Anyone considering leaving an established corporate job and starting a family business quickly encounters the daunting issue of health insurance costs. Replacing the full coverage typically offered to employees of large corporations can easily cost over $1200 every month! Obviously such high costs deter many potential entrepreneurs from even considering leaving their job and its fringe benefits.
If your family is currently healthy, going without insurance is an option. However, starting a business is risky and stressful enough without the added worry of how you might pay for a major medical expense due to an automobile accident or devastating disease. As Christians, we certainly must ultimately trust God for our health and for income to meet all expenses. But God also charges us to be prudent and not naively charge into a new venture without counting the cost or considering the potential setbacks we may experience (Luke 14:28, Proverbs 13:16, 19:2, 20:18, 21:20, 22:3, 27:12). In light of today’s medical costs and the fact that treatment for a single serious illness or automobile accident can wipe out a family’s entire savings and leave them with hundreds of thousands of dollars of debt, it seems prudent to have some sort of health insurance.
However, what if you have a serious health issue that will cost well beyond $14,000 a year? Then full coverage would seem cost effective. However, the better idea is to have insurance that will cover costs above the typical amounts yet have an annual cost well below $14,000 a year. These are known as Catastrophic health plans or high-deductible health insurance.
With high-deductible health insurance plans, your premium is usually about 1/3 to 1/4 the cost of full coverage plans with annual deductibles ranging from $2,500 to $10,000. The plans do not pay anything until your expenses exceed the deductible, then they pay from 70% to 100% of the costs, again depending on the plan.
For example, a family of 6 pays a monthly premium of about $300 for a plan deductible of $5000-$10,000. The same family pays $1100-1200 monthly for a $500 deductible. The insurance cost is $11,000 less, leaving that money available to cover out-of-pocket expenses. Unless your family is really sick every year, you will save a lot of money with the high-deductible insurance. And you have coverage for very expensive, unusual expenses due to serious disease or accident.
As long as you have saved enough money to cover the out-of-pocket expenses, you are wise to get the lower cost insurance. Note that with the full coverage, you still need substantial savings to cover the $1200/month premiums. This puts substantial pressure on your business to be profitable immediately, which is unlikely. The result is many entrepreneurs going into debt immediately which puts them into bondage to a bank. Escape from the bondage of a daily corporate job is replaced by bondage to a lender.
High-deductible insurance should be purchased from a reputable company with a national presence. Also, most companies will waive any waiting period if you’ve had continual coverage for 2 years prior to obtaining the new personal coverage. So be sure to have your new insurance in place before ending your current coverage.
Another option many Christians have considered are cost-sharing plans such as Medi-Share or Samaritan. These usually have monthly costs around $400. They initially did not cover auto accident or multi-hundred-thousand-dollar expenses from cancer or other serious disease. So you’d be vulnerable to being wiped out financially due to a serious condition. However, Samaritans now offers an additional “Save to Share” option that increases coverage to over half a million dollars which should cover most ‘worst case’ scenarios.
If you have questions or have experience with personal insurance plans or cost-sharing or other ideas on how families can work together on healthcare costs, please add your comments.