Right now is a President Biden-declared Special Enrollment Period for Qualified Health Plans. In Idaho, which has its own marketplace—yourhealthidaho.org—rather than the federal healthcare.gov—that SEP is the month of March with new coverage effective April 1.
Without getting into all that is faulty with the US health care system, let’s look at two ways major medical insurance provides substantial benefits when you need it most.
1. Insurance is leverage
Regardless of the type of insurance—homeowners, auto, life, disability, long-term care, etc.—self-insurance is no insurance. Insurance is leverage in that it delivers way more money than a normal person could have saved for upon a defined triggering event. The goal of almost any insurance could be boiled down to, “When X happens, you won’t lose your house.”
Critical to selecting a medical plan is the availability of in-network providers. For 2021, the out-of-pocket-maximum for in-network covered services is $8550 for an individual and twice that for two or more family members on a plan.
One of the most prevalent complaints I hear about high deductible health plans is, “With a deductible over $8k, I might as well insure myself.” That might work for, say, $4000 in expenses for treating a broken arm. Or maybe for $10,000 to have a baby, if all goes well. But if that break needs a rod, or the newborn needs to go to the Neonatal Intensive Care Unit, commonly referred to as the NICU, then start adding zeros.
2. In-network savings
Networks are incredibly important. One must look at multiple potential scenarios beyond primary care, including urgent/emergency services, specialists, and higher-level hospitals, such as the Mayo system. Employer group insurance tends to have broad networks where finding the expertise you need close to home is relatively easy. The individual market more typically involves tight networks that vary depending on your county of residence. Services out of network have separate and much higher deductibles and out-of-pocket-maxima. Don’t go there!
When planning on services, call your carrier to ensure that every service will be in-network.
The following section of a recent Explanation of Benefits from a health insurance carrier of just the hospital portion of a common surgery summarizes the magnitude of leverage and savings.
A “self-insured” person would be on the hook $180k for just the hospital bill. This surgery included additional bills for two surgeons and an anesthesiologist. Plus all the imagine and pre-op services. The total is around $250k. That is how to lose your house!
This insured person was only on the hook for the maximum of $8550. Owing that much is workable, and you won’t lose your house.
This is an example why I continue to include health insurance within my advisory services. Helping people save six figures within one year is a return on investment you could never “claim” for investment advice on a brokerage account.