Health Care: Is Anyone Self Insured?

[creditcardfree]

The general idea of self insurance for health care is to save the money you spend in health care premiums and out of pocket costs for doctor visits, preferable in a tax deductible Health Savings Account. When you need health care you pay for those expenses out of the savings account.

I understand people often take out a catastrophic health insurance plan which has a high deductible that could be paid from the Health Savings Account. The premiums on these plans are far cheaper than insurance with more coverage.

My understanding is that some doctors will charge you less (or at least not charge you the inflated costs billed to insurance companies) for paying in cash upfront for services.

Several years ago before the ACA, my sister in law had a situation where her family of five went to sign up for new insurance, cancelled old plan, and then were denied by the new one. This left them without insurance. Other than a few meds, they were relatively healthy. My suggestion to her at the time (which I don't know if she did) was to at least save the premiums she had been saving so that if something did happen where a doctor's visit was necessary, she would have some funds set aside to cover that expense.

Does anyone self insure? Does the idea of self insurance appeal to you? What do you think the pros and cons are?

[TexasHusker]

The general idea of self insurance for health care is to save the money you spend in health care premiums and out of pocket costs for doctor visits, preferable in a tax deductible Health Savings Account. When you need health care you pay for those expenses out of the savings account.

I understand people often take out a catastrophic health insurance plan which has a high deductible that could be paid from the Health Savings Account. The premiums on these plans are far cheaper than insurance with more coverage.

My understanding is that some doctors will charge you less (or at least not charge you the inflated costs billed to insurance companies) for paying in cash upfront for services.

Several years ago before the ACA, my sister in law had a situation where her family of five went to sign up for new insurance, cancelled old plan, and then were denied by the new one. This left them without insurance. Other than a few meds, they were relatively healthy. My suggestion to her at the time (which I don't know if she did) was to at least save the premiums she had been saving so that if something did happen where a doctor's visit was necessary, she would have some funds set aside to cover that expense.

Does anyone self insure? Does the idea of self insurance appeal to you? What do you think the pros and cons are?

The price structure of healthcare is now so grossly out of sorts, that 100 percent self-insuring is untenable for all but the very wealthy. When hospitals are charging $6000 for an MRI that's worth about 200 bucks, few can risk the proposition of self-insuring. In many states, hospitals have the ability to place liens on property and estates to guarantee ultimate payment. Even a brief hospital stay can bankrupt many families.

One argument with a lot of substance is that the government, itself, was and is the root cause of the skyrocketing prices, yet many advocate the government taking incrementally further control over healthcare.

[disneysteve]

I understand people often take out a catastrophic health insurance plan which has a high deductible that could be paid from the Health Savings Account. The premiums on these plans are far cheaper than insurance with more coverage.

We recently switched to this, a HDHP with HSA. The premium is cheaper, but not "far" cheaper. The deductible is $4,700 so the plan won't pay a penny until we've spent that much each year. For 2016, we can put $6,750 in the HSA which can be done pre-tax so we save the taxes on that income. I will fully fund it this year and expect to spend pretty much all of that money based on anticipated expenses. I hope that in future years, we'll be able to build up some savings in that account but for at least the next year or two, we are likely to spend it all.

[creditcardfree]

We recently switched to this, a HDHP with HSA. The premium is cheaper, but not "far" cheaper. The deductible is $4,700 so the plan won't pay a penny until we've spent that much each year. For 2016, we can put $6,750 in the HSA which can be done pre-tax so we save the taxes on that income. I will fully fund it this year and expect to spend pretty much all of that money based on anticipated expenses. I hope that in future years, we'll be able to build up some savings in that account but for at least the next year or two, we are likely to spend it all.

Steve, can I ask what your premium is? I think high deductible are the point, so I'm not surprised at the amount.

[creditcardfree]

The price structure of healthcare is now so grossly out of sorts, that 100 percent self-insuring is untenable for all but the very wealthy. When hospitals are charging $6000 for an MRI that's worth about 200 bucks, few can risk the proposition of self-insuring. In many states, hospitals have the ability to place liens on property and estates to guarantee ultimate payment. Even a brief hospital stay can bankrupt many families.

It's not a full on risk, since one would presume to have some sort of catastrophic coverage. I also understand that these aren't options at all levels of income. I think for generally healthy people even at middle incomes it would be better to save the premiums (my sister and husband pay $450/mo) and rarely use the medical system. So the value they are getting for their premiums is low.

One argument with a lot of substance is that the government, itself, was and is the root cause of the skyrocketing prices.

I agree with you there!

Health insurance has made the costs of even knowing how much procedures will cost nearly impossible. Call up to ask about that MRI and they can't tell you. Really? You don't know what you charge for procedures. There is no other business that wouldn't be able to tell you what they charge.

[disneysteve]

I think for generally healthy people even at middle incomes it would be better to save the premiums (my sister and husband pay $450/mo) and rarely use the medical system. So the value they are getting for their premiums is low.

Do they feel the same way about their auto insurance or home insurance or life insurance? Of course you don't get any value from those things unless you need to file a claim.

I hate when people try to argue that it's better not to have health insurance because they aren't sick. Well guess what. When you get sick, or injured, it's too damn late and you're screwed, even if you've been saving $450/month for a few years. $450/month for 5 years is $27,000. A couple of nights in the hospital or even the most minor of operations can blow through that in no time at all. Sorry but I just have a problem with people opting out of health insurance because they don't think they need it because they're young and healthy. I've seen far too many young and healthy people get diagnosed with serious illnesses or suffer serious injuries that suddenly made them extremely grateful that they had insurance.

[creditcardfree]

Do they feel the same way about their auto insurance or home insurance or life insurance? Of course you don't get any value from those things unless you need to file a claim.

I hate when people try to argue that it's better not to have health insurance because they aren't sick. Well guess what. When you get sick, or injured, it's too damn late and you're screwed, even if you've been saving $450/month for a few years. $450/month for 5 years is $27,000. A couple of nights in the hospital or even the most minor of operations can blow through that in no time at all. Sorry but I just have a problem with people opting out of health insurance because they don't think they need it because they're young and healthy. I've seen far too many young and healthy people get diagnosed with serious illnesses or suffer serious injuries that suddenly made them extremely grateful that they had insurance.

Just to clarify my sister has not opted out of insurance. That's just how she feels after paying so much and the cost keeps increasing. I don't even think she is contemplating it.

And wouldn't having catastrophic insurance help with a hospitalization or serious illnesses? Which I realize isn't self insurance.

[disneysteve]

And wouldn't having catastrophic insurance help with a hospitalization or serious illnesses? Which I realize isn't self insurance.

I suppose that's essentially what we're doing with the HDHP/HSA. We're on the hook for the first $4,700, which we can pay with pre-tax dollars through the HSA.

Unfortunately, our current medical expenses exceed $4,700/year. However, they weren't covered by our previous plan anyway so we're actually better off this way thanks to the HSA and being able to pay the bills with pre-tax money.

[disneysteve]

Steve, can I ask what your premium is? I think high deductible are the point, so I'm not surprised at the amount.

I just checked my paystub. I pay $353.59 every 2 weeks so that works out to $766.11/month. That's for the 3 of us, all adults.

[feh]

Self-insuring is not the same as having a high deductible plan.

Even for those that could afford to self-insure (I think you'd want to have at least $20M on hand), why would they want to? It's far too easy to run up 6 or 7 figures in medical expenses. Insurance is cheaper.

[disneysteve]

Self-insuring is not the same as having a high deductible plan.

Even for those that could afford to self-insure (I think you'd want to have at least $20M on hand), why would they want to? It's far too easy to run up 6 or 7 figures in medical expenses. Insurance is cheaper.

I agree. I can't imagine not having health insurance. If you can afford to self-insure, the cost of the insurance would be insignificant. Your premium isn't tied to your income fortunately.

[creditcardfree]

Self-insuring is not the same as having a high deductible plan.

Even for those that could afford to self-insure (I think you'd want to have at least $20M on hand), why would they want to? It's far too easy to run up 6 or 7 figures in medical expenses. Insurance is cheaper.

Yes, I do agree they are not the same thing. I probably worded my thoughts badly! I do think there could be better use of high deductible plans though.

[creditcardfree]

I just checked my paystub. I pay $353.59 every 2 weeks so that works out to $766.11/month. That's for the 3 of us, all adults.

Thank you for sharing! That is higher than I would have thought, but sounds less than some people pay for health insurance even with employer plans.

[disneysteve]

Thank you for sharing! That is higher than I would have thought

We live in insurance hell, otherwise known as New Jersey. Home of the highest insurance rates in the country.

[LivingAlmostLarge]

CCF no one can afford to self assure except the truly wealthy. Also HDHP I think are still pretty expensive in the grand scheme of things.

Um family of 4 and our HDHP plan was pure hell. $650/month and $6500/$13k family deductible. That means we were paying $7800/year and our deductible was $6500 a person or $13k family before they covered us. That means we could be out $13k/year. How do you afford that?

That does NOT cover prescriptions or dental or vision. That's plain medical. I also have my doubts that the insurance company wouldn't fight us on what they "cover" under the $6500 before making us pay more Out of POCKET and before they start covering things.

All my friends with HDHP hate it. There isn't anyone who really likes it because it cost more than HMO style care. Premiums typically save the company money not the employee. But that's because most people who are moved to an HDHP get a lower premium but then they are forced to pay more OOP and the company doesn't deposit money into an HSA with savings. Just winning for the company.

Also the biggest insurance in the US is medicare. So we already have a socaialized system that EVERYONE loves and won't give us. Want to save US government money? Take away medicare. But seniors won't do it. Medicare has low reimbursements and can negotiate with dr. But they haven't taken on pharma. But that's not the question.

The savings difference between an HDHP and HMO style plan I bet would be eaten up immediately with one accident or diagnosis.

Also I believe that Obamacare would always fail but the only saving grace was forcing companies to insure those they wouldn't previously. I don't think healthcare should be for profit but a right. Because we've shown when it's for profit insurance companies are pulling out because being forced to insure the uninsurable is untenable.

And the only way health insurance can work for those who are sick? By forcing it to be balanced by those who are healthy. And until people need care, they act as though they never fall into the category of sick. Then suddenly gee insurance companies are bad.