Split-Insurance: Dependent

5-27-2018 (8 of 1).jpgIt wasn’t too long ago when most employers, who offered group health insurance benefits, would pay the premium for an entire family.  Sadly, in the last few years that trend has changed.

Some employers still pay for health insurance benefits for an employee’s entire family but most only pay a portion of the premium for the employee.  Although the employee may be offered the “convenience” of including a spouse and/or children on the plan, what employee is required to pay the full cost of the premium for the family members.

That coupled with the fact that dependent coverage is often the most expensive premium the insurance company offers.  The insurance company is bound by rules that disallow medical underwriting.   As a result, they have no choice.  They must assume that every dependent will require expensive medical treatment during the year.

Under the PPACA most, if not all, group plans included all of the “Essential Benefits”, whether an employee wanted them or not.  Those “Essential Benefits” included benefits that all of us may need in the future.  However, plans that contain all of the “Essential Benefits” includes benefits that only some of us need.

For example, the premium for a group plan includes a charge for maternity coverage.  The next male or post-menopausal who needs maternity benefits will be the first.

The PPACA includes coverage for substance abuse.  That is another benefit that, in my opinion, does not need to be listed as an “Essential Benefit”.  I do not drink alcohol, neither do I abuse illegal drugs.  I do not understand why congress would require me to pay for health insurance for a risk that is very minimal to me.

The third “Essential Benefit” that I object to is the one that requires all parents to pay for dental and vision insurance for all children under 18.  Yes, I understand that children need to visit a dentist and many of them need glasses.  However, I have yet to see a toddler, with “baby teeth” need to visit a dentist, but group plans include that is the premium for dependent children.

The Split Insurance strategy helps control that extra cost.  It works like this.

Historically, employees would include their spouses and children on their group plan.  The Split Insurance strategy keeps the employee on the group plan at work but SPLITS the spouse and children onto a medically underwritten, NON-ACA compliant plan that does not include all of the “Essential Benefits” required by Obamacare.

By doing this the employee often saves several hundreds of dollars in health insurance.  Often that savings is a PER MONTH  savings.

This strategy has some minor risks.  Before you commit to this strategy it would be better if you discussed it with an insurance professional.  Just be aware that not all insurance agents understand this strategy completely.  Make certain that you discuss the potential risks that are included in this plan and what steps you can take to eliminate them.

The risks are not great, and they are deffinitely nothing to be afraid of, but they do exist.  As long as you are aware of them and take steps to avoid them, you will be okay.

My license is only good in the State of Texas.  If you live in Texas and want to know more, use the form below to ask your question.

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