The Big Treadmill of Health Insurance

Health insurance for most people is very confusing and foreign in nature. It is the job of the insurance broker or agent to help you understand so when you do buy, you understand what you are buying and most importantly why you are buying.

The components of health insurance whether individual or group are similar. There is a deductible, copays or % copays and a maximum out-of-pocket. The maximum out-of-pocket is the most money it will cost you in a calendar year for any services you use. Let’s say the maximum out-of-pocket is $10,800, which means in a calendar year regardless of what you are being charged for services he most you will pay is $10,800. Said differently, you are hospitalized and the bill is $350,000. You pay $10,800 and insurance pays the rest.

Deductible means the amount you pay before the insurance pays anything. Using $5,000 as the deductible on that $10,800 plan. You must pay the $5000 deductible before the insurance pays anything. You are being charged what the insurance company pays these practitioners for their services. Said differently; the retail price is the list price for services (Doctor Visit costs $150). The insurance company pays wholesale prices, which could be $95. You pay $95 for the service, and the doctor is paid in full. Once you have reached the deductible you then pay the % until the plans maximum is met. If it’s a gold plan you pay 20% of the charges, silver you pay 30% etc.

When looking at insurance policies you should look to see what the maximum out-of-pocket is to understand what you could be liable for in a calendar year. Most people never hit the maximum unless hospitalized and you usually will hit that number on day 1 of your stay.

Copays or % copays are merely a means of getting you to the maximum out-of-pocket. Copays can be a fixed amount, like a copay, for a doctor visit or they can be a % instead or any combination.

Consider this; the deductibles or copay all add up to the maximum-out-pocket so when and if you reach it, the insurance company pays all remaining charges for the calendar year.

It is my opinion, and shared by many, that you should buy the plans with the highest deductible and maximum out-of-pocket with the lowest monthly premium. Unfortunately, one of the issues that has come out of Obamacare is the rising plan deductibles and maximum out-of-pocket because so many more people are buying insurance these days. The unfortunate outcome is higher monthly premiums which include deductibles and maximum out-of-pockets as well.

If you understand the premise of health insurance, you can see that insuring more people would eventually lead to higher monthly premiums. Insurance is based on risks. When there was no guaranteed issue, you could be declined based on your health or charged more money for the same reason.

That’s called risk assessment and is the basis of rates based on health and age and gender. Today, gender is no longer an issue. The rates are based solely on your age, and if you smoke or not. The older you get, the higher the monthly premiums for the insurance.

Initially, when Obamacare started, they divided the plans based on the following: platinum was a 90/10 plan where the insurance played the higher amount. Gold was 80/10, silver was 70/30 and bronze was 60/40. The higher the insurance percentage meant higher monthly premiums. So, a 90/10 plan will cost you more than an 80/20 etc.

In the beginning, most sick people took the platinum plans because the out-of-pocket costs were less even though the monthly premiums were more. The insurance companies realized that the platinum plans just cost them too much money, so they are no longer available in Nevada. Nationwide similar situations happened where the lower costs plan with higher deductibles and max-out-of-pocket and of course lower monthly premiums are being purchased.

Personally, I like the bronze plans because of the lower monthly premiums. Unless sick or hospitalized, you will never hit the deductible much less the max out-of-pocket. I believe the bronze plans give you the best for the least. Meaning lower monthly premiums with higher max-out-pocket so you can afford coverage.

Another way of saying it is you have a risk reward scenario based on how much of a monthly premium you can afford rather than look at the eventual coat of coverage if something catastrophic happens. We all believe nothing will happen to us, so taking the lowest cost plan makes sense. Quite frankly, since Obamacare, the monthly premiums have risen annually and there is no end to that. In Nevada, insurance companies had to issue rates for the

upcoming enrollment period for November 1st through January 15th. The average rate increase was 41%. The reason was simple but not explained by the insurance companies. Congress being closed, insurance companies couldn’t offer subsidies, so they priced their premiums based on no subsidies.

Now that Congress is back in session and can rule on subsidies for individuals for 2026, the insurance companies have filed lower their rates with the department of insurance.

Very complicated but each person purchasing insurance should become familiar with the various concepts so when they buy something it will be something they will use.

I hope this opens people’s eyes to what is happening but more importantly, why it is happening and buy accordingly.

Also, I hope this information is useful and if anyone has questions, please contact me via phone or email and I will respond quickly.

Also, you may want to take a look at Medicare 2025 Information. 2026 Medicare Information coming soon and read more about the ACA in this Blog Post .

The Barend Agency Inc.

Len Barend, Broker

Cell:702-250-2200