Are you paying too much for your group health insurance? Do you have to increase your deductible each year to reduce your cost? Are your benefits decreasing because of your high deductibles? Well here is a solution to reduce your total monthly premium and eliminate your deductible.
What insurance companies know is that 94% of medical expenses are under $5000 annually. By increasing your premiums on policies that have deductibles less than $5000, insurance companies are able to receive your premium dollars and really not give a return service until after you have met your deductible. They know the total macro increase in premiums out-weigh the cost of expenses incurred on such things as Doctor’s Office Visits (DOV) and prescription drugs. Their rational for the additional costs are the new health insurance mandates required from the Patient Protection and Affordable Care Act (PPACA) or some times known as, Obama Care (Actually, President Obama likes this term because he says, “Obama does Care!”) However, premiums are less expensive on Health Savings Accounts (HSA), where costs are less than a traditional plan because these plans do not offer DOVs or co-pays on drugs.
Well, so how do we decrease our costs but increase our benefits? Simple, put a GAP Plan on a High Deductible Health Insurance Plan (HDHP). GAP Plans are a way to eliminate in-hospital expenses and cut costs by as much as 100% on out-patient expenses or 50% on in-patient expenses when a GAP is matched with the benefit value of the deductible. So now, it really does make sense to get a HSA plan if you only see a doctor once a year for sicknesses and once a year for routine physicals. Remember, with routine physicals (see definition of routine physicals), doctor office visits are free; you don’t even pay a co-pay. Why, because this is one of the mandates from PPACA. A typical Doctor’s Office Visit without insurance is around $150/visit. With the insurance, you get the pre-negotiated discount which is about 33%. This will put your costs for a DOV around $100/visit. Also with a HSA, the money that you put into your Health Savings Account, usually located at your favorite local bank such as a Wells Fargo or Bank of America HSA, is tax deferred and Tax Deductible just like an IRA. Now your total expense per employee is the cost of your HSA, GAP and the price of one or two sick doctor’s office visits during the course of a year. Let’s see how this plays out with a real world scenario. Please note that these are actual prices from a major medical group policy of a small group in Texas.
Real World Scenarios
EO – Employee Only ES – Employee Spouse
EF – Employee Family EC – Employee Child
Current Plan with 6 Employees [Census is EO (4) & EF (2)]
Deductible: $3000
Co-Insurance: 0% after deductible
OOP Max (Co-Insurance + Deductible): $3000
Doctor’s Office Visits (DOV): $30/Visit unlimited
Drugs Co-Pay: 10/40/60
Plan Price Total: $3521.34/Month
Renewable Plan Rates for 6 Employees [Census is EO (4) & EF (2)]
Deductible: $3000
Co-Insurance: 0% after deductible
OOP Max (Co-Insurance + Deductible): $3000
Doctor’s Office Visits (DOV): $30/Visit unlimited
Drugs Co-Pay: 10/40/60
Plan Price Total: $4537.56/Month
Alternative HSA Renewable Plan and Rates for 6 Employees [Census is EO (4) & EF (2)]
Deductible: $5000
Tax Deduction on Saving Account: 28% (This will not be included in the savings but added to show value)
Co-Insurance: 0% after deductible
OOP Max: $5000
DOV: Only receives pre-negotiated rates until deductible is met. Then covered at 100%
Drugs Co-Pay: 100% after deductible is met
Plan Total Cost: $2847.06/Month
GAP Cost for a $5000 Benefit (Note that the Benefit amount equals the Deductible value [Census is EO (4) & EF (2)])
GAP Price: $717.42/Month
Total Price (HSA + GAP): $2847.06 + $ 717.42 = $3564.48
Total Monthly Savings from Previous Renewable Plan is $4537.56 – $3564.48 = $973.08/Month
Total Annual Savings from Previous Renewable Plan is $973.08 x 12 months = $11,676.97/Year
Percent increase from old plan to new plan plus the GAP expense is 1.2%.
This does not include the tax advantages given for depositing additional funds into an HSA account which is totally optional. This should give you a very good illustration of going from a lower deductible plan to a higher deductible plan, then adding the GAP to decrease your total cost of ownership. To get a quotation on GAP for your company, call us at (972) 219-6004.
Insurance4Dallas
Health Insurance Blogger
