Dropping My Employer-Sponsored Health Insurance

Health Care LogoWell, not quite, but this is the first step. Like most Americans, I currently have health insurance through my employer, which unfortunately acts as a double-whammy in the event of job loss: If you quit or otherwise lose your job, you also lose your health coverage, or have to pay through the nose for temporary access to COBRA. So-called corporate health insurance therefore functions as a set of golden shackles binding people to jobs they may no longer enjoy just for the sake of keeping affordable health coverage for themselves and their families. For someone considering early retirement or self-employment, this is a giant disincentive.

Frankly, the general practice of corporate health insurance is a blight on our society that should be terminated, and if I were a politician, I would immediately push to remove the corporate tax incentives that serve to marry employers and health care in the first place. I see this as a boon to business owners, small and large alike, as it would free them from the hassle (and paperwork) of negotiating with insurance companies, and in an ideal world, employers could take the extra cash spent previously on supplementing health care per employee and instead give it directly to that employee in the form of salary, who could then use the extra money to purchase their own health insurance on the free market. My zeal in taking on the status quo might mean the rapid and relentless downfall of my own political career, but I suppose that’s why I’m not a politician. 🙂

My own humble viewpoint is that I would prefer to see America put into place a single-payer, universal-coverage system of healthcare that pretty much every other civilized, first-world nation enjoys. Getting sick should never mean going bankrupt or losing your house. But to even mention such an idea – or to even express concern for the general welfare of the least among us – means getting drowned out by shrill, repetitive, and unyielding cries of Socialism!, Fascism!, Communism!, and other such conflicting, non-nonsensical -isms, no doubt screeched by the very same people who send their kids to public school, drive on public roads, and enjoy the use of public libraries. If their houses catch on fire, I seriously doubt they would complain if the city-owned Fire Department rode to their rescue. Socialism, indeed.

Short of a single-payer system, I propose the following permanent revisions to our existing system, at a minimum:

  • End tax incentives to employers, thus decoupling health insurance from one’s place of employment.
  • Every citizen purchases health insurance on the open market, minus military and those eligible for Medicaid.
  • Denying coverage for pre-existing conditions is outlawed, as well as banning the imposition of a lifetime limit.
  • No one who applies for coverage on the open market can be denied, and no one can be kicked off a plan for getting sick.
  • Private insurers can use no more than 15% of premiums on overhead, or risk paying fines / reimbursements to customers.
  • Offer tax incentives to the private insurers for voluntarily developing exercise-related programs for customers – Example: For all customers who wish to participate, the insurer sends them free pedometers and offers premium rebates for tracking/increasing the number of steps taken daily. Such plans are already in existence, and efforts to expand them should be rewarded, as they directly reduce the overall cost of health care.

These propositions sound awfully similar to the Affordable Care Act (aka Obamacare). But this is a topic that wades into dangerous political territory where emotions run high and every solution has its complications, so I’ll step down from my soapbox now.

My Employer-Based Insurance Options

And now we return to our coverage of employer-based insurance. I’m lucky (?) enough through my employer (a private university) to have a choice in plans, which basically boils down to:

  • A 90% coverage plan (most expensive, lowest deductible)
  • An 80% coverage plan (middle of the road)
  • A 70% coverage plan (lowest premiums, highest deductive, HSA eligible)

At my previous employer (a public university), we had only one choice: Opt-in to the expensive plan, or not.

My wife and I are currently covered by the 70%, high-deductible plan. When our first child is born later this year, our premiums will go up. Employer-sponsored insurance to cover our family will cost $849 per month (WTF?), though my employer subsidizes the amount, leaving my out-of-pocket monthly premium at $240. Not too bad, considering that if I were to opt for the 90% coverage plan, the gross premium would be $1,395 monthly, and my portion would be a mere $786. Ouch.

If I were to drop the rest of my family from the 70% plan and keep only myself, my out-of-pocket monthly premium would only be $20. Plus, my employer kicks in $50 monthly to my Health Savings Account (HSA), meaning that my net cost is actually negative $30. Incentives are powerful things.

My Open-Market Insurance Options

Since early retirement is hopefully in my future, our family will no doubt need to acquire a health insurance policy on the open market. I plan to do this in two steps:

  1. After our child is born, acquire a high-deductible policy on the open market for wife and child, keeping my employer-sponsored policy for myself, for now. What can I say? I’m not willing to give up the extra $50 that my employer kicks into my HSA each month. Yes, incentives are powerful.
  2. When I retire in 5-10 years or so, I will join my wife and child on the same open-market plan.

To get started, all I’ve done is go to eHealthInsurance.com and search for HSA-eligible plans. Current quotes in our ZIP code for my wife and imaginary one-month-old child begin at $134.85 monthly, though the first realistic plan costs $162.48 per month. After all, who wants a $20,000 deductible? Not me.

If my wife and child can get private coverage at $162.48, and my coverage through my employer only costs $20, then this works out to a slightly better deal than covering all of us through work at $240 every month, even considering that the employer-sponsored plan is paid with pre-tax dollars. Plus, I have the added satisfaction of knowing that we’re helping to decouple employers from health insurance, at least in our own small way.

In a worst-case scenario, we can always go back to my employer-sponsored insurance if the open-market policy premiums rise too much, but considering that my employer-sponsored premiums tend to rise each year as well, this is not a likely scenario.

Maybe I’m crazy, but I like this plan. My wife is fine with it, too. I can’t change my current health-care elections at work until December 1st, so I have until then to reconsider. We’ll see if that happens.

If you have dropped your corporate health insurance in favor of the open market, or otherwise think I’m foolish to even consider such a thing, I’l love to hear from you.

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