The Cost of Independent Health Insurance
January 24, 2009 – 4:53 am
I’ve been hearing a lot about independent health insurance lately, and I just can’t wrap my mind around the affordability of these products.
My understanding of the benefits is that:
- by getting a high-deductible insurance plan in place you can ensure that you are covered even if you lose your job or change jobs.
- you can get insurance when you’re young and healthy, and thereby protect yourself and your family from being uninsurable.
- with some high-deductible plans you can contribute to a healthcare savings account, which is like a Roth IRA for healthcare expenses.
- You can let your HSA grow for years by paying for medical expenses out of pocket initially. Later in life you can submit for withdrawals from your HSA (after it’s grown quite a bit) even for expenses that occurred in the past. Or you can just use your HSA to pay for medical expenses going forward.
My issue is the cost. I my wife and I have insurance through my employer, and it costs us about $1800 per year under a well-known PPO program with a 20% copay (after $500 deductible). It’s not fantastic but I would think it’s somewhere around “good” or “average”. At esurance.com I priced out a policy for my wife and I at $3000/yr. And the coverage doesn’t even include pregnancy/child birth!
And there are downsides or unknowns for me as well, which include:
- are there any controls around increasing premiums? I suppose there aren’t any for my employers plan either, but this is still a concern.
- can these companies change the items they cover or the coverage amounts from one year to the next?
- what kind of investments are available in HSA’s?
- wouldn’t I just be better off putting $5,000 into a Roth rather than an HSA?
- I would expect to find substantial savings for a young healthy person or family. Where’s the savings if the insurance premiums cost 50% more?
I’m sure some of you have done more research on these types of insurance options than I have. What’s your take? Are they only a good deal for people who don’t have insurance available through their employers?
Image Credit: Jef Poskanzer
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3 Responses to “The Cost of Independent Health Insurance”
Three grand a year is cheap, if it actually gives you decent coverage. When I get canned from the Great Desert University, a possibility that looks ever more likely as the days pass, my COBRA will be $5700 a year — for one person!
For a time I had a high-deductible HSA. As I recall, the price was about $260 a month, and you had to put $1600 into a savings account at the outset plus another couple thousand a year after that. The management cost of the HSA account was outrageous. There are few controls on premium increases: the only one I know of in my state is that an insurer can’t raise an individual’s premium because the individual dares to use the policy: they have to raise everyone in the pool’s premiums. And believe me: they DO!
Rather than raising your premium, though, what they do is harass you after you’ve made a claim. I went to a dermatologist for a rash that came up on my face; he prescribed a steroid cream. I had never had anything like it in my life. Before long, I got an insurance investigator on the phone announcing that the company was investigating me for insurance fraud! They decided this was a pre-existing condition. This woman harassed me for months; I finally got her off my back by filing a formal complaint against the company with the state insurance commission.
Insuring yourself is difficult and expensive. Your best bet may be to join a trade organization that offers group insurance to its members. Being a blogger makes you a writer. Check out the Writer’s Guild, which has such a plan. Another possibility is to enroll in some classes at a college or university and get onto the student insurance.
By Funny about Money on Jan 28, 2009