Self-Funding Clients

[Crabcake Johnny]

ROP for health insurance would be a con since the insurance companies know a client can't suck up the rate increases for more than 3 or 4 years. Mega had a ROP feature - added a huge amount to the premium and the client got his premiums back at age 65. Yeah, like anyone lasted longer than 18 months on a Mega plan without cancelling.

 

[Atlas]

" They estimated they paid $100,000 throughout their life and did not get anything for it. "

Could they also not say the same thing about home and auto insurance?

" How do explain the importance of not self-funding and taking on that risk? "

Ask them if they are willing to drop their homeowners insurance for the same reason. I'll bet they will tell you no way. Well one big health claim can take far more from money them than a home burning to the ground. Point this out to them and see what they tell you. If they do not get the point tell them to have a good day and walk away.

 

[J.R.]

I would agree with what they said, but explain that the HSA WILL refund them their money if they don't need it and will be available to pay medical expenses when they get on Medicare. I always do best case and worst case scenarios, and what each plan costs. Sometimes you just can't get through to folks.

Can you provide an example of what exactly you mean by explaining the best/worse case scenarios and costs?

 

[arnguy]

I was half-joking, John P. Those ROP programs in term insurance and DI add a lot of premium to the product. I haven't analyzed them, but I wonder if the return is really worthwhile. Any comments? BTW, I agree with you on health insurance ROP. I was not aware that Mega had a ROP plan.

 

[bluemarlin08]

I use this when comparing a co pay plan with a HSA. Recently had a client with a 1500 cp and coinsurance of 80/20 to a max oop inc ded of 4500 per person, 9000 per family. He is paying 850 per month. For best case I assume no claims, annual cost is premium of 10,200. Compared to HSA, annual premium of 4800 plus the tax savings of the HSA 1412 for annual cost of 3388.
Worst case assume 2 family members have a 25,000 claim , annual premium 10,200, max family oop of 9000, total cost 19,200. With HSA, annual premium 4800, HSA fund 5650 total 10,450 less tax savings 1412 equal 9038. I give the prospect a copy of this with a summary and ask which one seems to be the best way to pay medical costs.

 

[J.R.]

I use this when comparing a co pay plan with a HSA. Recently had a client with a 1500 cp and coinsurance of 80/20 to a max oop inc ded of 4500 per person, 9000 per family. He is paying 850 per month. For best case I assume no claims, annual cost is premium of 10,200. Compared to HSA, annual premium of 4800 plus the tax savings of the HSA 1412 for annual cost of 3388.
Worst case assume 2 family members have a 25,000 claim , annual premium 10,200, max family oop of 9000, total cost 19,200. With HSA, annual premium 4800, HSA fund 5650 total 10,450 less tax savings 1412 equal 9038. I give the prospect a copy of this with a summary and ask which one seems to be the best way to pay medical costs.

I use a similar approach. Is there anything else included in the summary besides the calculations?