I worked on a case tonight about a couple (Man-63 and Wife -62) who are currently paying $1300 a month for a very comprehensive BCBS plan in PA. I explained to them the concept of an HSA with the major carriers in their state with premium ranges of $750-$850 a month to help reduce their monthly premiums and save them some additional money. Long story short, I lost the deal and now I'm going over what I did and did not do right.
Firstly, the couple conveyed to me that they had to battle an insurance company for 9 years to get them to pay for services. They have been going back and forth about canceling their insurance and save up the difference using the premium amount of $880 p/month they paid last year for the next few years until they are eligible for Medicare.
We talked about the cons of self-funding and the risk they take by not having an insurance plan in place in the event something catastrophic happens. I did not get anywhere. I touched about the new bankruptcy laws enacted last year, how hospitals deal with the uninsured, etc. Apparently I did not do a good job qualifying because they did not seem excited about the 40% savings I presented to them. Here are my questions that I would like some input on.
1) How do explain the importance of not self-funding and taking on that risk?
These people had insurance most of their lives so it struck me that they would want to go that route. They estimated they paid $100,000 throughout their life and did not get anything for it. I didn't want to argue since it was last so I did not speak up about the thoughts that came to mind.
2) How about them Bears?
3) Would somebody please tell Al I said hello, give him a hug, and let him that I will be more selective about the one word phrases I use in the future
Thank you for patience.
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[COLOR=#000066]"Tell me and I will forget. Show me and I will remember. Involve me and I will understand." Confucius
WEll if you can't get anything else out of them then sell them a catastrophic coverage plan like cancer or a heart stroke plan. Or say you know you are right Mr. Dummazz. Health insurance doesn't always pay off. How about I sell you a policy that is gauranteed to pay off. Sell him a **** load of life insurance.
"You know, Mr. Smith, you're right. There are times when insurance companies can be extremely difficult to work with, and the hoops you have to jump through can drive you nuts!
I agree. At this point in the game, this close to Medicare eligibility, you should self fund. Let me help you. Here's a plan with a $15,000 deductible. You self-fund the $15,000 then let the insurance company pick up the rest.
Fair enough?"
If they say "no", walk. Don't look back. These people have been burned by the insurance industry, and nothing you can do will change it.
BTW, World Insurance has plans that have deductibles that high (even higher, if need be). Just in case you were wondering where I got that.
"You know, Mr. Smith, you're right. There are times when insurance companies can be extremely difficult to work with, and the hoops you have to jump through can drive you nuts!
I agree. At this point in the game, this close to Medicare eligibility, you should self fund. Let me help you. Here's a plan with a $15,000 deductible. You self-fund the $15,000 then let the insurance company pick up the rest.
Fair enough?"
Great advice Bob. I actually did talk with them about a higher deductible plan with Assurant and that did not float. You win some and you lose some.
I would only suggest you document EVERYTHING and send them the "quickie letter" outlining their declination of your suggestions. If they have kids, you might add that they should discuss their choice with them. It is, after all, their own (although misguided) decision. Did you go over long-term care options as well? CYA, pal!
I would agree with what they said, but explain that the HSA WILL refund them their money if they don't need it and will be available to pay medical expenses when they get on Medicare. I always do best case and worst case scenarios, and what each plan costs. Sometimes you just can't get through to folks.
There's nothing exciting about telling people they have to crap the first $5,000 of a medical expense knowing what the insurance companies know - that they are unlikely to use $5,000 worth of medical care in a year.
For some people there's no value attached to a HSA; "So let me understand this - I pay a $400 a month premium and all of my doctor, lab and medication costs?"
As agents we are under the mistaken belief that it's all about money. Go to a Benz dealership today and catch someone who's about to buy an E-class: "Sir, are you nuts? You can buy a Chevy, save $30,000, invest that $30,000 and double that ever 7 years."
Let me know how that works out. As agents we know about that dreaded "potential liability" of the deductible and OOP having to be met twice. That's quite the doomsday forecast. Plus, a $1,500 PPO plan with a $2,000 OOP even times 2 is only a total liability of $7,000. Not much more than that $5,000 HSA.
Where you go south on the HSA presentation is when the PPO plan is affordable. Our family is blowing off to Coventry, saving over $100 a month and everything's a $20 copay - including a copay for the ER and urgent care - no deductible.
Yet we're moving from an "unlimited drug" benefit to a $1,500 cap. Are we worried? Nope. Two reasons:
1) There's no such thing as an "unlimited" drug benefit for individual plans. You think these companies are going to authorize and pay for "$10,000" a month in drug costs? LOL. Guess again.
2) If me or my wife gets some type of weird African disease and the only medication is harvested from some rare tree in Peru that costs $1,500 a dose then no problem - incorporate, hire an employee and establish group coverage for ourselves. But would that really solve the problem? Would that group policy authorize that $1,500 per does medication? Unlikely.
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ROP for health insurance would be a con since the insurance companies know a client can't suck up the rate increases for more than 3 or 4 years. Mega had a ROP feature - added a huge amount to the premium and the client got his premiums back at age 65. Yeah, like anyone lasted longer than 18 months on a Mega plan without cancelling.
" They estimated they paid $100,000 throughout their life and did not get anything for it. "
Could they also not say the same thing about home and auto insurance?
" How do explain the importance of not self-funding and taking on that risk? "
Ask them if they are willing to drop their homeowners insurance for the same reason. I'll bet they will tell you no way. Well one big health claim can take far more from money them than a home burning to the ground. Point this out to them and see what they tell you. If they do not get the point tell them to have a good day and walk away.
I would agree with what they said, but explain that the HSA WILL refund them their money if they don't need it and will be available to pay medical expenses when they get on Medicare. I always do best case and worst case scenarios, and what each plan costs. Sometimes you just can't get through to folks.
Can you provide an example of what exactly you mean by explaining the best/worse case scenarios and costs?
I was half-joking, John P. Those ROP programs in term insurance and DI add a lot of premium to the product. I haven't analyzed them, but I wonder if the return is really worthwhile. Any comments? BTW, I agree with you on health insurance ROP. I was not aware that Mega had a ROP plan.
I use this when comparing a co pay plan with a HSA. Recently had a client with a 1500 cp and coinsurance of 80/20 to a max oop inc ded of 4500 per person, 9000 per family. He is paying 850 per month. For best case I assume no claims, annual cost is premium of 10,200. Compared to HSA, annual premium of 4800 plus the tax savings of the HSA 1412 for annual cost of 3388.
Worst case assume 2 family members have a 25,000 claim , annual premium 10,200, max family oop of 9000, total cost 19,200. With HSA, annual premium 4800, HSA fund 5650 total 10,450 less tax savings 1412 equal 9038. I give the prospect a copy of this with a summary and ask which one seems to be the best way to pay medical costs.
I use this when comparing a co pay plan with a HSA. Recently had a client with a 1500 cp and coinsurance of 80/20 to a max oop inc ded of 4500 per person, 9000 per family. He is paying 850 per month. For best case I assume no claims, annual cost is premium of 10,200. Compared to HSA, annual premium of 4800 plus the tax savings of the HSA 1412 for annual cost of 3388.
Worst case assume 2 family members have a 25,000 claim , annual premium 10,200, max family oop of 9000, total cost 19,200. With HSA, annual premium 4800, HSA fund 5650 total 10,450 less tax savings 1412 equal 9038. I give the prospect a copy of this with a summary and ask which one seems to be the best way to pay medical costs.
I use a similar approach. Is there anything else included in the summary besides the calculations?
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