Can Health Insurance Make You Sick?
If your employer offers you a health insurance plan, you may not realize the entire amount of
premiums that are contributed per month—until you decide to quit your job to be
self-employed. My husband received a nice benefit package from his previous employer (an
institution of higher learning) and when we decided to start our own business after our
first child was born, one of the major financial dilemmas we had to face was what to do
about health insurance.
After discussing our options with my
doctor, she encouraged us to participate in the COBRA plan offered by the University at
least until our daughter was three months old. At that time, we had to pay $564 per month
to remain active with our health insurance company. Now, I don't know how your monthly
expenses add up…but we could eat, have air conditioning or heat, cable television and
water for that amount per month!
During that three months, we had
every insurance representative we could find give us their sales pitch. Knowing that we
had to cut back on expenses to make our home-based business a success, we realized that
health insurance was unaffordable for the average person starting out on their own. Every
insurance plan presented to us wanted at least $300 per month in premiums—and most of
the plans would not cover our pre-existing conditions for one year. In effect, we would be
paying over $3,600 in premiums alone (not counting the co-payments for doctor visits and
prescriptions) before the insurance would pick up the tab on my husband's sinus allergies
or my dermatological allergies.
After some serious number-crunching,
we realized that over the course of a year we paid nearly $7,000 in insurance premiums!
Then, we added up the medical expenses paid by us and by the insurance company (even the
delivery and birth of the baby) and it came to less than $5,000. The reason for this is
that as insured on a group health plan, the risks are spread out amongst all of the plan
participants—some of who are using more health insurance and some who use less.
We then began to look at our
out-of-pocket expenses for doctor visits. Our baby would need well-baby checkups every few
months and I would need my annual exam and my husband would need his yearly physical. All
of those expenses added up to less than $500 per year.
We could well afford to pay the
doctors directly for our care compared to paying an insurance company "in case"
we needed care.
With that decision made, we moved on
to major medical insurance. This insurance usually has a
higher deductible than health insurance in exchange for lower premiums. We found a
well-known, reputable company that offered us a major-medical insurance policy for less
than $110 per month with a $2,500 deductible. The only catch was that the major medical
would not cover pregnancy—but, we could live with that while we raised our first
child and our first home-based business.
Over the course of that first year,
we created our own medical savings account and set aside $190 per month. We were also able
to take some tax advantages by purchasing the insurance through our company. At the end of
that year, we had nearly enough saved for an emergency deductible in case of
hospitalization.
But, despite the shock of health
insurance premiums making us sick…the inevitable happened. No, not an emergency
appendectomy. I became pregnant with child #2 and we made the decision for my husband to
return to full-time employment. The University he works for now picks up the entire cost
of premiums but we still have our medical savings account that we started nearly five
years ago just in case the high cost of health insurance makes us sick again!
©2000 Tammy Harrison. Tammy
Harrison is a wife and mother of three children ages four and under. She has a degree from
Mizzou in Human Environmental Sciences, Consumer Economics and Management, Personal
Financial Management. She is the Independent Creative Representative for Home-Based
Working Moms (http://www.hbwm.com), email HBWM_Creative_Rep@hotmail.com. Subscribe
to HBWM free eNewsletter atmailto:hbwmoms-e-news-subscribe@egroups.com
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