Insurance Agent Forum

[hyy]

Hello all...feedback welcome, on whether I'm missing anything. With last months huge premium increase, I'm now paying about $530/month for an indiv. BCBS policy (I'm in my 50's) . It's now time to think about raising the $500 deductible to $2500, which would lower the premium to about $380 (a difference of about $1800/yr). But when you change deductibles, your OOP max. also changes....it would go
From $2500 to $5000. But that's the only thing that changes. They're both "20%" copay plans, in that after the deductible is met, i pay 20% of the bill. The lifetime max. is still "unlimited", which I like about this particular series of indiv. BCBS plans (as opposed to the "saver" series that my company offers....which has a $3 million lifetime max). So, I developed a spreadsheet showing how much I would pay OOP for about 10 different hypothetical medical bills.

It really seems to make sense now to change to the $2500
Deductible. (I should add here that bcbs does allow one to change to a higher deductible once per year, but not to a lower deductible, unless one wants to go thru underwriting).

So, for example, with a $5000 medical bill, I'd pay $1400
With the $500 ded. policy, but i'd pay $3000 with the
$2500 deductible policy.

With a $15000 med bill, I'd pay $3400 with the $500 ded. policy, but $5000 with the $2500 ded. policy.

So given the difference in premiums (about $1800 per year)
Between the 2 ded. policies, it makes sense to move to the higher ded. policy. Last year (before this huge increase), there wasn't really that much of a difference in premium prices between the 2 policies.

The only thing holding me back is the (naive and ignorant??) idea that when the new health bill passes, there's a good chance people like me, in a low tax bracket, will get a tax break or get subsidizied...resulting in lower premiums. If that happens, I may be wishing I had the original 500 deductible policy (and it would be too late to get that back?). Then again, with the new health bill,
Supposedly I will be able to move to other health plans with no underwriting (either within my current ins. company or to other companies), so that may not be anything to worry about.

One other thing....the difference in premiums for the 2 policies is CURRENTLY what I stated above, but who knows what it will be next year...maybe not much different?

Thanks for noting whether i'm missing anything.

P.s. My own "health status" is irrelevant. Although it's generally pretty good, there's no way to project/predict what it will be in the future (or what accidents i will "participate" in). .

[dgoldenz]

Sounds like a good idea if you want to keep your premiums down. $500 deductible policies usually don't make much sense when you compare the premiums to the higher deductibles. What state are you in?

[djs]

I'm not sure its worth the change. There are a lot of other variables not mentioned. Of course, your present health does play into this significantly.

Here is how I boil it down. You'll save $1800 a year IF you don't use your insurance. To save this money, you take on $2000 of additional risk up front in deductible, plus a higher out of pocket max on the back-end.

While normally I would think if you don't go to the doctor, this would be a good decision, as long as you put away the difference to meet the deductible, life would be good. The downside, if something happens, this decision (as you mentioned) is irreversable, since you may not pass underwriting.

In my P&C world, I tell people to take the highest deductible that they can write a check for. Want a $1000 deductible on your car? Make sure you can write a $1000 check to get your car fixed. If not, lets stay with a $500 deductible. Health works a little different, actually, a lot different, but some of the same theory applies. Higher deductibles are great, but you have to make sure you can afford them. In this case, that isn't to hard since the annual deductible = the annual savings (pretty close anyway).

Shopping to other plans may be the smarter thing to do.

Dan

[dgoldenz]

I would say the opposite....if you're generally healthy and can afford to pay a $5k deductible if necessary, then why throw away all the extra money each month for a lower deductible?

[somarco]

My own "health status" is irrelevant.

Actually, it is not irrelevant.

Many carriers, including Blue, charge more to existing policyholders than for new entrants for the same plan. Here in GA I see existing policyholders paying as much as 2x what a new applicant will pay.

If your health is good, I would give serious consideration to looking at other carriers.

I also believe you are over-thinking your options as well as eliminating possibilities outside of Blue.

Anything that Congress does won't happen for 3 - 4 more years.

[djs]

Originally Posted by dgoldenz

I would say the opposite....if you're generally healthy and can afford to pay a $5k deductible if necessary, then why throw away all the extra money each month for a lower deductible?

This is why his current health is relevant. If you visit the doctor several times throughout the year, the difference between a $500 deductible and a $2500 deductible could be $0.00.

My only point is it is hard to know without knowing more of what is important to the client. There is no 'one size fits all' solution.

In general, I agree, pay to take away the big risks, accept the small risks yourself and have a nest egg to pay for the small oopses in life.


Dan

[hyy]

I just read over my original post, and noticed a minor typo. Where I wrote :"With a $15000 med bill, I'd pay $3400 with the $500 ded. policy, but $5000 with the $2500 ded. policy". The typo was $3400...it obviously should have said $2500, because I had already said a few lines earlier that $2500 is the OOP max.

Anyway, I don't have my spreadsheet with me right now, but a quick note: The reason it makes no sense to keep the 500 deductible policy is that the maximum annual difference in OOP costs between the 2 plans $2500 minus $1800, when considering all possible medical bills (from what I remember when looking at the simple spreadsheet i created). And in previous years, my medical bills were never high enough to even reach that $700 difference.

I would change my comment about current health status being irrelevant to the following: If my current medical bills were currently very high (and I expected them to always be high), it would obviously make sense to keep the $500 ded. plan. But the fact that my med bills are and have not been high (i usually only reach my $500 deductible every other year) should not be a major factor in my decicision (since future health is unpredictable and becomes more so with age).
P.s. But, one reason NOT to change to the higher ded. is that I don't know what my BCBS rates will be in the future for the 2 deductible plans....If , for ex., next year the 2500ded plan premium goes up alot more than the 500ded plan, then I'd regret changing. And, as I said, if congress acts sooner than most people expect, then I'd also possibly wish i didn't change plans. But ignoring all that, ii see not reason to not change to the higher ded. plan, given the spreadsheet numbers.
P.s. In these plans, office visits are standard $25 (and not related to deductibles). The deductibles only related to "all other things", like: lab tests, procedures, xrays, etc...........



Somarcos comment about current policy holders paying more than new entrants suggests something illegal is going on IF INDIVIDUAL policy holders are being singled out according to their health. But if they are part of a whole group whose rates have risen, then that is not illegal. I do know that I have always paid a little LESS than new entrants, because I check my BCBS website for current premiums....but this year, i'm actually paying the same as new entrants.

Originally Posted by djs

I'm not sure its worth the change. There are a lot of other variables not mentioned. Of course, your present health does play into this significantly.

Here is how I boil it down. You'll save $1800 a year IF you don't use your insurance. To save this money, you take on $2000 of additional risk up front in deductible, plus a higher out of pocket max on the back-end.

While normally I would think if you don't go to the doctor, this would be a good decision, as long as you put away the difference to meet the deductible, life would be good. The downside, if something happens, this decision (as you mentioned) is irreversable, since you may not pass underwriting.

In my P&C world, I tell people to take the highest deductible that they can write a check for. Want a $1000 deductible on your car? Make sure you can write a $1000 check to get your car fixed. If not, lets stay with a $500 deductible. Health works a little different, actually, a lot different, but some of the same theory applies. Higher deductibles are great, but you have to make sure you can afford them. In this case, that isn't to hard since the annual deductible = the annual savings (pretty close anyway).

Shopping to other plans may be the smarter thing to do.

Dan

[dgoldenz]

There is no way that a policy with a $2500 deductible would have a larger rate increase than the same policy with a $500 deductible. You are taking a percentage increase of a larger amount, and the snowball effect on your premiums begins.

[CHUMPS FROM OXFORD]

You could move to Maine where BCBS rates tend to remain very stable.

[somarco]

If my current medical bills were currently very high (and I expected them to always be high), it would obviously make sense to keep the $500 ded. plan.

Not necessarily. Carriers will continue to hose you on deductibles less than $2500 or so.

You are not really buying more insurance with lower deductibles and copay plans, you are just paying more.

Somarcos comment about current policy holders paying more than new entrants suggests something illegal is going on IF INDIVIDUAL policy holders are being singled out according to their health.

That is not at all what I said. Go back & read it again.

this year, i'm actually paying the same as new entrants.

That is a state variant based on the way the plans are filed. Still doesn't mean you can't/won't find something better.

[URDRWHO]

$500 deductible in 2009...hm? That is rather an easy one. Raise the darn thing, $500 is like the silly people that still want a $50 deductible on their collision insurance.

[djs]

Hyy - You have WAY over analyzed this. It's time to go change to the higher deductible. Make sure you put a few dollars aside to pay the deductible, just in case, problem solved.

Dan

[healthagent]

Originally Posted by URDRWHO

$500 deductible in 2009...hm? That is rather an easy one. Raise the darn thing, $500 is like the silly people that still want a $50 deductible on their collision insurance.

If I could choose a $10K auto deductible that's what I'd have. If I pay $50 a month for auto insurance it's $45 too much.

[djs]

You can chose an $10K auto deductible. But then, why have collision insurance at all? Go with liability (depending on your car).

Your point is the same, regardless of the coverage.

If I could choose a $10K health deductible that's what I'd have. If I pay $50 a month for health insurance it's $45 too much.

[healthagent]

No collision here. I have the most stripped down coverage available. The only cheaper rate is not having insurance.

[CHUMPS FROM OXFORD]

I still carry an umbrella. Probably will never use it. Too bad it's not like that return-of-premium term life.

[healthagent]

How 'bout if you used the umbrella then since it got wet you couldn't use it anymore and buying a new one now costs $400. Auto insurance is the umbrella you carry but just walk in the rain instead since you don't dare get it wet.

[CHUMPS FROM OXFORD]

I worked hard for the assets we have accumulated and the umbrella is needed. Our auto insurance is a nice umbrella, but I feel more comfortable with a golf umbrella. Not that expensive anyhow.

[djs]

John - I'm feeling some anomosity from you towards auto insurance. Is there something going on you want to tell the class?

[hyy]

Originally Posted by somarco

Not necessarily. Carriers will continue to hose you on deductibles less than $2500 or so.

Using your favorite phrase, "Go back and read what I wrote". I was talking about MY particular plan. Given the numbers and details I provided, it's easy to see that someone with high medical bills would save money each year with a $500 ded. plan compared with a $2500 ded. plan.


You are not really buying more insurance with lower deductibles and copay plans, you are just paying more.



That is not at all what I said. Go back & read it again.

Actually, that IS what you said. But your poor writing causes you to say things that you may not mean.

That is a state variant based on the way the plans are filed. Still doesn't mean you can't/won't find something better.

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