Insurance Agent Forum

[GreenSky]

This is posted primarily for Al who I think is incorrect as to the value of a separate deductible (embedded) in an HSA plan.

I ran the following quote in my zip code of 91316. Family of 4, ages 37/40/7/9.

Here are the results:

$243 Health Net $8,000 Family Deductible
$265 Blue Cross $7,000 Family Deductible
$336 Aetna $5,000 per person/$10,000 Family
$405 Nationwide $3,500 Family Deductible
$425 Aetna $3,000 per person/$6,000 Family

My interpretation of the results:

Why would anyone spend $852 more per year to go from Blue Cross to Aetna 5K deductible plan? In other words, you are guaranteed to spend $852 to save $2,000 in the event of a catastrophe that happens to ONE person. What if more than one person has a major claim?

Let's look at the Nationwide plan that is cheaper than the 3K Aetna plan. I would spend $240 more for Aetna to save $500 on ONE person. If more than one person had claims, the Aetna policy would likely cost me more money.

Bottom Line:

You have to do more than believe something is better. You need to do the math. A professional insurance agent will do this. A hack will just go with their gut feeling.

Rick

[somarco]

In GA BX & Aetna offer embedded deductibles. The rest offer a family deductible.

I always run the numbers to see. Sometimes it makes sense to use an embedded deductible.

Sometimes not.

Like with anything else dealing with insurance, the answer is "it depends"

[al3]

Rick makes good points but as others have pointed out it is not always easy to make a dollar for dollar comparison. In this case I think the Aenta plan gives better value:

It has an immediate PT benefit
It has an immediate well-woman benefit
It has an immediate well-child benefit
It has a Prosthetics benefit
It has a DME benefit

And of course it has an embedded deduct so that if someone has $7,000 worth of damage, they will get $2,000 worth of benefits with Aetna. With Cross they get zippo.

I would tell the client that the $82 a month is worth the difference. They may not see it, but that's what I would buy.

I see insurance as a bet, same as Rick makes in Vegas. You are betting you will get sick, the house is betting you won't. I'm willing to place a bigger bet for better odds and a better payout. YMMV.

Al

(Same ages an Rick's example, but in 95628 zip code)

[GreenSky]

Al:

So you're saying it's better to spend $1000 more to have the Aetna policy? That difference effectively raises the cost for one person under Aetna to max out to $6,000. Blue Cross only costs $1,000 more than this for the entire family.

By the way, I have yet to find a case where I couldn't beat Blue Cross with Nationwide. If you want a better comparison with a plan that gives a better well-care benefit, try them. I see you went to Zapquote for this information - try it with another carrier. If you don't like Nationwide, use Health Net.

Al, you really need to look at your math better. The chances of anyone hitting the deductible is about 5% or less. Would you like to spend $1,000 per year to have a claim covered better once in 20 years?

Rick

[TXINSURANCE]

The carriers need to do a better job clearly stating which have INDIVIDUAL or FAMILY deductibles. Even on Norvax it will show $5000 individual / $10000 family on embedded deductibles - the consumers are completely confused on this issue and 90% of agents I speak to have no clue either.

It is a good topic since most consumers and agents are not up to speed on this mathematical variation.

[al3]

So you're saying it's better to spend $1000 more to have the Aetna policy?

I think it is a better policy because it is a better overall value. Given the choices, it is what I would buy. Thus, it is what I would sell.

That difference effectively raises the cost for one person under Aetna to max out to $6,000. Blue Cross only costs $1,000 more than this for the entire family.

I don't sell cost or price. I sell benefits. I find that most people don't care what it costs as much as what they will get FROM the plan. That's the pitch I make. "You can have X for one dollar or Y for two dollars. I think the two dollar plan is better because you have a better chance of getting benefits."

By the way, I have yet to find a case where I couldn't beat Blue Cross with Nationwide.

It took NW two and a half weeks to clear a 100% clean case... and it would NOT have cleared if I didn't get on their ass the past three days. Aetna did a similar clean case in 2 days. No more NW for me until the dust settles with the HealthNet take-over.

If you don't like Nationwide, use Health Net.

HN has a horrible reputation up here. I don't know what they did in the past but a lot of people don't want anything to do with them.

Al, you really need to look at your math better. The chances of anyone hitting the deductible is about 5% or less. Would you like to spend $1,000 per year to have a claim covered better once in 20 years?

It's not all about math. It's about VALUE. Long ago I learned that business people (which is my largest market) don't care about SAVING money... they care more about making it... or getting benefits when they SPEND it. I sell what I think is the best overall VALUE for the money that my client is going to spend. There is no math you can show me that will compute your Blue Cross plan as a better VALUE than the Aetna plan.

That's my story... and I'm sticking to it.

Al

[James]

I have to agree with Al's mentallity here, Value is far greater then simple Cost. People such as Al is speaking of, the business class while they look for Value for their Dollar but that isn't always a pure Cost assumption. Remember, Insurance is all about how much Risk that you can afford to cover, if someone can afford to take less Risk will do so, even if they pay a few more dollars for it, that is the name of the game.

[somarco]

The carriers need to do a better job clearly stating which have INDIVIDUAL or FAMILY deductibles. Even on Norvax it will show $5000 individual / $10000 family on embedded deductibles - the consumers are completely confused on this issue and 90% of agents I speak to have no clue either.

Carriers do an outstanding job of designing plans to confuse the consumer. That works to the carriers benefit when a consumer buys a Saver or Right Start plan because the premium is lower.

Agents that are confused need to stop calling themselves agents and perhaps seek a different line of work.

[GreenSky]

Al - Clearly you have a very narrow niche market where your clients don't care about cost.

There is no value in spending an extra $1,000 a year, each and every year, to save $2,000 in the event of a claim that mathematically happens once every 20 years.

The only benefit to your "value" is that in your example, you will pad your commission by another $200.

Rick

[al3]

Originally Posted by GreenSky

There is no value in spending an extra $1,000 a year, each and every year, to save $2,000 in the event of a claim that mathematically happens once every 20 years.

You don't see the 'value' because you buy and sell on price.

I spelled it out in chapter and verse along with four part harmony and full orchestration why the $800+ a year extra for the Aetna plan added value, but you don't see it.

No one in my area who makes six figures (or above) and lives in Gold River and has a home there (where I market) really cares that much about the $800.

And then there is your Cheech and Chong 'mythical' math. You are telling me that in a family of 4 you believe that one person will incur above $5,000 in medical problems only ONCE in 20 years? If so, you're not smoking the same stuff I'm smoking ('hisp, hisp... uh like wow this is good sheet man!).

I think half of Gold River breaks a leg or ankle skiing at Heavenly each year. The other half dislocate a shoulder at my tennis and swmming club Gold River Racquet Club . Do you have any idea how many 'boomers' think they are still 27? Add in the usual assortment of kid-sports (soccer, little league, rock-climbing) injuries and the occasional bust-up of the Beemer and you are looking at some real money... and risk.

The only benefit to your "value" is that in your example, you will pad your commission by another $200.

I've heard this... I think we all have. After working with a client for a week or two, my response is simple. "I'm worth it. You are lucky to have me. Go to the phone book, call any 5 agents you see there and let me know if you feel they are being honest with you. I do my best to not let my clients be stupid... because I need to sleep at night. If you want a policy that I won't sell [i.e. anything with 'right' or 'value' in the name] or which I don't think is right for you, you don't need me to get it. Obviously you want to think about this, so I'll let you do some research and I'll call you in a week or so."

I take the sale away from them. I giveth, I taketh away. I don't want clients who don't trust me implicitly or who are going to feel that I cheated them.

Let me add one more comment to your accusation (which I think was fair and I don't take offense). At least 50% of the time I talk people DOWN from an over-priced co-pay plan or HMO into a better value HSA or PPO (especially for people with large incomes and big tax bills).

I'm not in this business for the money. I already have the money. I'm in this business to help the people, to stay active in my 'senior' years, and to make a few bucks to help afford my very expensive wife... whom as she gets older gets more and more expensive. Have you priced what plastic/cosmetic surgeons get these days?

Al
Insurance Solutions 123

[somarco]

Aenta plan gives better value:

It has an immediate PT benefit
It has an immediate well-woman benefit
It has an immediate well-child benefit
It has a Prosthetics benefit
It has a DME benefit

PT limited to 24 visits per year $25 each after satisfying the $5000 deductible.

Well visit for adult, about a $200 - $250 benefit.

Well visit for child, about $100 benefit.

Prosthetics limited to $2000 per year.

DME limited to $2000.

Deductible is $1500 higher.

Premium is $984 per year more.

What am I missing?

[arnguy]

Al3, have you considered trading in your wife for a less expensive, younger model? Sort of like trading a Lexus for a Chevy Geo. Of course, with the California community property laws your current spouse could take to the "cleaners."

[GreenSky]

Originally Posted by somarco

PT limited to 24 visits per year $25 each after satisfying the $5000 deductible.

Well visit for adult, about a $200 - $250 benefit.

Well visit for child, about $100 benefit.

Prosthetics limited to $2000 per year.

DME limited to $2000.

Deductible is $1500 higher.

Premium is $984 per year more.

What am I missing?

You are missing nothing because YOU are a PROFESSIONAL insurance agent and can actually do the math.

By the way, the comparison Al uses to a Blue Cross plan is a bad comparison. Blue Cross benefits for well-care are terrible. He won't use Nationwide until Health Net takes over the Farm Bureau program but says Health Net has a bad reputation. He has said Blue Shield doesn't issue policies quickly enough.

Al, when Aetna pisses you off, who will you use? There will be no one left.

Rick

[al3]

Originally Posted by GreenSky

He has said Blue Shield doesn't issue policies quickly enough.

No I didn't. I said that Shield has terribly strict UW right now such that it's hard to get anyone over age 50 in at even tier-2, much less tier-1.

Al, when Aetna pisses you off, who will you use? There will be no one left.

Look. I've been in and around the health insurance biz for 30 years now. I wrote the friggen front-end processing for Blue Shield's MediCal system in 1975 (when I was with EDS). I've worked for the blues, for the CA Dept. of Health Services, Delta Dental, Dept. of Managed Care, Foundation Health, and a few others I forget.

If there is one thing I've learned it's that this business is cyclical in that the company that is a 'hero' today, becomes a 'goat' tomorrow... and the company that is horrible today gets new management and comes back strong. For years Aetna people couldn't spell C-A-T without being spotted the C and the T. Now they are back in CA and from my perspective they are kicking butt.

I hear NW was "the bomb" as the kids say, in the past few years. Now they are a case study in disorganization. HealthNet (up here) was everyone's favorite (for group, anyway) and then they went down hill (and I heard almost tits-up), but maybe the Farm Bureau will get them in shape again.

And finally, it's all moot. I don't believe there will be a viable IFP market 24 months from now. You can rant and rail about one-payor or uni-coverage until the moon turns blue, but the current system is not sustainable and it will CHANGE, and my bet is that you and I won't be part of that change. If you have half a brain you will be looking for a different sector of the financial services business to get into... just in case I'm right and you're wrong.

That's why I write worksite for Colonial. That's why I'm looking at LTC as well as annuities for boomers.

And Rick, as to who is and who is not a professional... I'll let you make that determination as I'm sure that you are the most qualified person in this community to make those pronouncements. IF I'm not 'a professional' in your opinion... than I guess I'm not.

I can live with that.

Al

[GreenSky]

Originally Posted by al3

And Rick, as to who is and who is not a professional... I'll let you make that determination as I'm sure that you are the most qualified person in this community to make those pronouncements.

Finally, we agree on something.

Interesting discussion and I'm looking forward to the opinions of the other professionals on this forum.

Rick

[TXINSURANCE]

I think the moral of the story is there is no correct answer.

Show the client both models - both scenarios and let them decide which THEY prefer

I have clients I have sold $5000 deductibles before that had a major claim in the first 6 months that would do anything to turn back the hands of time and buy a lower deductible.

I also have clients that have been on $500 deductibles for 4 years and have flushed thousands down the toilet in premiums.

It is insurance and everything is a roll of the dice... I can think of the scenerio of someone buying HSA vs. PPO and he runs over his foot with his lawnmower after a month of membership and doesn't see the short term value of high deductible.

It is our job as an agent to explain the pros and cons and let the client decide what is their comfort level.

There is no right or wrong answer in the end...

[somarco]

I don't believe there will be a viable IFP market 24 months from now.

Then as far as you are concerned there will not be.

I started in the business in 1972 while in college. Went full time in 1975 with a small consulting firm that specialized in large employer groups. I worked that market (large group) almost exclusively until about 3 years ago when I got into the individual market & small group.

This is a very lucrative market and will remain viable for a long time.

How do I know?

Because I believe in it.

Agents have been bitching about their business for as long as I have been in it and they were probably doing so before. They will continue to bitch & moan about how bad life is and the business is going away.

For them, it already has.

I see a wonderful opportunity to earn a living everywhere I look. Hardly a day goes by when I do not encounter someone who needs my help.

Sure, there are days when I want to walk away and do something else. But I did that about 7 years ago and wish I had never left.

I will continue feasting off other agents who gave up a long time ago.

[Dave020]

Originally Posted by al3

No I didn't. I said that Shield has terribly strict UW right now such that it's hard to get anyone over age 50 in at even tier-2, much less tier-1.

I am too busy to dig through and replay the thread where you actually said you could "kick my ass" because all people over 50 are not risky for underwriting with Blue Shield contrary to what I think. Wasn't I labeled the "voice of Blue Cross" by you for exactly this? Now you don't like their underwriting anymore? Don't deny it because I can find the thread and pull it back up.

Originally Posted by al3

If there is one thing I've learned it's that this business is cyclical in that the company that is a 'hero' today, becomes a 'goat' tomorrow... and the company that is horrible today gets new management and comes back strong. For years Aetna people couldn't spell C-A-T without being spotted the C and the T. Now they are back in CA and from my perspective they are kicking butt.

Funny that Blue Cross has really never been the goat, at least in the buying public's perception. It's easy for Aetna, now, they dumped a ton of uninsurable people onto the market a few years back when they pulled out of the market. Several thousand as I recall, all uninsurable, all to MRMIP which completely flooded the program (as did the Cigna move a few years later). It's easy to kick butt when you don't have risk hanging out there on your books. Good business model though, too much loss, abandon the market and come back later - some guy whose been in and around health insurance for 80 years is BOUND to fall for it.

Originally Posted by al3

I hear NW was "the bomb" as the kids say, in the past few years. Now they are a case study in disorganization. HealthNet (up here) was everyone's favorite (for group, anyway) and then they went down hill (and I heard almost tits-up), but maybe the Farm Bureau will get them in shape again.

Both carriers are guilty of buying bad business in the last few years. Health Net would write anything with a pulse and underpriced their plans substantially. It bit them in the butt. Nationwide, well, NAIC complaint ratio is 30 for last year - Mega is 5.1. You don't need a map to figure out what that is all about. BTW, Cross, Shield and Net all came in under 0.50 complaint ratio - the median being 1.0. Now if you are 6 times worse than Mega, well...............

[Macdaddy]

Originally Posted by GreenSky

Finally, we agree on something.

Interesting discussion and I'm looking forward to the opinions of the other professionals on this forum.

Rick

My opinion is that Al needs to listen to Rick.

Al is a Senior, and Rick is a Certified Senior Advisor. Case closed.

[GreenSky]

Originally Posted by Macdaddy

My opinion is that Al needs to listen to Rick.

Al is a Senior, and Rick is a Certified Senior Advisor. Case closed.