How Much Does That $20 CoPay cost....Really?
05-Jan-2010
“How Much Does That $20 Co-pay Really Cost?”
For some reason still inexplicable to me, some people are very hesitant to let go of their over-priced health insurance policy because it has a “low” deductible or “low” co-pay. But just how much does it really cost to carry a policy with a “low” co-pay?
Let’s assume the co-pay is $20. Our happily (?) insured family sends one family member to the Doctor this month. The cost? “Just 20 bucks”. That is what I will typically hear—that the Dr. visit “only cost me 20 bucks out of my pocket.” But did it?
A closer look reveals an important fact—somebody forgot to include the amount of the premium they are paying every month! After all, the total amount of money out of your pocket is just that—money out of your pocket.
A typical family today may easily be paying $500 (or more) in monthly premiums for that policy. Let’s assume it is exactly $500. Wouldn’t it then be more correct to state that the total out of pocket expense for the month was $520? ***After all, you had to pay the $500 premium in order to have the “convenience” of a $20 co-pay.***
What if that was the ONLY Dr. visit for the year? Now how much did that little Dr. visit cost? The annual premium is $6,200 PLUS a $20 for one Dr. visit. My calculator tells me that our happy little client had one Dr. visit for the year that actually cost him/her a mere $6,220! Land sakes alive! That must be one highly educated Doc!
Seriously now friends, I hope you are beginning to see the absurdity of those goofy little co-pays. (My favorite term for them.) Wouldn’t you be much better off without insurance? Well, wouldn’t you? Of course you would—especially if you never had a hospital bill! Without insurance, that Dr. visit would probably average about $80. That’s it! Your total medical expense for the year would literally be $80 if you had no insurance (and thus, no premiums to pay) and you only had one Dr. visit per year.
Of course, that is very risky today. If you happened to end up in the hospital for just 3 days, you could easily incur expenses in excess of $14,000! And it just gets worse from there.
People don’t buy insurance on their car that covers a $50 oil change, do they? Why then are they so insistent to pay so much extra in premiums just to be able to “insure” a minor expense such as a Dr. visit or prescription for a small co-pay?
Really, when you think about it, it doesn’t make much sense? Does it?
Most people would be much better off following this simple, time tested formula:
If you can pay for it without insurance, don’t buy insurance for it.
When it comes to insuring your health, the formula is again very simple:
Buy a policy with a “high” deductible, and self-insure the “small stuff”.
That’s where the HSA concept makes so much sense. With an HSA, you have one “high” deductible for the entire family (!!! unheard of with any other kind of health insurance !!!). Your premiums are relatively LOW. And you are self-insuring the “small stuff”. But there’s a catch—a good catch for once. With an HSA plan, the U.S. Government is actually giving you a tax-break for saving money to self-insure those small bills! WoW!
All things considered, the HSA will be your lowest cost alternative to traditional health insurance time after time.
Bob Clark, Pres.
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