Wednesday, October 12, 2016

When a Benefit becomes a Detriment


It’s that time of the year again when we have to take a look at the benefits that our company offers and lock in our elections for the coming year. I just finished making my elections and it made me want to put together some thoughts about benefits that I’ve had for anyone out there who might be going through the same thing.

First off, I’d like to come clean and make a confession to a bi financial mistake that I made when I first started getting a benefit package from my employer. When I had to make my first benefit elections we approached it with the following mindset:
1)      We have to have medical insurance
2)      I have glasses so I must need vision insurance
3)      We have teeth so we better get dental insurance
4)      Everything else is a luxury intended for people who aren’t very healthy
The hard part about insurance is that you can’t predict the future so it’s always a bit of a gamble. But now that I look back I kick myself for accepting their dental plan based solely off of the assumption that it would be the safest financial decision and that we must need it.

The first year that we had this insurance we were charged $1,655 for a family dental plan. We all had cleanings and an x-ray and that was it. For the 3 of us we could have paid out of pocket for the same services and it would have only been about $800. So we paid an extra $855 that year for the option to have the insurance company pay up to $2,000 for dental expenses after we met the annual deductibles.

Last year we decided to forego the super expensive dental plan and self-insure our dental care. We each got 1 cleaning (we didn’t take the little boys in since all they do at that age is count their teeth, brush them and charge you $100) and we paid a total of $222 for our dental care. So, just be redefining what benefits were needed in our own paradigms we were able to save our family $1,433.

At the same time we also dropped the vision coverage we had on me because I got new glasses out of it and we found that my prescription hadn’t really changed enough in the past 5 years to warrant needing it again for a few more years. Dropping that saved us another $84.

The main takeaway that I want you to get out of this is that you don’t have to sign up for it just because it’s offered. There are times when it doesn’t make financial sense to pay for insurance. So take the time to really look at your options and the costs and rewards of each one.

And just in case you were curious – here are our current elections and costs that I just made for the coming year. (Total Cost = $7,106.68)
1)      Medical Coverage (Total Cost = $4,065.48) – I chose the cheapest plan (partly because it was the cheapest and mostly because it allows us to have an HSA). Our family deductible is set at $3,000. 15% coinsurance, $6,550 Out-of-pocket maximum. All preventative and maternity prenatal visits are covered 100% and everything else is covered 15%. We had the same plan last year and it increased by $414.36 over last year.
2)      Health Savings Account “HSA” (Total Contribution = $2,350) – If you have the option to get an HSA you should strongly consider it. The annual contribution limit for a family this year was $6,750 but we chose to just leave it at the same amount that we contributed last year.
3)      Dental Coverage (Total Cost = $691.20) – Yep, like a dog to its vomit we went back to dental coverage this year. But, notice that it is considerably cheaper this time around so it is starting to make more financial sense to have it. At our cleanings this past year we made sure to get the dentist’s opinion on if our teeth looked like there might be anything major brewing that would warrant us needing insurance and he thought we’d be just fine without it for another few years at least. But now what we have 4 of us that need to be going to the dentist we would expect to pay at least $700 for us to all have the 2 cleaning and 1 set of x-rays that the insurance plan offers us for free. We figured that we would probably spend about the same amount to properly take care of our mouths on our own as we would for insurance. So we decided to get it to insure that we actually go get the proper care done instead of trying to save money and cut corners that would cause bigger (more expensive) problems down the road.