The best strategy to optimize your health insurance

FACT: Health Insurance Does Not Pay For Health Care

You must understand the distinction between health INSURANCE and health CARE.

  • HEALTH INSURANCE covers the risk of an unlikely but very costly health event.

    A bad accident, the treatment of a critical illness or a major surgery can quickly generate hundreds of thousands of dollars in medical expenses.

    The insurance will cover most of it. You will only be responsible for paying up to the Maximum out of Pocket.

  • HEALTH CARE is the medical maintenance and prevention that occurs in everyday life.

    Doctor visits, tests, etc.

    This will be paid mostly —if not fully— out of your pocket, regardless of the plan or the insurance company you have.

You need to have health insurance. Otherwise, a life accident can wipe out your finances forever, including your house, all savings, retirement accounts, everything. You and your family could be destitute in no time, and you might still need more medical care.

You also need to maintain your health, but that will be at your own cost, no matter how you look at it.

FACT: Most of Health Care is Paid in Full by You.

It is either prepaid under the form of premiums or paid in full until you hit the deductible.

FACT: The Cost of Health Care is the Same Across All Plans and All Insurance Companies

By the time you have hit your deductible and can benefit from the plan, you have spent an average of $7,500 per person.

FACT: The Total Cost of a Medical Disaster is the Same Across All Plans and All Insurance Companies

That is all the premiums plus all the costs to reach the Max Out of Pocket is the same final number, an average of $11,000 per person.

FACT: Insurance Companies Want You to Pay Higher Premiums

The system is purposely confusing. Deductibles have no purpose but to entice you to pay higher premiums. Because premiums are money the insurance company is guaranteed to have, and they count on the fact that you will not make much use of your benefits.

FACT: Benefits and Deductibles are Irrelevant

The only way to make the best of your health insurance is to look at what comes out of your pocket toward medical expenses, including premiums. Benefits and deductibles are irrelevant because what you will not pay to the doctors, you will pay to the insurance company. The overall cost will be the same.

  • Lower deductibles are compensated by higher premiums.
  • Lower Maximums out of Pocket are compensated by higher premiums.
  • Lower copays are compensated by higher premiums.

The only equation you need to look at is Care Dollars + Premium Dollars = Cost Dollars and this Cost Dollar amount is always the same.

What to consider

There are only two criteria to consider to choose your health plan.

  1. Your total medical cost over a full year – You want it to be as low as possible.
  2. The network of providers – You want a network you like.

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What you can control

The only two things you can control are

  1. The premium you pay.
  2. Your medical care needs.

The best strategy to optimize your health insurance

  1. Pay the lowest premium possible.
  2. Have $5,000 per person in savings for medical purposes.
  3. See doctors as you see fit and pay as required using these savings.

The second best strategy to optimize your health insurance

  1. Look at the plan you like that has a higher premium.
  2. Take the plan with the lowest premium.
  3. Put the difference on a saving account each month when you pay your premium.
  4. See doctors as you see fit and pay as required using your savings.

Using these strategies requires a grave look at the reality.
If you prefer to listen to what insurance companies advertise, it will cost you more money.

These strategies leave you with the control of your medical costs whether paying a higher premium will not. The money paid toward the premium is gone regardless of using the benefits or not.

The fact is you do not know in advance if you will need medical care or not, but you are sure to pay the premiums.

So by paying the lowest premiums and saving money for medical expenses, you are covered no matter what.