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As a society we have been spoiled by an era of group health, low deductibles and co-pays.  The First thing that we need to remember when we have a group health plan, our company is paying for a portion of it, usually at least half of the employees plan.  This gives us the perception that it costs us less than it really does.

One thing that we do know is that costs go up.  One thing you should look at when buying a health insurance plan, kind of really like buying anything, is how will I use it?  Do I see a doctor often?  Do I even need coverage for that benefit?  What am I trying to protect?

I say this because if you think about it, group health plans are more coverage than you really need.  How many times have you been hospitalized in the last ten years?   People are always looking for the best value.  On group health plans, you often have a lower deductible than on the individual side of things.  Again the company is paying part of the premium so you are “sharing the expense” so you can have more benefits in the plan.  The higher the deductible, the lower the premium you will have.  I was reading an article today online that was reported by CNN that 26% of Americans went without insurance during 2011.  Of those 69 % were without health insurance for a year or more due to being unemployed and the cost of individual was too expensive.

Here is the first problem with that statement.  We have become dependent on or companies to insure us.  I do not know why that is the case.  Our companies do not insure our homes or our personal automobiles, why do we depend on them for our health insurance.  Have you ever stayed with a job that you hated because they had great health insurance benefits?  You probably have.  This is what I refer to as job-lock.  You are locked into your job for benefits.  If you purchase your health insurance on the individual market, you are never locked into your job.

Now think back about 15 years (those of you who were old enough to own a home 15 years ago).  Your homeowners insurance deductible was probably no higher than $250 maybe $100.  How many of you now have less than $500?  Most of my clients now carry $1000 or more on their home.  Is it reasonable to think that health insurance deductible would be on the rise as well?  Now let’s think about this for a minute.  Your homeowners insurance does not cover maintenance on your home, and your auto insurance does not cover maintenance on your auto, I bet you still get your oil changed every 3000 miles or so though.  Now let’s examine this a little closer.  We will use $30 for an oil change as the example (I paid $44.95 last week).  I will also say the average person drives 15,000 miles per year.  Obviously, some travel more and some travel less.  With those numbers that would equate to having 5 oil changes done per year at $30 each or $150 per year.  We never complain that our auto insurance does not cover it, we just pay it.  Yet, an annual physical for our bodies is around $250 (again depending on what you have done and where you have it done).  I can afford that, I do not need my insurance to pay that. Sure it would be nice, but I would rather save on the monthly premium than have that covered.  Under the new health care law (currently under review by the US SUPREME COURT), one of the things that is mandatory is that preventative care be covered at 100%.  The proponents of the law say you get free preventative care, they do not tell you that there is an added premium for that.  I use the analogy if there was a law that said you could no longer buy a plain cheese pizza. You had to buy a one topping minimum. You would still have to pay for the one topping.

I am not opposed to an insurance company offering preventative care as a benefit to the plan, I just do not know if you need to have it as part of the plan.  Maybe make it like your car insurance again, you can add say towing insurance to the plan, but you do not have to.

It is very common now on the individual market to have a $2500 or a $5000 deductible. Do not have a sticker shock when you see that.  Again, if you end up with a $100,000 or $250,000 medical bill, $5000 is a small amount to pay (there often times will be some co-insurance as well).  My point is insurance does not have to be expensive, if you design it right.  I am self-employed and pay for my own insurance.  My premium for myself and my two kids is $279 per month.  I have a $5000 deductible.  If my kids have to go to the doctor, that visit applies to the deductible so I usually do not hit the deductible.  I am ok with that.  Someday as I get older, or my kids get more involved with sports, I will hit the deductible, I will be prepared as I have saved that money in my health savings account.  Be prepared.  THANKS for reading!

Eric Wilson is an insurance broker in Chicago.  He can be reached toll free at 888-448-5370 or online at