What do assume and Association health plan have in common? A cautionary note!

So, did you figure that out yet?  What do assume and Association health plan have in common?

The first three letters of course! Don’t let either one make an “Ass” out of you!

In both instances there’s a high probability you’re going to end up with egg on your face if you don’t do your due diligence.

The presidents proposed changes to the Association insurance regulations are all the rage right now, and if ever there was time for caution in regard to your health insurance now would be the time.

Before I go on I want to point out the most basic concept of insurance and it would be a good idea for all of you looking at Association plans to keep this in mind:
Insurance is a process of collecting a small amount of money from enough people with low risk to pay for (cover) an unforeseen catastrophic event with one of the members.

Insurance is not a product, it is not a rich uncle, it is not the golden goose of your dreams, and it certainly cannot exist beyond the actuarial rules regarding risk. Money coming in must be bigger than money going out and anytime you take on unknown and uncontrolled risk you jeopardize the financial stability of the entire program.

Whether you are ensuring 1000 individuals with personal policies, or allowing 1000 individuals to join your Association plan, the risk is virtually the same. 1000 people need to contribute enough money to cover the $800,000 per year dialysis cost of one member. You can only control the risk by limiting exposure to the claims.

Promoters of association plans will tell you that they have found some way to reduce the risk, allow people to have better medical coverage, and produce the world’s best bagel. This might in fact happen, assuming that they reduce the benefits, and impose restrictions not currently available in most traditionally insured health insurance people purchase. Oh, it will really help if they can get you to have habits that keep you healthier.

So what are some of those restrictions I’m talking about?

Subrogation – If the Association is self-funded (or level funded) you need to be aware of the subrogation clause. That says that if you are paid for your medical expenses because of an auto accident your insurance plan can go back against your auto claim settlement and recoup their money. That means they take all of the money you got in your settlement.

You need to look at the most important page in the policy document, the exclusions page. This is where your plan can refuse payment if you are involved in any accident involving alcohol, any event that may be construed as self-inflicted, and a host of other things that would currently be covered under most health insurance plans that are fully insured.

Although it may not sound like it, I am actually a big proponent of association plans and self funding, however, there are going to be a large number of plans promoted by people who may not know what they’re talking about, and number two definitely do not have your best interest at heart.

Always keep in mind that no other person cares as much about your well-being and your health as you do. If you have a major claim of any kind it may well jeopardize your life. At that point you need to know that your health insurance covers what you thought it did. To put a finer point on the argument you do not want to be standing in an emergency room with your injured child wondering if the people you bought your health insurance from are ethical, honest, and honorable. At that moment you will not care how cheap the coverage was, you will only care that it works.

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