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Established in 1990, Life & Health Underwriters, Inc. (LHUI) provides employee benefit brokerage and consulting services to employers in the state of Washington. We currently assist over 80 employers in the management of their benefit plans. We also represent over 200 individuals in the purchase of individual life, disability, and health insurance. Our professional staff combines over 190-plus years of experience with enthusiasm and professionalism.
Here are some recent news and trends:
08.21.2008 - ProducersWEB.com
Hybrid Cars and Hybrid Health Insurance
As gas prices breached the four-dollar-per-gallon mark, America began to change. GM closed some of its SUV and truck plants in order to retool for more fuel-efficient cars. People voluntarily began to drive more slowly in order to save on fuel, and the demand for hybrid cars far outpaced the auto industry's ability to build them.
Why hybrids?
Hybrid cars owe their success to combining the benefits of a gas engine with the benefits of an electric motor. Here's the logic: The gasoline engine gets excellent highway mileage but poor mileage in the city. The electric motor is very efficient in city driving, but is less efficient on the highway. With a hybrid car, energy from the battery powers the electric motor during start-and-stop city driving, and as speeds increase the gas engine begins to contribute power; at highway speeds, the car is propelled entirely by the gas engine.
The fuel efficiency results are eye-opening. Traditional cars with good mileage might boast 28 mpg highway, 18 mpg city (note that city is always less than highway mileage). On the other hand, the Toyota Prius hybrid advertises 45 mpg highway, 48 mpg city. The city mileage is actually better than highway, thanks to the efficiency of the electric motor and the storage battery.
Hybrid health insurance
In today's health insurance marketplace, a new kind of hybrid is also evolving: hybrid health insurance. Hybrid health insurance plans owe their success to combining the benefits of an insurance policy (like the gasoline engine) with the benefits of a tax-advantaged health savings account (like the electric motor and storage battery).
The insurance portion provides affordable protection from large and unexpected medical bills such as a $30,000 hospital bill or $250,000 for cancer treatment. "Insurance" is efficient because a large number of people contribute on a monthly basis to a pool of money so that the few who have large and unexpected expenses will have access to that collective pool to pay those costs. Insurance is cost effective because it is built on the "all for a few" concept.
However, insurance plans are much less efficient with smaller claims. A large number of people still pay a monthly premium; however, a large number of people also use the health plan to pay for their routine and expected health care expenses. This "all for all" concept is not really insurance; it's really prepaying a portion of routine costs in exchange for paying small co-pays at the time of service. That portion of the premium you pay to the insurance company in exchange for co-pays is subject to facility costs, labor costs, administrative costs and profits.
Health savings accounts (HSAs) are a more cost-effective way to pay routine and expected expenses. The portion of the premium that would have gone to the insurance company in exchange for low co-pays now goes into the individual's health savings account on a tax-deductible basis. It is not subject to insurance company costs. The HSA acts like the battery in the hybrid car: during the majority of years -- with good health -- money accumulates for future use.
This money storage feature makes a huge difference when analyzed over a three- to five-year period of time. These hybrids health plans can do things that traditional HMO and PPO plans simply cannot do, including:
- Ability to eliminate financial risk in future years
With systematic saving in a health savings account over three to five years, individuals can build a surplus that will cover out-of-pocket expenses for several years.
- Reward for good health
If the employer puts money into an employee's HSA and the employee doesn't use that money, the money is effectively a reward for good health.
- Money for a wellness program
HSA dollars can be used tax free to pay for nutrition counseling to lower cholesterol, a WeightWatchers program or stress management program.
- Ability to plan and save for a lifetime of benefits
HSAs function like a retirement plan. According to Fidelity, the average couple will spend $295,000 in unreimbursed health care expenses between age 65 and their final years. Health savings accounts allow individuals to begin planning and saving for these expenses. Much like a 401(k) plan, the younger you start, the greater the benefits.
- Control future premium increases
The HSA-compatible high-deductible health plan is often one of the least expensive plans available that is resistant to annual premium increases.
Watch for substantial change to hybrid cars and hybrid health insurance in the near future.
Watch for substantial change to hybrid cars and hybrid health insurance in the near future
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