There are a myriad of words that get thrown around regarding health insurance these days. When you sit down with your broker, you’ll hear things like: carriers, deductibles, coinsurance, copays, network, etc, etc. The result of this is often a lack of focus on the three main decisions that anyone needs to make regarding health insurance.
One reason why this is a problem is because Health Insurance is not only about dollars and cents, it’s mostly about risk and human behavior. Too many people, of all walks of life, have unfortunately over the last 70 years or so treated Health Insurance not like insurance at all, but like a managed care program.
This has resulted in a lot of problems that everyone is familiar with, mostly manifested in very high Health costs, thus very high Health Insurance costs.
The truth is that the policy decisions surrounding this right now are almost irrelevant. What IS relevant is what you and your business or family can do to minimize how much you have to spend on health care in a particular year.
Luckily, without any real change in the “system”, most of us can start right now focusing on the right decisions first. Once we do that, when it comes to those other decisions that your broker can help you with, they can help you with a foundational understanding of what your principle drivers of Health Insurance costs should be.
First, though, let’s get one fundamental rule out of the way that should support and defend the answers to all three questions. And that is this simple and inescapable fact:
There are only two numbers that actually matter in Health Insurance–Minimum Cost and Maximum Cost. And what we mean by that is that if you start with the idea that your goal is to minimize the maximum dollar amount you would have to spend in any given calendar year for medical expenses, while at the same time keeping your minimum costs (your premium) affordable, it makes it a lot easier to come to the right decisions every step of the way.
Next time, we’ll discuss the first question. Keep in mind that the questions don’t necessarily have to be answered in order, they really have to be addressed comprehensively, but we’ll start with this question nonetheless:
Are we a business or a family?
Butch Porter, MBA is a health insurance advisor and Principal of Goose Creek Financial. He can be reached at wdporter@gcfin.com or www.GCFin.com
(this article can also be found at: investorfinances.com)