Anyone voluntarily self-insure? Would you trade health insurance for cash?

[laohaire]

I renamed my title because I've discovered I'm not leaning toward an HSA as much as the cash (self-insure) option. I like the idea a lot - I'm just terrified to actually do it!! (Husband feels exactly the same). But here's my original post anyway:

==

I'm thinking about asking my employer to cancel our group health insurance and either put the money into an HSA or actually just give us the cash like a raise.

I'd love to hear pros and cons. Don't worry about the issue of convincing the employer, let's assume he would do either one.

For the HSA, the pros I can see are:
- Tax deductible
and... that's all I can think of.

If I got the cash, we'd put every dime into a separate savings account untouchable for anything other than medical (and dental) needs. Pros I can think of:
- I decide exactly what constitutes a withdrawal. I can go to a quack if I want. I also desperately need money for dental work, only 2 grand would cover it, but this option is the only way I can see that I could actually get this done. I absolutely consider dental health an integral part of whole body health and it's crazy that Western medicine considers it more cosmetic.
- If my life circumstance changes for some reason I can use the money for whatever I want. For example, if I move to Canada (not an impossible scenario) I can enjoy universal health care and have a wad of savings, rather than paying a penalty to withdraw from the HSA.
- I can put as much as I want into it. I understand the current annual cap is $5,800 per family. My employer is spending closer to $10,000 annually on my family's health insurance, so if he was willing to give it all to me (as a perk to him, I'd say it would be a fixed amount year after year, as opposed to the insurance premiums that raise 10-15% annually!!).

Cons:
- Not tax deductible

And cons versus just staying in the health insurance mode:
- Might not save enough to cover a catastrophe... then again, I don't have faith in the insurance industry that THEY would cover it either.

I just had some blood drawn, and I have to pay several hundred dollars out of pocket for it (deductible is $1,000/$2,500 - and my employer is paying $10,000 a year in premiums - they are making SCADS of money off of us and we are getting NOTHING out of it). I just feel like, what's the freaking point of being insured?

Yes, I know the point is WHAT IF. Is that good enough? Am I sure that the WHAT IF will be covered anyway? Frankly, DH and I could only think of 3 incidents in 7 years (since we started our insurance plan) where a treatment helped us, and only 1 of those was serious and expensive (still only a few thousand I think). (The others were a round of antibiotics, plus I just started anti-anxiety medication that I really needed).

I live in a state where we would have to pay $1,000 a year to the state as a penalty for not having health insurance. IS THAT STUPID OR WHAT. But it might be worth it. My employer pays me an extra $10k a year (that's a HUGE, HUGE raise, that's at least 25% of my salary). I pay some taxes on it. I pay my stupid state their stupid blackmail fee. And I still walk out with, what, maybe $7k in my special savings account.

Thoughts? I'll take "you're crazy" as well as "we do exactly that." Well, either way, I want to know WHY you think I'm crazy or smart.

[Vaske]

We have a HSA. My understanding is that you can only set up an "official" HSA if you also have a high-deductible health insurance plan. Our deductibles are $2500/$4500 and we haven't gotten anywhere close to them, even with a home birth (insurance kindly disallowed many of the midwife's charges).

I think the health care reform reduces the limits on HSA contributions, and essentially outlaws high-deductible plans in a few years, but that's only my recollection from months ago.

The benefit of the high-deductible plan, besides providing some coverage for catastrophic costs, is that you pay for services at the rates the providers have negotiated with the insurance company, rather than the full uninsured patient/client rate. You are treated as insured, even though the deductible is so high that you are paying out of pocket. If you self-insure totally, you will either be paying more, or you'll have to negotiate lower charges yourself.

For now, being in my prime childbearing years, I prefer to have the high-deductible plan and HSA. But later on, I could see that I might prefer to simply self-insure. I know of several smart, well-off, non-insurable people who do that.

[laohaire]

I could be naive but I'm thinking if I walk in there with a wad of cash to give them right then, I could negotiate the rates.

It's got to be more expensive for HCPs to collect their money from the bureaucratic insurance companies. Filling out all the forms and so on. Waiting several weeks.

But the thing is, they know they'll get paid. Whereas a self-insured person might not pay when the bill comes in the mail. If I wave around cash, that should be a win-win for everyone. Get it settled right now.

But maybe I'm naive.

[dizzysmom]

Originally Posted by Vaske

We have a HSA. My understanding is that you can only set up an "official" HSA if you also have a high-deductible health insurance plan.

I work with HSAs at work, and as far as I am aware you can only open an account and make contributions if you have an approved high deductible health plan. The rules as far as contributions, withdrawals, and eligible expenses are pretty strict too.

We have an HSA for our family (deductible for our less-than-stellar insurance is $2000 per individual or $4000 for the family). My employer is the one who kicks in most of the contributions for the HSA. We really like it, as we probably will never meet our deductible unless something big happens to one of us. Even last year with all of my prenatal expenses, I only jsut met my deductible the week before DD was born.

[Thystle]

Weird we have a HSA (first time with one) and we do NOT have a high deductable plan at all. Apparently that is not normal?




OP... follow your gut and be ready to own the consequences either way. Only you can decide what is best for your family.

[barky586]

The disadvantage of HSA

The main disadvantage is that it would not be sufficient to cover a major illness such as my daughter's very unexpected diagnosis of a very serious and rare disease called Vertebral Osteomyelitis. First year bills totalled $70,000.

[happysmileylady]

Something else to consider...if you don't have health insurance and something like cancer or diabetes or whatever comes up, the person who gets sick will likely become uninsurable later, if you want or need to change back over to traditional health insurance later.

[SunRise]

Originally Posted by happysmileylady

Something else to consider...if you don't have health insurance and something like cancer or diabetes or whatever comes up, the person who gets sick will likely become uninsurable later, if you want or need to change back over to traditional health insurance later.

With the new health reform (whenever it kicks in), I think this becomes a non-issue, non??

Originally Posted by laohaire

I renamed my title because I've discovered I'm not leaning toward an HSA as much as the cash (self-insure) option. I like the idea a lot - I'm just terrified to actually do it!! (Husband feels exactly the same). But here's my original post anyway:

I have selected cash/savings/paying out of pocket over health insurance, sort of.
For three years I have had private health insurance (my kids are covered by the state program which covers every kid, on a sliding scale).
I have been paying a lot for private insurance for myself (I am self-employed). After my child was born, I deliberated my options; downgrade to a deductible plan, catastrophic or no health insurance. Going to a deductible plan was pointless as I would still be paying the same out of pocket $ for doctors visits before I met the deductible as well as a monthly payment as I would with catastrophic/paying out of pocket.

I did downgrade to catastrophic (as I couldn't quite banish health insurance completely, yet); the savings I was getting by downgrading are significant (monthly savings of 750). This allows me to re-allocate a couple hundred to my own health savings account (and use it towards either doctors or acupuncture, homeopath, dentist etc, which I was paying cash for anyhow). And then the rest for other personal savings.

I was getting annoyed paying so much for health insurance (Note: I have no prescriptions or health concerns) and wanted to invest the money else where. I still have some level of health insurance (this plan covers mammograms and other preventive care things too, which was a factor in choosing this plan).

As far as paying out of pocket, previous to having health insurance, I had none for a year. I had a few health issues that led me to doctors (miscarriages, cat scan) and I paid out of pocket. And every appointment and place I visited gave me a discount, (up to 50% discount at labs (blood draw)! if paid at office visit). It saves the doctors, labs etc. admin costs when clients pay out of pocket hence the discount. SO its good to have a savings account for these kinds of visits.

factors in my consideration:
~Im 43 (done having children)
~Im healthy and rarely go to doctors outside of well visits (which I do not often go to)
~If I chose to go to an acupuncture or other homeo health options, I had to pay out of pocket. (was not covered my my health insurance)
~Dentist was out of pocket. (was not covered my my health insurance)
~Kids are fully covered by a state plan
~NY private health insurance is expensive!
~In my city, HSA is not an option, not a product offered for sale.
~I wanted to up my retirement fund
~Private health insurance was more then my mortgage ...150%
~Catastrophic option covered certain preventive care tests, which made this plan favourable
~I am a Canadian living in the US and when / if I return can get back on to the Canadian plan

[laohaire]

Originally Posted by barky586

The main disadvantage is that it would not be sufficient to cover a major illness such as my daughter's very unexpected diagnosis of a very serious and rare disease called Vertebral Osteomyelitis. First year bills totalled $70,000.

Yes, that is my fear.

I'm very sorry this happened to your family.

I just am torn about whether it makes sense to pay a health insurance industry scads of money just in case we get a rare disease.

I know it happened to you. But on MDC it's a common question: how do you balance the what-ifs? Many of us home birth and feel safer there, but there is certainly a chance that there could be some disasterous complication that would have been addressed in the hospital. On the other hand, there are the complications CAUSED by the hospital. So round and round we go.

I know for the mamas who have EXPERIENCED these things, it's different. It would be different for me too. I know it.

But to what extent do we live in fear? There are sensible things we do that cause no harm that just really have no drawbacks. We use seatbelts and child seats in the car. It's stupid not to. There are virtually no drawbacks.

I am a little extreme I guess but I feel there are big drawbacks to participating in this health care insurance industry. It lines the pockets of scumbags. My premiums also pay for lobbyists in washington who spend a great deal of money preventing Americans from getting health care (otherwise we'd have a single-payer system). It provides a false sense of security. I keep reading stories about families who had this or that medical problem and they spend their life energy fighting the insurance industry to get it covered. And often fail anyway. I also have major ethical issues with the pharmaceutical industry (and they are in bed with the insurance industry), and I know I'm not the only one on MDC who does. So to me, it's not clear-cut like a seatbelt is.

Originally Posted by happysmileylady

Something else to consider...if you don't have health insurance and something like cancer or diabetes or whatever comes up, the person who gets sick will likely become uninsurable later, if you want or need to change back over to traditional health insurance later.

I did think of that but my husband thought that the reform included a clause that required insurance to cover pre-existing conditions. He said he thought he remembered it would take place in 4 years. I'll have to look it up.

[laohaire]

Thanks, SunRise, for sharing your experience. Maybe the happy medium is to change to catastrophic and ask my employer for the saved premiums in cash, to go in my own private HSA.

But it depends on how much savings we would get from the switch, and whether catastrophic insurance is worth anything anyway. That's just one thing that gets me, insurance doesn't just cover what you need, it plays games.

Maybe what I really need to do is move to another country. Which I'm willing to do in theory but I really love my home and would hate to move

[happysmileylady]

Originally Posted by laohaire

I did think of that but my husband thought that the reform included a clause that required insurance to cover pre-existing conditions. He said he thought he remembered it would take place in 4 years. I'll have to look it up.

I have heard this, but haven't read the thing completely to know the exact details for sure. However, making the assumption that the reform bill will take care of it assumes that it won't be repealed (could happen, there are a few elections between now and then), it assumes that the insurance companies won't find a loop hole (which, if I recall they already did with the child portion of that, which was supposed to take place sooner) and that there won't be any changes to the law even if it isn't repealed

[zebra15]

For example this weekend my roommate broke her arm. Total freak accident. So far she has been to the ER, had X-rays, and the whole ER experience (probably 5-7k) and left with a splint. Today (thurs) she was seen by an orthopedic dr, more x-rays and had her arm re-set. This orthopedic re-xrays and re-casts every 2 weeks until the break is fully healed. Todays office visit is probably around $500, and each subsequent office visit will be close to that amount. She is unsure if there will be physical therapy. This does not include any RX she needs for pain.

One broken bone can run $10k easy. Just something to keep in mind.

[newbymom05]

We have an HSA w/ a $2400 deductible. I'm 41, DH is 42, kids are 5/2. We're all healthy, and every year so far we've hit the deductible, as have most of DH's coworkers w/ kids. My DH has recently had some melanomas removed--insurance was billed $895 for each, and that's their *negotiated* rate. I can't imagine what they'd try to charge an uninsured person. With our high deductible, we often debate even going to the doctor, so if we were uninsured, for example, I don't think my DH would be going to the dermatologist every 6 mo as he's advised to do.

I don't know, it's tough. Our deductible is high, but still MUCH cheaper than going private, and based on our expenses so far, I don't think out-of-pocket would save us anything, and of course we get the tax break for our deductions.

I despise the health insurance industry's business model and hoped for single payer to pass, and I certainly DON'T want to give them even a penny of our money, but for us that's a luxury we can't afford.

ETA Maybe I've just only gone to greedy doctors/hospitals, but I've never experienced an uninsured rate being cheaper than the insured. When I was uninsured, it seemed the doc's idea of discount or working w/ me was to give me a payment plan.

[laohaire]

$10k for a broken bone seems doable in my cash scenario. In 2 years we would have saved up enough to cover that and have more left over.

Obviously something like... cancer... would be another story.

The PP who ran up a $2400 deductible every year... WOW. This year so far I've spent $275 out of pocket for bloodwork I did yesterday. Of course there was a doctor appointment or two as well, which I only paid $20 copay for, I assume the appointment is more like $100+. So I'm just thinking I spent $500 in cash so far this year (obviously we're only halfway though). So let's double that and say we spend $1000 by the end of the year, then I have $6000 sitting in the bank (gaining a bit of interest as well).

The problem, obviously, which we'll go round and round on - is that's the good scenario. The bad scenario is something I don't even want to type out, and it costs $250,000 a year. Then again, what are the odds that it will be covered anyway?

What are the odds I'll spend more than $7k a year on health care, and what are the odds that if I do, it would have been covered by the insurance?

That's rhetorical, I know nobody is going to be able to quote me a number.

I think I will defect to Canada I'll announce that my 1/4 acre plot is now part of the Quebec province, I'll send my taxes to Canada, I'll celebrate July 1 and sing O Canada at ball games.

I'm only half kidding.

[shelbean91]

Not exactly for cash, but I sort of did something similar. I am a teacher and I cover the family with my insurance. To cover myself is almost nothing. To cover kids only is about $150/check - which is something like 20 pays, as we don't get paid over the summer. To cover dh and kids would be 374/check! Dh is healthy and rarely goes to the dr, but for $200/check, I'm almost willing to take the risk, but not quite. So, I priced private insurance and found a pretty decent one for $150/month - a bit higher deductable than the district insurance, but it is medical and dental and seems to be good. This is the first month we've done this, but I think it will work. If not, I'll cancel and add him back to mine, but we're now saving a significant amount a month.

[iowaorganic]

we had a BCBC Gold policy for years and then it just got to be way way more that we could possibly afford. (self employed). So we switched to a HD HSA plan. It was great- as in it taught me not to go to the dr for every little thing- a lesson I didn't realize I needed to learn. This year we dropped it altogether. We do however have an AFLAC accident policy- which I love.

He is a little example- last week DS1 was screwing around and stood on a chair- fell over backwards and split his head open on a cupboard handle. ER visit with 5 staples. $308 for the visit and $71 for the staples + dr time (billed separately). I called the next morning and negotiated a 20% discount for paying in full- I would have done it that day- but actually they gave me until Sept. 1st. AFLAC will be sending me a check for $120 for the ER visit, + laceration length +$35/staple. So- really all I will be left owing is the dr's fee. All for $50/mo for our whole family. Definitely a better return than traditional health insurance- when you are healthy and don't seek conventional medicine normally- which we don't.

If you and your family is healthy and willing to take the risk- then go ahead and drop your coverage. But seriously think about an accident policy- it makes me never question going to the ER.... which with little kids is a bound to happen right?

But definitly ask for early paying discounts- definitly worth it- after all- you are the one with the cash- that they may or may not see for quite some time.

[VisionaryMom]

I think you really have to assess your comfort with risk. My husband, who'd been healthy and athletic suddenly developed an auto-immune disorder at 21...no warning, and not a rare illness. So the charge for his monthly medication is around $1,100. He has dr visits & bloodwork 4 times a year - $500 each. That's all assuming normal treatment. If he hadn't still been on his parents' insurance when that happened, there's no way he could pay for all of the costs (which all of his insurance companies have tried to deny when he's a new subscriber).

[mnnice]

Since 2002 my employer has offered me cash in lieu of insurance. Currently is $600 per month and I have used it to fund my 403(b). So yes I would trade health insurance for cash.

I don't voluntarily self-insure. Conceptually I have no problem with it, but IMO to trully be self-insured completely you have to have lots and lots of money sitting in cash (at least six figures). I think to partially self insure with a high decutible plan can make a lot of sense and is something a lot more people could do feasilble (i.e. the OP)

I have taken it every year except for the year my DH was laid off then we took the insurance. We have always had coverage from DH employer (although it has always been inferior to the coverage I have).

[montlake]

When you mention the employer giving you cash, are you talking about just saving the amount YOU contribute now, or are you talking about the employer giving you the amount THEY contribute? If you mean the employer's contribution i don't think either is an option. I find it hard to believe they would make those funds available to you.

[seeing_stars]

We have a plan with fairly low premiums, a $2400 deductible that the employer pays half of. We have met our deductible every year for various reasons- one year it was hyperemesis requiring multiple ER visits and a zofran pump that would have cost 40k , the next year it was 2 knee surgeries to correct a genetic condition, so far this year it has been tonsil and adenoid surgery, decompression for bulging disks/pinched nerves and there will be 2 more knee surgeries. Those things combined would have been more than 100k if we were cash pay. Our employer pays 15k/year for our family premiums so the benefit of insurance has outweighed the cost. I would not feel comfortable even thinking about it without A LOT of cash on hand.