Funding Your Own Healthcare

Introductiondiscount plans provide legitimate discounts that
More folks including both individual adults and familiesbenefit their members, many take consumers' money
are on their own to provide funding for healthcare.and offer very little in return." - Federal Trade
There is a growing trend of being your ownCommission
freelance business owner, being a contract employeeAdvantages:
or being employed by a business that does not offer
a health insurance benefit. Many people make the1. Low Monthly Fee
mistake of buying price instead of value in a2. Discounted care from some healthcare providers
healthcare funding plan. This article provides an3. Normally available to all applicants
overview of options for funding healthcare with bothDisadvantages:
advantages and disadvantages of each strategy.
How Much does Healthcare Cost?1. No financial protection from the risk of a major
Understanding what healthcare costs is important toillness or injury
deciding the best strategy for funding your own2. Difficulty in accessing care without insurance; Some
healthcare needs. Buying based only on price and nothealthcare providers may require advance payment
value (price vs. benefits) is a common and very3. After any offered discount, you still pay the whole
grave mistake. Some examples of what healthcarebill for medical treatment
can cost will help illuminate the importance of valueLimited Benefit Plan - Pay a monthly premium for a
and risk transfer (insurance) in funding your owndefined-benefit insurance policy. Also often marketed
healthcare.as "Affordable Healthcare," these mini-med health
Routine Care: Having an ongoing relationship with ainsurance plans typically offer a set payment amount
medical doctor is important value and can help youfor a specific healthcare treatment and a maximum
avoid much more costly illness and improve yourbenefit limit under $100,000. These plans don't meet
overall health outcome. I am an example of thethe "my brother test" - would this type of plan
benefits of routine medical care with the goals ofcoped with the healthcare costs of my brother's
avoiding cardiovascular disease, diabetes andlymphoma? - No, so I won't sell them. The healthcare
managing my sinus allergies. My recent doctor visitdiscount cards and limited benefit plans are
including blood test = $248 Well Baby Check (priceaggressively marketed on the internet. Just google
from local pediatrician) = $160 Annual Physical ="affordable healthcare" or "low-cost health insurance"
$500? Cost depends on how elaborate a physical youand you will see bunches. There just is no free lunch
get.in health insurance. If the plan is cheap, then the
Rx Drug: Prescription drugs are approximately 10% ofbenefits are limited.
total healthcare spending [1]. Prescription drugs can beAdvantages:
a large component of treating a major or chronic
illness. These are drugs that I take with the list prices1. Less expensive monthly premium
from my local drug store. OTC Claratin (equivalent2. Discounted care from some healthcare providers
house brand) = $10 / month Crestor = $137.99 /3. Limited insured benefit payments for medical
month Astelin = $115.99 / month An example of aprocedures
more expensive medicine that my wife takes4. Improves access to care
regularly for her chronic migraines: Topamax (generic5. Few enrollment restrictions
equivalent) = $566.99 / monthDisadvantages:
Diagnostic Tests: Diagnostic tests are an important
part of most disease identification, management and1. Incomplete financial protection from the risk of a
treatment and are a large component of healthcaremajor illness or injury
costs. My recent blood test (three panels) = $1522. Due to benefit limitations, some healthcare
X-Rays = $100+ Mammogram = $150+ MRI =providers may require advance payment
$1000+; a complex MRI can cost several thousand3. After any offered discount and benefit payment,
dollarsyou pay the remaining balance of the bill for medical
Emergency Care: ER Visit = $1000+; this is based ontreatment
my experience - I have never had an ER visit thatMajor Medical Policy - This is your "Traditional Medical
was less than a $1000 in billed costsInsurance" policy for individuals and families. You pay
Hospital Admission About 30% of healthcare costsa monthly premium for an insurance policy covering a
are for in-patient hospitalization. The average lengthwide range of healthcare risks with a substantial
of a hospital stay is five days [2] with costs highlybenefit limit, often $1 million or more. Most Major
dependent on treatment. Heart Arrhythmia (irregularMedical Insurance policies now sold use a network
heartbeat) - Example from one of my clients =concept called a "PPO" or Preferred Provider Option.
$45,000 including an ER admission and then threeMost plans feature co-pays for doctor visits and
days in the hospitalprescription drug purchases which reduce the
Major Illness: Cancer (Lymphoma) - My brother overout-of-pocket cost of these routine healthcare
two years of treatment = $500,000+; It is hard toexpenses.
tell the actual total but when I called to see if myAdvantages:
brother was close to exceeding his $1 million lifetime
limit the expectation was at least $500,000 in paid1. Protection from the financial risks of a major illness
benefits to complete his cancer treatment.or injury
Chronic Illness: A chronic illness is defined by a medical2. Provider discounts if "in network"
condition lasting a year or more that requires ongoing3. Improves access to healthcare providers and
treatment. Examples are Diabetes, Asthma,treatments
hypertension and Depression. Approximately half of all4. Encourages preventive health treatments
Americans have some kind of chronic aliment [2].5. Reduced out-of-pocket costs for routine
Type 2 Diabetes - Average Annual Cost = $5949 [3]healthcare
Asthma - Average Annual Cost = $3192 [4]Disadvantages:
Put all of this in a gigantic pile and the average cost
of healthcare in Texas according to the Texas1. High monthly premium costs
Department of Insurance in 2006 was $7110 per2. Applicants must qualify based on health screenings
person. That is $593 per month per person.3. Generally, no maternity coverage
Admittedly that includes a lot of unhealthy and high4. Must use "in network" providers for lowest
healthcare uses but it provides some perspective onout-of-pocket costs
what healthcare costs. If you have not had a closeHigh Deductible Health Plan (with optional Health
relative, family or friend with a serious illness or injury,Savings Account) - This is a "Major Medical Policy" to
it is hard to imagine the high cost of healthcare. Valuegrapple with a major illness but only after an annual
in funding healthcare is more than helping with thedeductible is exceeded. An optional tax-advantage
cost of routine care. Value to me means grapplingsavings account (H.S.A., "Health Saving Account") is
with the risk of a major illness or injury.available to set money aside for healthcare costs
Choices for Funding Healthcareprior to reaching the deductible. A family insurance
Cash - Just buy it when you need it and pay what itplan that qualifies as a prerequisite for a Health
costs out-of-pocket. The big disadvantage of theSavings Account in 2009 can have a deductible of no
"Cash" or what I call the "If we are Lucky Plan..." isless than $2400 and no more than $11,900.
that you have no protection of the risk for a majorAdvantages:
illness or injury. We have over 24% of Texans
uninsured for healthcare with a fourth of the1. Protection from the financial risks of a major illness
uninsured on the "Cash" plan by choice --- about 6%or injury
of the entire population.2. Provider discounts if "in network"
Advantages:3. Improves access to healthcare providers and
treatments
1. No Monthly Premium / Fees4. Access to optional Health Savings Account to save
2. Ask for Cash discount from healthcare providerstoward future medical bills with a tax advantage
3. Available to allDisadvantages:
Disadvantages:
1. Monthly premium costs (lower than Major Medical
1. No financial protection from the risk of a majorPlans but still substantial)
illness or injury2. Applicants must qualify based on health screenings
2. Difficulty in accessing cares without insurance;3. Generally, no maternity coverage
some healthcare providers may require advance4. Requires making more choices on healthcare
payment5. Larger deductible and no expensive reducing
3. You pay the whole bill for medical treatmentco-pays
Discount Health Card - Buy it when you need it andAdditional Advantage of Optional Health Savings
pay less with an "Affordable Healthcare" discountAccount:
card. Essentially, you access contracted network
rates without a Health Insurance policy for an annual1. Reduced taxable income by amount saved in H.S.A.
or monthly fee. I look at this plan as a variation ofaccount
the "Cash" plan since you have no protection of the2. Use it or keep it --- any funds not used are
risk for a major illness or injury. "The FTC and manyretained for future medical expenses
states have found that although some medical3.