IQ expert Jason Beans: Employer-sponsored health insurance may not be your healthiest option
Q: If my employer offers health insurance, should I take it? Or can I do better shopping for health insurance on my own?
A: Many factors come into play with this decision, but mainly, it all comes down to how healthy you are and what you can afford.
Most employers subsidize some portion of the total premium for your health insurance. If you decide to buy a policy on your own, you’ll have to foot the entire bill; in some states, that could be quite costly. Your employer also has volume and buying power. The larger the employer, the more likely it is to be able to obtain lower rates.
Health Insurance Checkup
|Jason Beans is CEO of Chicago-based Rising Medical Solutions, a medical cost containment/care management company.|
The reason policy costs vary from state to state is basic supply and demand. In some states (such as California and Nevada), you have numerous carriers competing for your business. That competition lowers costs. Meanwhile, in a state like Illinois, you have one major carrier that owns a significant portion of the market share, so it can charge higher rates.
If you’re a relatively healthy person who just needs a very basic policy, such as a high-deductible health plan, and your employer offers only a high-cost traditional PPO health plan, it may be in your best interest to find a low-cost, high-deductible plan. That will cost less each month than your employer’s insurance.
However, if your employer already offers a low-cost, high-deductible plan, I’d recommend staying with your employer’s insurance. The reason? You can take advantage of tax-saving options such as pretax premiums (also called cafeteria, POP or Section 125 plans), and health savings account (HSA) pretax deductions and employer contributions.
You may be able to get a better rate on your own if your co-workers have significant health issues, and you are healthy and in a low-risk category. A few high-risk employees can drive rates up dramatically for everyone at your office. This is especially true at smaller employers. If your rate is really high, shop around. There’s no harm in looking.
But if you’re someone who uses your health plan frequently throughout the year, there may be a danger in getting a policy on your own. You may pick a policy that doesn’t provide you with adequate coverage for emergency care or a policy that has other restrictions.
Bottom line: Do your homework. Go ahead get a quote and see what’s out there. Just make sure you don’t miss your employer’s enrollment periods, as most plans have a limited sign-up window each year.
Jason Beans is CEO of Chicago-based Rising Medical Solutions, a medical cost containment/care management company serving the workers’ compensation, group health, auto and liability markets. Beans founded Rising in 1999. Since then, Beans has received a number of honors, including Business Council Advisory Man of the Year and Midwest finalist for Ernst & Young Entrepreneur of the Year. Rising has appeared several times on the Private Company Index’s Top 10 Growth list and Inc. magazine’s Inc. 5000 list.
Beans earned a master’s degree from MIT’s Entrepreneurial Masters Program and a bachelor’s degree in finance from Boston College.
For more information, visit www.risingms.com.
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