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insurance costs

Health insurance is a valuable tool when used in a smarter way!

If at all possible everyone should have health insurance. You need coverage in case you are hospitalized or have an accident. Your cost for such services can be very costly to you and your family. Insurance is not so great of a deal when you are paying multiple hundreds of dollars per month. The value for your dollar can go a lot further when you understand how primary medicine and your routine care should work.

The Funny Story of The Exclusive Bake Club and Van’s Food Insurance.

Although Van’s story below may be humorous in some ways, the reality of the expense of insurance for most of us is not. There are better solutions! Before you read about Van’s story, take a look at Dr. Belk’s video.

Your insurance costs you more out of your pocket than you think it does, and you don’t even know it – “Tricked by Insurance” – by David Belk, MD Tricked by Insurance


back to Van’s story…

Van (the obese diabetic smoker with high risks for cardiovascular disease) has food insurance and he wanted a piece of apple pie at the Bake Club – a famous bakery which you can buy a membership to join and receive benefit and discounts on all their products. However, Van prefers to use his food insurance that makes you pay a copay (or admission fee) of $20 every time you go to the Bake Club, and if you decide to actually buy a pie – your food insurance will cover 80% of the cost of the pie and you have to pay the remaining 20%. That’s a great deal, right? Van only had to pay his copay of $20 to be allowed in the Bake Club, and he only had to pay 20% of the cost of the pie. This is a great deal!?

OK – let’s stop the story right there, and put ourselves in Van’s place. Except we don’t have all the disease and risk factors, right? For the sake of the rest of the story let’s just pretend we are in Van’s shoes.

What if the food insurance didn’t pay the baker the full price for his pie, but instead only paid a percentage of the charge? Well, the baker is then going to need to increase the price of his bake goods so he can get paid what is needed to stay in business. What if the price of the pie was inflated so much because of the baker having to deal with the food insurance that the charge for the pie is $100? Your cost would then be a $20 copay (or admission fee) and an additional $20 for the cost of the pie. That’s a great deal right? You only paid 20% in addition to the admission fee (copay)! Your total out of pocket cost was only $40. However, if it was common for you to go to the Bake Club around 4 times a year and buy in a year’s time 4 pies,  5 cakes for $100 each, 7 cinnamon rolls for $60 each and 5 dozen cookies at $100 per dozen your cost for that year would be $424. It’s a great deal right? Four visits to the Bake Club, and you only paid a $20 copay (admission fee), plus only 20% of the charge to purchase the baked goods!

Oh by the way, don’t forget that we have not mentioned anything about the monthly fee (premium) of several hundred dollars you have to pay each month for the food insurance that would cover you in case of an acute wedding or baked goods emergency.

Well, what if I told you that you could pay the baker directly for less? If you could pay a membership fee of $25 per month and only pay $5 per pie. And for that year and you only bought 4 pies, 5 cakes for $5 dollars each, 7 cinnamon rolls for $3 each and 5 dozen cookies at $5 per dozen.  Your total cost for that years expenses at the Bake Club would be $391.

So, with food insurance you paid $424. But, when you paid the baker directly those same pies, cakes and cookies cost you only $391. BUT WAIT… isn’t it cheaper to pay for it with your food insurance? Also, don’t forget that we are not considering the monthly insurance payment (premium).

A significant % of the time for most people the answer is, NO! The misconception is that paying a membership fee each month is more expensive, and that it is cheaper just to pay a copay whenever you need to go. This misconception of course is in error. What most people do not realize is that the 20% (coinsurance) actually cost them more because the charges are inflated. Once you understand this you realize that using your insurance may be more expensive – more so than you thought. The only way you can know this is to find out how your insurance works – what is your copay, coinsurance, deductible, out of pocket maximum, etc… Only you can decide this. THE BAKE CLUB CAN NOT DECIDE THAT OUT FOR YOU.

So, what’s the moral of the story? Pay less. Save more. Get catastrophic food insurance to cover the acute wedding or baked goods emergency. For most people this will help reduce your monthly cost by hundreds. Then take those savings and deposit it into a Health Savings Account to use when you need it. Take some of the money in your HSA to purchase a membership to the Bake Club, use it for routine baked goods eating at a discount (when needed) and let the rest gain interest that can be used as a retirement account.


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