Updated: Oct 4, 2018
You lost your insurance and get a call from someone who said they have a great plan for dirt cheap, do you buy it?
Cheap plans, what are they? What do they look like?
In the insurance world there are many Cheap Plans. These are the plans who quite frankly sound too good to be true and have a ton of "coverage" for very little money. Well guess what guys, if it is too good to be true then it definitely is! In the insurance field you get what you pay for and I am sorry to be the bearer of bad news but insurance is expensive and unfortunately is time we all accept it. As you shop for a new insurance plan please beware of these plans because they can end up costing you a ton down the line. Here a few things to look out for.
No Deductible? How much per month? Sign me up!
Yes, there are plans with No Deductible out there, these might or might not be right for you. Depending how they are structured they can be beneficial to some young people. However, these are not recommend to anyone over 40 unless you can’t afford a full health insurance policy. These are not considered to be Major Medical plans because they only pay a Hospital Indemnity or a maximum dollar amount per situations. Unlike plans with deductibles, these hospital indemnity plans start paying right away which sound great but then after the coverage ends you will be stuck paying the rest. For example, if you go to a hospital for 5 days and your bill is $20k. It is a possible your plan only paid for $1,000 per day while you were in the hospital, totaling $5,000 per that hospital stay. What happens to the other $15k? Well you will be responsible for it, doesn’t sound so great now right?
This is why this plan can be useful for young individuals who are less likely to have a hospitalization and are on a strict budget. They are very cheap but it is better than nothing.
High Deductible, how much per month? Great, I don't get sick anyways, sign me up!
High deductible plans exist to those who think “I just need insurance in case I get sick, $10k deductible no problem”. Now the issue here is that most of these people do not understand how their plans truly work or how a deductible works. Most of these high deductible plans have no doctor copay or medication copay until you meet your deductible which is outrageous. Say you get sick and need medical treatment, the doctor will give you a bill for $250 and unfortunately that comes out of your pocket because the insurance will not pay for it. Another example, say you were cutting up vegetables and sliced your finger and need stitches. Those 5 stitches might run you around $3,000 guess who pays for this? Well unfortunately your deductible has not been met yet so this will be you. Now, on top of your high deductible you might also have a co-insurance of 60/40 which means even after you paid the first $10k you still have to split the rest of your bill with the insurance 60/40. Again, high deductible plans can be very dangerous because if not understood correctly you may actually be in a situation where you are emptying out your savings to pay for a medical emergency.
Major Discounts up to 80%, sign me up!
Now these are the Discount Plans. I simply despise these Discount Plans, Notice the “UP TO” well that is worded like that for a reason. Most of us might think 80/20 split right, well not really. “Up To” means that your coverage can be 5%, 18% or 60%. Now, what most of these discount plans do not tell you is that national average for these discount plans are about 46%. Even on a major hospitalization 46% discount can leave you with a hefty bill destroying your savings account. What is really dangerous is that most of these plans are sold disguised as health insurance and when you go use them you are stuck with a huge bill. Please beware of these as well.
So are they worth it?
As you can see, Cheap is Cheap for a reason. No Deductible, High Deductible and Discount Plans these are all plans that can very dangerous. They sound great at first but then all of a sudden you have to pay almost everything out of pocket. In many situations you might even destroy your savings account just because of one of these plans. Remember if it sounds too good to be true, it probably is!
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