How to buy a $1,200 policy without breaking the bank
The most popular insurance policy in America is a one-year, $1.1 million policy from a small insurer, but it can be more expensive than many people think, says a former government official.
“This one-time-only policy is a big bargain compared with many other kinds of insurance, especially for the middle class,” said Gary Cohen, a former director of the Office of Management and Budget who is now the director of research at the Brookings Institution, a Washington think tank.
“It’s not necessarily a bargain.”
A $1 million annual policy typically costs $7,000 to $10,000, but the cost can be as high as $20,000 for a single policy, Cohen said in a phone interview.
He said that even a one percent increase in premium would not lead to a big savings.
“That’s not going to be enough for most people,” he said.
A large part of the cost of an average one-off policy is in the deductible, which is usually between $1 and $2,000.
Insurance companies are required to cover all medical expenses, including the deductible and co-payments.
Some insurers have waived deductibles, but that often means some people can end up paying more for coverage than they would have otherwise.
Cohen estimated that the average one year policy will be about $1 per month, and he said a one year of coverage would cost $1 billion or more.
Many policies are not even worth the premium, he said, because they offer less coverage than most other insurance plans.
But a $2 million policy can cost $8 billion or $10 billion, depending on what it covers and what it’s deductible, Cohen added.
A $10 million policy costs $20 billion or less.
Cohen said a policy might be cheaper if it covered the deductible alone and included co-pays and other co-insurance, but he said many policies don’t do either of those things.
He pointed to a policy offered by Aetna that has a deductible of $500,000 and an annual deductible of between $10 and $25 million, with the $500 million deductible going toward an annual out-of-pocket expense.
The Aetanx policy covers the entire deductible and out- of-pocket expenses, but Aetanix does not cover the deductible for out-patient services, Cohen noted.
Aetanox, which does cover the out-pocket for outpatient services, did not respond to a request for comment.
Cohen also noted that many policyholders have had their premiums go up since the ACA passed, and they’re now paying more out-patients.
Cohen called it a good thing that insurers are not covering the costs of out-payouts.
“What they’re doing is subsidizing them to the tune of about $2 to $3 billion annually,” he added.
“And if the rate of growth continues, then it could be $10 trillion in the near future.”
Cohen said policies offered by many insurers have a deductible that is much higher than what it costs to insure a person, but insurers do not have to cover that deductible.
Cohen, however, said that this deductible is a problem.
“We’re seeing the cost grow faster than the benefit,” he noted.
“The cost is growing faster than what is being paid.
So you’re paying the cost.”
The average annual out of pocket cost of a $10.5 million policy is $1.,250.
But that is $3,000 higher than the cost for the same policy if it were paid in full, according to the Kaiser Family Foundation, which has a research group that studies insurance.
Cohen says a single-year policy can be expensive, and that the typical policy is not worth the cost because it’s a big premium, with a high deductible and a relatively low out-out-of pocket cost.
“If you’re buying a one time-only one-dollar policy, then the price is going to go up because you’re spending a lot more money than you’re saving,” Cohen said.
The costs of an individual policy are not just in the monthly premiums, he added, but also in the out of- pocket costs, including deductibles.
A new law enacted last month makes it easier for people to qualify for out of control premiums that are often higher than they should be.
For example, a single person who earns $20 million annually could qualify for a $250,000 premium.
But if that same person earns $30 million annually, he or she could end up getting a $500 deductible, the maximum that is allowed under the law, Cohen estimated.
If that same individual earns $50 million annually and the same person makes $80 million, the out out- out-in- pocket cost could be over $500.
If the out cost was $1 in 2020, that would mean the person could pay $2.25 million more for a policy that has no deductible. If a