Health Insurance Guide For The Self-Employed
By Rebecca Yates
Chapter 5: Know your max liability
So many times, people get hung up on getting a lower deductible and having copays for something to be considered a “good” plan. However, most Americans miss the absolute most important thing in their health insurance documents: The Out-of-Pocket Maximum.
This is the most you would pay in one calendar year if everything went horribly wrong. If you have health insurance, this is the maximum of liability and it’s a number you need to be aware of!
I often have clients tell me they want the “best” plan and are willing to pay for it! They want a $250 deductible. In my state, the $250 deductible plan has a $7,900 out-of-pocket maximum and is often 30% higher than an HSA plan for monthly premiums.
However, if they enroll in an HSA they can often get a lower out of pocket maximum. My plan is a $4,500 deductible, but that is also the out-of-pocket maximum. At 30% less expensive per month, it’s an absolute bargain! But most people ignore this plan because all the see is the deductible.
Let’s look at an example:
Johnny needs a $60,000 heart surgery.
Plan 1: He’s paying $500 a month to get the lower deductible. That equates to $6,000 a year in insurance premiums. When he has his surgery, he will pay $7,900. So, in total he spent $13,900. Which beats the pants off $60,000 any day! But it’s not the best he could have done.
Plan 2: He is now enrolled in the HSA plan. He is paying $350 a month. That equates to $4,200 a year in insurance premiums. BUT when he has his surgery, he pays $4,500. That means he spent $8,700 less than on the “best” plan. But wait! He also got to put that $4,500 through an HSA account and gained the additional tax savings.
Navigating the complex world of health insurance can be daunting. The Ark Insurance Solutions team has the skill and experience to guide you. We’ll help you compare health plans to make the best decision based on your unique circumstances and budget. Give us a call at 801-901-7800 or click here to schedule an appointment with us.