The AlternativeThe Alternativeisis

Consumer DrivenConsumer Driven

Health InsuranceHealth Insurance

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Where are American’s getting their Where are American’s getting their health insurance?health insurance?

80% of Americans get 80% of Americans get their health insurance their health insurance through work.through work.

Employer subsidized Employer subsidized health insurance health insurance causes people to not causes people to not understand it’s true understand it’s true cost.cost.

What’s wrong with that?What’s wrong with that?

Insurance companies Insurance companies add options into add options into policies that are a policies that are a waste of money!waste of money!

Terminology is being Terminology is being used to confuse used to confuse people!people!

Confusing the ConsumerConfusing the Consumer

$1000 Deductible$1000 Deductible $1000 Deductible$1000 Deductible $1000 Deductible$1000 Deductible

90/10 Co-Ins 80/20 Co-Ins 50/50 Co-Ins

Which Looks Better?

10% of $10,000 20% of $5,000 50% of $2,000

$1,000 $1,000 $1,000

What is the total out of pocket for each of these?

$2,000 $2,000 $2,000

Family ExampleFamily Example

40 year old male, non-smoker40 year old male, non-smoker

40 year old female, non-smoker40 year old female, non-smoker

2 kids2 kids

Zip Code: 68133Zip Code: 68133

Example Yearly CostsExample Yearly Costs80/20 To $5,000.0080/20 To $5,000.00$500 Deductible$500 Deductible$1000 Co-Ins$1000 Co-Ins$1500 Max Out of Pocket$1500 Max Out of Pocket

$779.57 x 12 months= $9354.84$779.57 x 12 months= $9354.84Max out of pocket +$1,500.00 Max out of pocket +$1,500.00 Total Yearly Risk $10854.85Total Yearly Risk $10854.85

50/50 To $2,500.0050/50 To $2,500.00 $1000 Deductible $1000 Deductible $1250 Co-Ins$1250 Co-Ins

$2250 Max Out of Pocket$2250 Max Out of Pocket$487.28 x 12 months=$5847.36$487.28 x 12 months=$5847.36Max out of pocket +$2,250.00Max out of pocket +$2,250.00 Total Yearly Risk $8097.36Total Yearly Risk $8097.36

As you can see, there is very little difference between plans!!!

50/50 To $2,500.0050/50 To $2,500.00$2500 Deductible$2500 Deductible$1250 Co-Ins$1250 Co-Ins$3750 Max Out of Pocket$3750 Max Out of Pocket

$343.5 x 12 months=$4122$343.5 x 12 months=$4122Max out of pocket +$3,750.00 Max out of pocket +$3,750.00 Total Yearly Risk: $7872Total Yearly Risk: $7872

50/50 To $2,500.0050/50 To $2,500.00$500.00 Deductible$500.00 Deductible$1250 Co-Ins$1250 Co-Ins$1750 Max Out of Pocket$1750 Max Out of Pocket

$647.73 x 12 months=$7772.76$647.73 x 12 months=$7772.76Max out of pocket +$1,750.00Max out of pocket +$1,750.00 Total Yearly Risk $9272.76Total Yearly Risk $9272.76

50/50 To $2,500.00 50/50 To $2,500.00 $1500 Deductible$1500 Deductible

$1250 Co-Ins$1250 Co-Ins$2750 Max Out of Pocket$2750 Max Out of Pocket

$422.26 x 12 months=$5067.12$422.26 x 12 months=$5067.12Max out of pocket +$2,750.00Max out of pocket +$2,750.00 Total Yearly Risk $7817.12Total Yearly Risk $7817.12

Your Actual CostsYour Actual Costs

Lets run these quotes on you and see the Lets run these quotes on you and see the actual numbers.actual numbers.

OptionsOptions

Doctor’s OfficeDoctor’s Office

Co-PayCo-Pay– Health Insurance is Health Insurance is

expensive.expensive.– Paying $20 or $30 at Paying $20 or $30 at

the doctor seems like the doctor seems like a bargain.a bargain.

The Reality, it’s a The Reality, it’s a giant waste of money!giant waste of money!

How It Really WorksHow It Really Works

How many times does How many times does an average family of 4 an average family of 4 go to the doctor in a go to the doctor in a year?year?– 4, 5, or maybe 6 times4, 5, or maybe 6 times

What does a doctor’s What does a doctor’s office visit actually office visit actually cost?cost?– $70 - $80$70 - $80

How It Really WorksHow It Really Works

Let’s assume this family has a $1,000 Let’s assume this family has a $1,000 deductible. With a 50/50 Co-Ins up to deductible. With a 50/50 Co-Ins up to $2,500$2,500

This Family has a really bad year and they This Family has a really bad year and they go to the Doctor 20 times and each visit go to the Doctor 20 times and each visit costs them $100.costs them $100.

VisitsVisits Doctors ChargeDoctors Charge TotalTotal DeductibleDeductible

20 x $100 = $2000 $100020 x $100 = $2000 $1000

The DeductibleThe Deductible

VisitsVisits Doctors ChargeDoctors Charge TotalTotal DeductibleDeductible

20 x $100 = $2000 $100020 x $100 = $2000 $1000

If you are the one paying the office visit, then the cost would go If you are the one paying the office visit, then the cost would go towards your deductible, so after the first $1000, your deductible towards your deductible, so after the first $1000, your deductible would be satisfied.would be satisfied.

VisitsVisits Doctors ChargeDoctors Charge TotalTotal DeductibleDeductible

20 x $100 = $2000 $100020 x $100 = $2000 $1000

You Pay $1000 You Pay $1000 SATISFIED!SATISFIED!

The Co-InsThe Co-Ins

VisitsVisits Doctors ChargeDoctors Charge TotalTotal DeductibleDeductible 20 x $100 = $2000 $100020 x $100 = $2000 $1000

You Paid Deductible You Paid Deductible $1000$1000 SATISFIED!SATISFIED!

You Pay Co-InsYou Pay Co-Ins $500$500Insurance PaysInsurance Pays (50%) (50%) $500$500Total $2000Total $2000

So, for this example you have paid So, for this example you have paid $1500$1500 and the and the Insurance Company paid Insurance Company paid $500$500, , BUT THE YEARLY BUT THE YEARLY DEDUCTIBLE HAS BEEN SATISFIEDDEDUCTIBLE HAS BEEN SATISFIED..

Lets Add The Doc OptionLets Add The Doc OptionFirst Replace the words First Replace the words co-payco-pay with the words with the words Penalty PaymentPenalty Payment

– When the co-pay is made to the When the co-pay is made to the doctor, the amount does not go doctor, the amount does not go towards the deductible or the co-towards the deductible or the co-insurance. insurance. It is just extra money It is just extra money out of your pocket.out of your pocket.

Remember: Insurance Companies Remember: Insurance Companies aren’t in the habit of losing money. aren’t in the habit of losing money. So what they have set up here is a So what they have set up here is a smoke and mirror cost shift. smoke and mirror cost shift. Where you the consumer are Where you the consumer are guaranteed to pay more than you guaranteed to pay more than you can ever collect.can ever collect.

The Cost of Co-PayThe Cost of Co-Pay

The Doctors Office Co-Pay option by itself The Doctors Office Co-Pay option by itself costs $178 per monthcosts $178 per month$178 x 12months = $2136 in premiums And $178 x 12months = $2136 in premiums And

20 visits x $30 per visit = $600 in penalty payments20 visits x $30 per visit = $600 in penalty payments

The Total Doc Co-pay + Premium is The Total Doc Co-pay + Premium is $2736$2736..

ThisThis would have only cost you would have only cost you $1500$1500 ……. …….

if you paid it yourself!if you paid it yourself!

When do you come out ahead?When do you come out ahead?

NEVER!!NEVER!!

It does not matter how many times you It does not matter how many times you visit the doctor when using a co-pay, you visit the doctor when using a co-pay, you will never come out ahead.will never come out ahead.

Why?Why?

The cost is never going towards your The cost is never going towards your deductible.deductible.

Prescription Co-PaysPrescription Co-Pays

These work the same as These work the same as other deductible plans.other deductible plans.

A $500 deductible with A $500 deductible with 10/25 co-pay is part of 10/25 co-pay is part of the base plan.the base plan.

BUT…you have the BUT…you have the option of buying the card option of buying the card down to $0.down to $0.

The MathThe Math

Insurance companies immediately see Insurance companies immediately see potential claim losses of $500 as well as potential claim losses of $500 as well as administrative fees.administrative fees.

How much is this savings going to cost you?How much is this savings going to cost you?

Deductible:Deductible: $500$500 $0$0

Your Cost:Your Cost: $0$0 $181/month$181/month

Total:Total: $500$500 $2172$2172

The Cost of SavingThe Cost of Saving

Deductible:Deductible: $500$500 $0$0

Your Cost:Your Cost: $0$0 $181/month$181/month

Total:Total: $500 $2172$500 $2172

You are spending You are spending $2172$2172 to save to save $500$500. . Now that you understand the cost, who in Now that you understand the cost, who in their right mind would do this?their right mind would do this?

What is the SOLUTION ? What is the SOLUTION ?

An Educated ConsumerAn Educated Consumer

An Empowered ConsumerAn Empowered Consumer

An Enlightened ConsumerAn Enlightened Consumer

AND……AND……

Health Savings Account (HSA)Health Savings Account (HSA)

The HSA simplifies the consumers choices The HSA simplifies the consumers choices when buying a Health plan.when buying a Health plan.

You the consumer, know what is best for You the consumer, know what is best for your family!your family!

How are you going to spend your hard How are you going to spend your hard earned Dollars?earned Dollars?

Understanding How an HSA Works Understanding How an HSA Works

There are two moving parts to an HSA. There are two moving parts to an HSA. There is the Health insurance portion and There is the Health insurance portion and the cash portion.the cash portion.

Your cash$

High deductible insurance plan

Health Insurance portionHealth Insurance portion

In order for you to have an HSA. You must first In order for you to have an HSA. You must first establish a high deductible health insurance establish a high deductible health insurance plan…plan…A high deductible insurance plan must have an A high deductible insurance plan must have an individual deductible of at least $1000 up to a individual deductible of at least $1000 up to a maximum of $5000.maximum of $5000.Family deductibles range from $2000 up to a Family deductibles range from $2000 up to a maximum of $10000.maximum of $10000.The current maximum contributions for an HSA The current maximum contributions for an HSA are $2650 for individual $5250 family.are $2650 for individual $5250 family.

Cash PortionCash Portion

Only after you have established a high Only after you have established a high deductible health plan.deductible health plan.

You can then place up to 100% of your You can then place up to 100% of your deductible into a tax free cash account.deductible into a tax free cash account.

These are the funds that you may use to These are the funds that you may use to pay your health care expenses. pay your health care expenses.

If you do not have any health expenses If you do not have any health expenses you keep the money. you keep the money.

Comparing PlansComparing Plans

Lets go back and look at the 50/50 plan to Lets go back and look at the 50/50 plan to $2500 with the $1500 deductible.$2500 with the $1500 deductible.

This is a $2750 max out of pocket. This is a $2750 max out of pocket.

This is times two for a family with a total This is times two for a family with a total family max out of pocket of family max out of pocket of $5500$5500

Cost of this plan is Cost of this plan is $5067.12$5067.12 per year. per year.

Total family maximum risk is Total family maximum risk is $10567.12$10567.12

Comparing PlansComparing Plans

Now lets look at an HSA plan with a family Now lets look at an HSA plan with a family deductible of deductible of $5250$5250. .

The coinsurance is 100%. The coinsurance is 100%.

The cost of this plan is The cost of this plan is $3613.44$3613.44 per year. per year.

The risk factor for the family is now The risk factor for the family is now $8863.44$8863.44

The family risk factor drops by The family risk factor drops by $1703.68$1703.68

Side By Side ComparisonSide By Side Comparison

Deductible $3000Deductible $3000

Co-Insurance $2500Co-Insurance $2500

Total Total $5500$5500

Cost Cost $5067$5067

Risk Risk $10567$10567

$5500 max out of $5500 max out of pocket is apocket is a after tax after tax out of pocket.out of pocket.

Deductible $5250Deductible $5250

Co-Insurance $0Co-Insurance $0

Total Total $5250$5250

Cost Cost $3613$3613

Risk Risk $8863$8863

$5250 max out of $5250 max out of pocket is now pocket is now pre tax pre tax out of pocketout of pocket

Consumer Driven PlanConsumer Driven Plan

By Taking the savings in premiums from the By Taking the savings in premiums from the traditional plan and placing them in an HSA traditional plan and placing them in an HSA account.account.The consumer is paying themselves instead of The consumer is paying themselves instead of paying the insurance companies.paying the insurance companies. Creating a Tax deduction even if the funds are Creating a Tax deduction even if the funds are not needed. not needed. Lowering their yearly risk factor if they due Lowering their yearly risk factor if they due become sick or injured.become sick or injured.Controlling there own funds. By paying only if Controlling there own funds. By paying only if and when they need their health program not and when they need their health program not every month in the hopes that they will.- every month in the hopes that they will.-

IS There A DownsideIS There A Downside

Yes there is a down side to an HSA.Yes there is a down side to an HSA.

The down side to an HSA is in the first few The down side to an HSA is in the first few months of an HSA people have not had months of an HSA people have not had sufficient time to fund their savings. sufficient time to fund their savings.

Is There A SolutionIs There A Solution

AbsolutelyAbsolutelyBy using insurance wrap around products. By using insurance wrap around products. Clients will be able to fund their HSA’s with Clients will be able to fund their HSA’s with funds from other companies indemnity funds from other companies indemnity products.-products.-Clients purchase small Accident, Critical Illness, Clients purchase small Accident, Critical Illness, and Hospital Indemnity polices from other and Hospital Indemnity polices from other carriers,carriers,This spreads the risk over several companies This spreads the risk over several companies and drives the cost down even further.and drives the cost down even further.

ExampleExample

40 year old couple with 2 kids in 68133 40 year old couple with 2 kids in 68133 area code.area code.HSA health plan. Monthly cost $232.50HSA health plan. Monthly cost $232.50HSA contribution $25.00 HSA contribution $25.00 Accident policy with Hospital cash option Accident policy with Hospital cash option rider. Monthly cost $32.41rider. Monthly cost $32.41$5,000 Critical Illness policy monthly cost $5,000 Critical Illness policy monthly cost $17.06$17.06Total monthly cost of all plans $306.97Total monthly cost of all plans $306.97

You Now Have The PowerYou Now Have The Power

Now You Are An Educated Now You Are An Educated Consumer!Consumer!Now You Are An Empowered Now You Are An Empowered Consumer!Consumer!Now You Are An Enlightened Now You Are An Enlightened Consumer!Consumer!How Are You Going To Spend Your How Are You Going To Spend Your Hard Earned Dollars?Hard Earned Dollars?