No which way you slice it, health insurance is two things: a gamble and a rip-off. It’s a gamble because you’re putting down money – in most cases, a lot of money – with each paycheck in hopes that you’ll never need to take advantage of the benefits your policy promises to provide you with in case of an emergency. It’s a rip-off, because in the fortunate event that you don’t need to take advantage of your policy’s benefits, you’ll have shelled out thousands (maybe even tens of thousands) of dollars in insurance premiums over the life of the policy for something you’ve never used.
And, as just about everybody will admit, the state of health insurance in America just plain sucks. That’s why Obamacare became the law of the land in the first place; it’s why so many have attempted to block it from taking effect. But this isn’t a post about Obamacare; it’s a post about my family’s decision to switch from one insurance plan to another.
It began when my husband left his old job and I began a new one during a three-week period, forcing us to leave his insurance plan – which our family of four had been on for years – for my company’s policy. But not all types of medical insurance are created equally, and we immediately saw how different my new policy was from his old plan. While his old company’s plan had been a PPO, mine was a high-deductible health savings account, or HSA. With the exception of annual well check-ups for each member of our family, everything else was paid for completely out of pocket until we met our annual deductible of $3,500; at that point, 80/20 coverage kicked in. The plan’s out of pocket max was $10,000 for our family.
I wasn’t tasked with paying for everything myself, though; my company chipped in $1,000 annually to my HSA, plus matched every dollar I put in with $0.33, up to a maximum of $2,000 a year.
But here’s where the gamble comes in: any money left in my HSA at the end of the year could be rolled over to the next year; on top of that, if or when I left the plan (after a three-year vested period), any money in that HSA could be rolled over into a tax-deferred retirement account. In other words, it was free money – but only if my husband, kids, and I could manage to stay healthy and accident-free. Otherwise, it could cost us a whole bunch of money.
Things were cruising along until my husband got a new job, that came with – you guessed it! – a new health insurance option. I was surprised to learn that even though I had health care through my employer, that my husband’s job would still let me join his policy under a family plan. The premiums were fairly equal to what I was paying, but there was a major difference in terms of the coverage. All doctors’ visits – whether well visits, sick visits, or trips to a specialist – came with just a $20 co-pay. We had a $200 yearly deductible for our entire family, plus a $1,600 out of pocket max.
My husband and I ultimately decided to cancel my insurance and take advantage of his company’s policy instead. While it was tempting to “gamble” and see if we could stay healthy on my policy and cash in down the road with the money from the HSA, we just couldn’t let our family’s financial and healthcare future depend on such a high amount of risk.
I know a lot of folks have been seeing major changes to their health insurance policies lately, too. Leaving politics out of it (I don’t want this to devolve into a debate on the merits and demerits of Obamacare), what type of medical insurance plan do you have these days? Are you happy with what you’ve got? Why or why not?