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Here is a way that people can reduce their premiums on their health insurance, and at the same time, reduce their overall risk. 

How can this be? 

First, we will explain how purchasing two additional policies, will reduce your cost of insurance.  Yes, reduce your cost of insurance. 

Let's take an example:

In the above table, you can see pricing for the Blue Cross and Blue Shield of North Carolina®, Blue Advantage® plan.  If they chose Plan "B" with $500 deductible and 70/30% coinsurance, then that plan would cost $579.58.  Their total risk would be $500 plus $3,000 or $3,500. 

Now let's price the same plan, but with a $3,500 deductible, and everything else the same.  That premium would be $482.62, a savings of $106.93.  The total "out-of-pocket" risk is $3,500 plus $3,000 or $6,500.  This sounds too scary to most people.   They don't want to consider being out of pocket $6,500.  Hold on, now. . .

We will use that savings of $106.93 to purchase an accident plan for $30.00 and a DesignMed Super Supp policy for $72.87.  The combined policies total $102.87.  That is within $4.06 of being equal...actually the savings is greater that the expenditure. 

Now let's look at our risk.   

Look at the table above showing "Accident Risk Summary WITH additional policies".  You can see that we have reduced our "out-of-pocket" risk by $5,150 by adding the two policies.  The total risk is only $1,350 instead of $6,500. 

Here is how it is done in more detail:

Accident Example:

If someone in the family has an accident, the family will need to spend their deductible and coinsurance.  Perhaps the fourteen year old boy breaks his leg playing soccer.  That accident could easily cost $3,500 or more.  So, there would be deductible cost of $3,500, plus 30% of the amount spent up to $10,000 or $3,000.  In this example, the out of pocket would be $3,500 deductible + $3,000 coinsurance totaling $6,500.  

BUT wait!  Because the accident policy would pay up to $5,000, it would pay most of those costs back to the family, i.e., the amount paid would be reimbursed by the accident policy.  Sometimes we call it "gap" insurance.  The Super Supp would help out too with $150 for the accident making the total payment back to the insured of $5,150.  Since the insured has a debt of $6,500 but received checks for $5,150, he is only out $1,350.  Not bad, eh?

Sickness Example:

Even though over 50% of the time that a person ends up in the hospital, it is the result of an accident, we have to account for the fact that one may need to go to the hospital for a 5-day stay, for example.  (By the way, the average stay in the hospital is 5-days.)  Let's say that an operation costs $40,000.  How do they come out?

We would still have the $3,500 deductible and the $3,000 coinsurance "out-of-pocket" totaling $6,500.  However, the Super Supp would pay $1,000 for first two days stay in the hospital plus $3,000 for days three through five.  This totals $4,000 so far. 

Next, there would be a payment for $2,000 for the surgery and $500 for the anesthesiologist totaling, $2,500.  So, we spent $3,500 and we took in $6,500.  We are up $3,000.  That looks ok to us.  Depending on the length of the stay and the particulars, the Super Supp may cover ALL of the "out of pocket" expenses.

By insuring the gap, we end up with an overall savings of $4.06 and a great reduction in risk of $6,500.  

In addition, the accident policy will NOT go up in price next year and the Super Supp will NOT go up in price next year.  Of course the major medical policy will go up next year, because the cost of health care is going up every year.  However, by transferring a good part of the risk to other policies that don't go up in price, our amount of exposure to price increases has been decreased.

What do you think?  Doesn't that make sense? 

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