Zero Premium NC Health Insurance Plans

Well I bet the title got your attention!  You must be asking "please tell me more about these zero premium NC health insurance plans!"  Obviously, there is no such thing as a zero premium insurance plan...after all these companies have to bring in revenue to pay for claims. But for some there is a way that you can take advantage of the laws to work for your benefit and pay nothing or have a very reduced rate overall once everything is said and done.  Let me explain by example.

I recently had a prospect call that was looking to change plans and was inquiring about the pros and cons of a North Carolina health savings account. After explaining to him how all this works he decided that this made the most sense for his situation and we applied with a carrier for a $5000 deductible individual HSA qualified plan. Due to excellent health he was awarded best case rates and his monthly premium was $81 per month ($972 Annually). I know you are saying to yourself (and me) this is not a zero premium health plan.  Keep reading....

Lets look at the numbers and some things this guy has working for him.  First, he is self employed so he gets to write off 100% of his health insurance premiums on his taxes.  Because he is a relatively high income earner lets say for this illustration he is in the 25% federal tax bracket.  Also the NC tax bracket would be 7%. In addition, he has also set up his Health Savings Account (HSA) where he plans to contribute the annual maximum of $3,050.  This too is 100% tax deductible.  Here's how his numbers break down:

  • $972 x 32% = $311 in additional tax refund
  • $3,050 HSA contribution x 32% = $976 in additional tax refund
  • $1,287 in additional tax refunds

As you can see he is paying out $972 in annual health premiums but due to the tax laws he is able to increase his tax refund by $1,287.  In this situation he is making money.  In addition, he has $3,050 set aside in a health savings account to pay for over 60% of his annual deductible IF he needed to use it.

This was an example for a single individual. It's important to note that in 2011 if it were a family plan they can contribute up to $6,150 annually to the HSA.

Obviously not everyone will fall under this scenario and be approved at rates like these.  However, this is an example of some of the insights that you can get by working with a qualified NC health insurance agent to make sure that you are aware of all the opportunities out there.

Disclaimer:  I am not an accountant or a CPA.  Please consult with your CPA in regards to your particular situation. 

The No Brainer NC Health Insurance Solution

Most of the times when people are shopping for NC health insurance they are looking to reduce their premiums.  Whether these premiums are for COBRA, a portion of their group, or individual coverage that they already have.  Sometimes I am able to help them find a better solution and sometimes I cannot.  However, if you are on COBRA then most likely we will find you a better alternative.

What I call the "No Brainer" solution to changing your policy is when your annual premium savings with the new plan will cover your out of pocket exposure of the new plan. Let me explain through an example of a recent client. 

The Jones' (not really their name!) came to me looking to save money on their current COBRA premiums.  In disussing their current plan they told me they were paying $1,500/month for COBRA...holy cow that is more than most peoples mortgage!  Well the plan has a $0 deductible, 80/20 coinsurance (max individual exposure of $4K and family exposure of $8K).  Having a $0 deductible (almost unheard of anymore) is great but you are paying for this in premium.  After a discussion of everyones health status and determining the appropriate carrier we moved forward wiht the application.

After a several days the underwriting process was complete and final rates were determined. After explaining to them the benefits of having a high deductible health plan (HDHP) paired with a North Carolina health savings account and the premium savings they were convinced this made the most financial sense.  Well how much was it?  For a $10,000 family deductible the monthly premium was roughly $500/month.  $10,000 deductible you say!  Who in their right mind would want that?  Let's look at the math.

Current premium savings of $1,000 per month equals $12,000 annually which is $2,000 more than they would have to spend on claims with the new plan.  Therefore they cannot lose money...they will either save $12K annually or worst case they will save $2K.  It is a win-win situation and why I call this a No Brainer.

Let's look at some examples:

Example 1
             COBRA New Plan
Annual Premium $18,000 $6,000
Annual Individual Claim $10,000 $10,000 
Amount of Claim Owed $2,000 $10,000
Total Annual Cost $20,000 $16,000
Annual Savings   $4,000

In this example you can see that in this type of scenario they still saved $4,000.  Not only that but now the ENTIRE family is covered for the rest of the calander year because they have met their family deductilbe.  Still not convinced.  Let's look at one more Scenario.

Example 2
                                 COBRA New Plan
Annual Premium $18,000 $6,000
Claim 1 - Husband $40,000 $40,000
Claim 2 - Wife $20,000 $20,000
Claim 3 - Child $8,000 $8,000
Amount Owed Claim 1 $4,000 $10,000
Amouth Owed Claim 2 $4,000 $0
Amount Owed Claim 3 $0 $0
Total Annual Costs (including premiums) $26,000 $16,000
Annual Savings   $10,000

As you can see in this situation they CANNOT lose money.  We looked at two examples...the first being more common scenario and the second a more extreme but very real scenario.

Granted not everyone is paying this much in COBRA premiums but they usually are quite high. This situation was a great example of why someone shopping for NC health insurance needs to work with a broker so that they can insure they are getting the best plan for their money.

Best Individual Health Insurance North Carolina

Which carrier offers the best individual health insurance North Carolina?  This is a question that seems to get searched for a lot according to my analytics.  The answer to this is there isn't one BEST company for everyone.  What may be the best option for you may or may not be the best option for your brother or neighbor. 

Let me explain a little further.  Many people search the internet for health insurance quotes all the time. These quotes really mean very little unless you are healthy as a horse.  These rates are quoted best case scenario but this is a start.  Now lets say you have sleep apnea.  Do you think you will get the rate that you are quoted.  Well you won't because of the high risk involved with this condition. Most carriers will infact deny you coverage whereas some will rate you up as much as 300% and others will place a rider on this condition (meaning they won't cover it nor will they cover any complications that arise from it).  Other common conditions that many individual have include anxiety/depression, migrains, high blood pressure, high cholesterol, acid reflux, and obesity.  All of these are viewed differently by the various carriers and will be rated differently which will have a major effect on your final premium.

That touches a bit on the underwriting variotions of different health insurance companies. But what about plan variations amongst them.  Here are some common terms that you should be familar with and compare between plans:

  • Deductibles - How many deductibles per family?
  • Coinsurance - What is the maximum amount of coinsurance for the individual and family?
  • Prescription Drugs - Does the plan cover brand name drugs?
  • Copays - Are there limits on the number of times you can see your doctor?  What does the copay

These are just some of the important features of plans that you need to look.  When it comes down to determining which carrier or plan offers the best individual health insurance North Carolina you really should work directly with a professional that can answer all these questions for you. There is no cost associated with working through an agent so it is a win win for everyone.

Copay Plan or HSA Plan?

When you find yourself shopping for North Carolina family health insurance, the great thing is that you have options! Unlike when you are working for someone usually your only plan choice is the one your employer has chosen.

I am a strong advocate for HSA qualified plans. Here is a video that I created comparing the main differences between a traditional copay plan and an HSA plan. Maybe a North Carolina health savings account plan is right for your family and maybe not. Take a quick look at this short video adn let me know what you think.

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