stable prices.

As you can see, there is no clear cut answer as to which type of insurance is the best. The answer depends on a number of factors and is different for every unique situation. The best advice I can give you as you consider your health insurance options — get good advice from an experienced health insurance advisor.