Why are people paying so much money for one health plan? What is more disturbing is the number of people looking for that “golden egg” health policy that will pay every medical expense. These plans do not exist! Successful business owners know that it is not how much you spend but how much return you receive on what you spend that really matters. There is no difference in the realm of health insurance. As a business owner or individual looking for insurance, nothing matters more than a well-structured health insurance portfolio.
Unfortunately, not many business owners are aware of how to create a well-structured health insurance portfolio. It often comes down to the mindset that the best investment is a single policy that delivers the most coverage for the least amount of premium. These policies often fail to cover key areas of health care costs that many people often overlook. There are five key areas a health insurance portfolio should cover for a business owner:
- A Basic group or individual medical plan with a high deductible and coinsurance.
- Medical Gap plan that pays your deductible and coinsurance.
- Dread Disease plan (Cancer, Critical Illness, etc.) to supplement your medical plan for critical illnesses.
- Accident and Disability plans that supplement your medical plan in the event you are injured as a result of an accident or become disabled.
- Whole Life Insurance that includes an Accelerated Benefits Rider. This pays you a portion of the cash value of your life policy in the event of a terminal illness.
What should interest people most about this portfolio structure is the return on your monthly premium. Consider a typical scenario for a mechanic with his own business. While the mechanic has assets, he most likely does not have readily available funds to pay for a serious health problem. He seeks a health insurance plan with a low deductible and co-insurance to protect him against this contingency. But when his child is diagnosed with Leukemia, this single health plan will not cover enough of the expenses. The significant portion of radiology expenses alone may not be covered by his health plan. This is serious for the mechanic, whose assets are tied up in his business. Not only is the mechanic at risk, his business is at risk as well. He is paying into a single plan that does not account for a majority of contingencies he and his family could face. How does he avoid this?
First, instead of a low deductible, high premium plan, this business owner should investigate high deductible, low premium plans. His options for covering the high deductible are a Health Savings Account or a Major Medical Gap Supplement Plan. His Cancer Supplement coverage would pay in addition to his basic medical insurance plan, leaving a small amount, if any, leftover for him to pay. Even if the mechanic suffers an accident at a later point in time, he has the protection from his Accident Supplement policy and health plan combined to cover a significant portion of the medical expenses.
For about the same amount of premium per month as a single, low deductible health plan, this mechanic can have the protection of as many as five plans. This follows the logic of insurance, the principle of sharing risk. The return in coverage is greater as this risk is shared among more companies, and the costs associated with these plans are much lower than a single, low-deductible health plan. This is the solution for the business owner looking for the best value in health insurance. Several policies with specific functions and coverage are better than one policy that promises more than an insurance company can afford to pay.