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Benefits Have Changed – This Isn’t Your Parents Policy

With Ryan Rapier, Vice President of Vector Employment Services

When I was kid, my dad worked for the local copper mine that served as the economic engine for our community. As part of his compensation, our family had a very generous benefits package that allowed us to visit the doctor for just $10 a visit. And if a medical emergency arose, we didn’t have to worry too hard because we would only be responsible for $1,000 of a deductible. Our situation was typical of families in our area. It was also typical of what families were experiencing with regards to health benefits all across the nation. As a result, my generation has come of age believing that you can judge the effectiveness of a health plan on just two things: the deductible and the co-pay.

However, in many ways things have changed since I was a kid. Most specifically, the cost associated with plans that provide a low co-pay and a low deductible. As individuals strive to maintain a “good” benefits package, they will often find themselves struggling with how to pay the monthly premiums that continue to climb year after year. Meanwhile, many of these same individuals are dismissive of products known as “supplemental” or “worksite” policies that pay people directly in the cases of accidents, hospital admissions or critical illness diagnosis. Because they are different than the typical health plan, they are often dismissed as unnecessary or not worth the extra expense.

The purpose of this post today is to dispel both of these misnomers. First, let’s deal with what makes an effective health plan. Having a low deductible is certainly not a bad thing. However, I always encourage people to look back ten years and determine how many times they have actually met their deductible. For a vast majority of families it is only once or twice at most. A large number of individual can’t even point to a year when they met their deductible. So whether or not the deductible is $1,000 or $5,000 is immaterial. On the other hand, if a low deductible plan costs a family $1,400 a month while a high deductible plan would only cost $1,000, over the course of a year, that family would save themselves $4,800 in monthly premiums. Doing the math shows that this kind of savings would cover the difference in deductible and still leave some left over.

Which brings us to misnomer number two. For as little as $75 a month, an entire family can have a supplemental accident policy that would pay them directly for any medical services associated with an accident. If that accident resulted in a hospital stay, tests and imaging procedures, they could see as much $4,000 come back to them. Now, let’s add that to the $5,000 deductible plan above. For $1,075, a family could be out of pocket the exact same amount over the course of a year for medical costs while simultaneously saving themselves $3,900 annually in monthly premium costs.

Healthcare is expensive. But it doesn’t always have to be as expensive as we think. At Vector ES, we specialize in helping business owners and individuals understand how to make their medical dollars go further and turn some of those medically budgeted dollars into disposable income for employers, individuals and families. To learn more about how you can make your healthcare dollars go further, please contact us through our website, www.vesbenefits.com, or call us through BTU at 480-690-6000.