November 18

Coffee with Mike- The Role of Insurance



Welcome again to coffee with Mike. I hope this is not your first time but if it is, we're glad that you joined us. What we are doing is making a series of videos helping you understand more about how I think through an issue, and how I might help you make a decision. If that appeals to you and if it's something that you think would be helpful to you, then we would invite you to work with us to see how we can help you put together a plan (and actually act on that plan), to be able to build the future that you are envisioning. That is really what we are trying to do here: to help you understand how we go about it, and how you might like to go about it.   

Today I'm really thinking about the role of insurance in our lives. I think that a lot of people forget about the role that insurance is supposed to play. When people talk about health insurance, for instance, I think a lot of people think about how much the co-pay is going to be at the doctor's office; how much the co-pay is going to be at the specialist's office; how much the co-pay is going to be if I go into the hospital. They think about it in terms of co-pays. Then, of course, they want the lowest premium possible. Or maybe they are willing to pay a higher premium because they want the least amount out of pocket.  But I believe they begin looking at insurance as though it's more of a payment plan as opposed to what its real function truly is, which is to help you to avoid catastrophe. 

Insurance is not necessarily about helping you pay less. It's about helping you avoid a financial catastrophe in any given area, depending on the type of insurance you are actually considering. For instance, life insurance is to help your family avoid a financial catastrophe because you passed away, or you had an untimely death. Disability insurance is there to help you avoid financial catastrophe because you're no longer able to earn income. Property insurance is about avoiding a catastrophic loss because you've had some natural disaster occur.  

All these things are different, but they all have one common theme, which is that we bought the insurance because we wanted to avoid a financial loss. We wanted to avoid a financial catastrophe. If we looked at insurance this way, we might make our insurance choices a little bit differently. Open Season for federal employees started the second Monday of November. Your question is that do you want to take a look at what health insurance plan you're currently using, and do you want to continue to use it the next year, or should you make a different choice?  
Consider this question: If insurance is really about helping me to avoid a financial catastrophe, then is this really the right plan for me? Am I spending too much money because, really, this is overkill. This is too much - I'm over-insured. Or is there going to be a financial catastrophe, because I didn't take it seriously enough, and I'm not even enrolled in health insurance. Or, I don't have an adequate plan. I want us to think about it that way, because I think it will help you have the right pair of glasses/the right perspective to consider what it is you're really looking for when you're looking for a health insurance plan.  

FEHB is a really good plan - Federal Employee Health Benefit Plan - FEHB - is a really good program. It has 15 to 20 plans, practically in every location that they have federal offices where they have federal employees. I think that all their plans are worth considering. The question is what's the right plan for you? The right plan for you takes into account what you already have in the bank, and what you can afford to take out of that savings account or that checking account in the event of some unexpected medical event. Also, how you would replace that money back into your account; how you would pay the doctors; how you would pay the hospital; how you would pay any medical provider; and how you would go about getting that claim paid through your insurance company. All that matters!  

"Insurance is not necessarily about helping you pay less. It's about helping you avoid a financial catastrophe in any given area..."

It's not just one thing - it's all these things. How do we help you put it together? How do we help you figure it out? It's going to be a different answer for different people. Yet, I see 98% or 95% (or whatever it is) of federal employees enroll in the exact same plan or at least with the exact same company. Not to say that's a bad company - it's a great company. But that's not to say that these other companies don't have something to offer, and maybe something better to offer you this year.   

So, when we look at a financial plan, we're thinking about catastrophic loss, and how we avoid it. We are thinking about what features of the plan fit me, and fit my medical team.  My doctors, the hospital that I prefer, the prescriptions that I currently receive, and all the other things that might matter. How do we put all that together for you to make a good choice? That's what we're here to help you do, and I hope you will take an opportunity to look at our website, You will see some help there on how to make a healthcare benefit selection. We hope that will help you.

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