The Importance of Health Insurance

Ive talked about my health insurance in the last couple of posts, but today I got the explanation of benefits summary from my insurance company.� I didnt realize how much of a difference the negotiated rates make if you go with a provider that has signed on with your insurance company.� I realize this is extremely important for HMO and other network-based plans, but for my plan (I basically go to anyone I want without any hoops to jump through), I didnt think it would matter.� Turns out, it matters more than I would have imagined.�� Let me give you an example:

I had surgery to put in a screw in my foot.� The bill for that (not including anesthesia – thats a different bill) was $2250.� Since this provider has an agreement with my insurance company, they are only allowed to charge me $884.�� Since I have a high deductible that I havent used yet, I have to pay that $884 amount, but if I didnt have health insurance (and if the provider wasnt signed on with my insurance company) I might have had to pay the full $2250 – $1366 that I get to keep because a pay a little bit each month to my insurance company.� Not a bad deal huh?

So if youre thinking its ok to go without insurance, just think about this – it may cost more upfront to have it, but itll really pay off when you need it.� I did learn that I need to check out the providers beforehand when possible – since I might be liable to pay the full amount if I happened to choose one that wasnt signed on.� In my case, all of the providers I used turned out to be registered, but I didnt check before I went to them so it could have turned out much more costly – even with the insurance.� It just goes to show how taking a little more time upfront and making smart choices can really pay off down the line.

What Ive Learned About Risk

Thus far in my life, Ive typically played things safe whenever I had a choice with one or more risky options. Over the last year or so, Ive been trying to re-orient myself to better deal with risk. I certainly dont think there is anything wrong with playing it safe – the big benefit is that it allows you to feel more in control (notice I didnt say be). On the other hand, it also limits your potential in many ways. It has taken me quite a long time to realize this – Im not sure exactly what figured out to change my perspective other than the new experiences that come with joining the real world after college (plus some experiences near the end of college). So – I thought I would share my observations about taking more risks in case it helps anyone else re-evaluate his or her stance on the issue. Here are the three keys to taking on healthy risk:

Dont be stupid.
When you have a choice between two options, dont blindly choose to take the extra risky choice. It may be that those decisions work out to be the best you could have made, but there are going to be very few times when you have so little time you dont have the option to think through the impact of those decisions. Dont seek out risk for the sole purpose of being risky – youre probably not going to get the outcome you expect. When you have a choice, just think it through.

Never overestimate how much control you have over anything other than your own choices.
Whether you choose to play it safe or be on the risky side, youre probably not in control as much as you think. One of the few things in this world that you have the power to control is your choices – beyond that, you can only hope things go as planned. Youll never figure out how to 100% guarantee that 20% yearly return in the stock market year after year, youll never control who loves you and who hates you, youll never even be able to completely predict exactly what youll be doing an hour from now. This point should be pretty obvious with risky choices since thats part of the definition of risk, but from my experiences, even safe bets are still just that – betswith no 100% promise that youll get the outcome you expect.

The fact that you cant control something doesnt mean you should let it control you.
You should also remember that the world isnt out of your control as it might seem sometimes. Even if the only things you are in complete control over are your choices, you still have a very powerful tool. If you know youre taking on a risk and you can tell what the possibilities are (both good and bad), then plan for each. You shouldnt expect bad to always happen, nor the good, but you shouldnt be surprised when either one happens.

A recent example of all of this from my recent experience involves my health insurance policy I recently signed up for at work. (I blogged about this not too long ago so if you read that post, this part will probably be a repeatjust FYI.) Basically, I had the choice of signing up for 1 of 3 different plans (or none at all). The plans range from nearly ~$100/mo which covers everything at 100% with no deductible to a ~$4/mo plan that covers 80% of most things after a $1500 deductible. I havent really been sick much at all over the last couple of years – in fact I cant remember any time Ive been to the doctor in quite a long time other than once a couple of years ago for a spider bite. Now for the last 6 years, Ive pretty much been in the classrooms or labs at college most of the time and done very few dangerous things – I have the typical college student diet so thats probably not all that great, but it hasnt been a problem thus far at least. In the past 2 months though, the situation has changed to where I own a house now and have many more opportunities to get hurt, Im 6 years older, tons of stress in changing to a whole new lifestyle in a different state 350 miles from basically everyone I know, and all of that good stuff.

So from my point of view, the safe bet would have been to pay the $100/mo in case anything happened. If nothing happened, then I would lose quite a bit of money. If something did happen, everything was more or less taken care of. Naturally, the $4/mo plan was the most risky – if I didnt use it, I would be able to save up quite a nice chunk of change and wouldnt feel like my money was wasted. Of course, if something happened, itll hurt (physically and literally).

My choice was the $4/mo plan. BUT, what I did was think through how I would handle it if I DID have to use it. I decided to put the deductible and + the remainder of the out of pocket maximum into an ING savings account. If I dont need it, its already stashed away and earning interest. If I do have to use it, its right there an will be back in my checking account within just a couple of days. I went into everything understanding that I might have to use every bit of this savings at any point if something happened. And if I had to do that, Id have to refill it to the same level by the next year if I want to maintain this insurance.

Well – the unexpected happened. I tripped in my garage and broke my foot. I had to drive myself to the emergency room, get some crutches and all of that good stuff, go see a specialist, have surgery to put in a couple of screws to hold the bone in place, and Im still waiting to see what else Ill have to do. Now I dont have the bills yet, but I would be very surprised if I dont burn up my stash by the end of the year. The good thing though, is that Im not caught off guard. I hadnt planned to use the money on anything other than medical expenses, I had already thought about the possibility of something like this happening, and now Im adjusting my plan according (mainly to divert funds to refill this account ASAP). I still stick by my choice though – this was one of the times when taking the risk cost me quite a bit, but because of the choices I made to plan for the good and the bad, it didnt really impact me (at least financially – not being able to walk for 6 weeks is a bit of a physical impact).

Looking to save a little cash? Cut the cable!

For the 6 years I was in college for undergrad and graduate work – I had Comcast Cable as my broadband and cable provider. I didnt have many problems with them – the service was generally good, the modem speeds were fast, and things werent too bad – except the bill each month was around $100 for the standard cable package (no digital content, DVR, etc.) with 6.0 Mb broadband. Well, when I moved to Tennessee to start my new job, I decided I was going to cut the cable and try going without Comcast for a while. I still needed internet of course, so I looked around and BellSouth has a 3.0 Mb DSL package that I decided to go withsure, its a little slower, but its also a little cheaper. The main reason I dont care about speed is this: if you actually watch the total amount of bandwidth that youre using at home on your high speed internet, Im betting you would see that youre not getting anywhere close to 6.0 Mb/s or higher. Sometimes you might be, but most of the time, your download speed is going to be limited much more by the server that has the content you want than your actual connection. I really hadnt given it much thought until recently, but now that Ive looked into the issue, I really wasnt getting that much extra bang for my buck with the faster connection. In fact, I can hardly notice the difference at all even though I cut my speed in half.
As far as the actual TV shows, I still get those, I just dont pay for them anymorebut its still legal. How can I do this? Simple, just go to your local discount store and buy a nice antenna to put next to your TV. Mine cost around $30 and has a built-in signal booster and HDTV reception (although I dont have an HDTV so it doesnt help). You may have to fiddle with it a bit to get everything positioned properly, but when you do, you should be able to get the major channels like FOX, ABC, CBS, and NBC without much trouble. Sure, I miss Sci-Fi, Cartoon Network, Discovery (and related channels), HGTV, etc – but now I can still see several of the shows I like (e.g. House is great if you havent seen it), but I dont lose the $50 a month on cable programming. In addition to the cost savings, I also have more time nowits less tempting to plop down in front of the TV and chill out if you dont have many channels – Ill sit down and watch a show or two when something I really want to see if going to be on, but I dont just flip through the channels anymore just to find a show to waste time – so Im actually making myself a bit more productive this way too.
In the end, my total cable / broadband bill went from right at $100 to about $40 – I still have about the same level of quality and speed for my broadband service, still watch most of the key shows I enjoyed on TV before, and I have $60 more per month that I can use as I see fit. Of course, I did have to buy the antenna, but to hook cable up here would have cost at least that much – for cable and Comcast broadband, I was looking at a connect charge of over $100 right there (mainly because I would be required to have my cable modem professionally installed here for some reason and thats a $99 charge alone last time I checked). So far, Im very happy with my choice – I think my family was more upset with it than anything because they like to watch TV when they come and visit, but I think they have even been able to find enough to watch on the few channels I have that its not as much a problem as either of us thought it would be. So if youve been thinking about ditching cable, my suggestion is to try it for a bit (but be aware of the costs to reconnect it should you decide to disconnect and then have it hooked back up – the best time to try this is when youre moving since youll have to disconnect and reconnect anyway).