Don't Dump the Health Insurance!

Audrey and her husband barely use their health insurance. They'd like to cancel it and save up cash to just pay for their medical care since it's $600 a month. Dave thinks this is a quick route to bankruptcy.

QUESTION: Audrey in San Francisco and her husband have four small children and barely use their health insurance. They’d like to cancel it and save up cash to just pay for their medical care since it’s $600 a month. Dave thinks this is a really dumb idea and a quick route to bankruptcy.

ANSWER: Absolutely not. You’re about to have to file bankruptcy. You don’t pay $600 a month for the $40 co pay. You pay $600 a month for the $250,000 bypass. It never happens in your 30s, huh? People in their 30s don’t get cancer. Children don’t get sick and have to go in the hospital. You’d be bankrupt in one visit.

You’re scaring me to death. No, no, no, no, no, no. I understand that it’s expensive. Let’s look at some ways to lower the cost of it if there is a way. You’re in California. Six hundred dollars a month for a whole family doesn’t sound that bad to me in California. Let’s shop around. Usually, very small groups like his company don’t get a group discount. If that company can buy that in the open market, you might be able to beat it as an individual person. When my company was only 50 people, we used to just give them money and tell them to go buy their own because it was cheaper than a group deal was.

Go to daveramsey.com, click on ELP for Endorsed Local Provider, and you’ll find a health insurance person there who is an independent insurance broker. What that means is they don’t sell for just one company. They sell for lots of different companies.

If you’ve got a little bit of savings built up, one way to get your premium way down would be to look at what’s called an HSA—a health savings account. The health savings account will have a $5,000 deductible, so basically you’re taking care of your own healthcare like you were talking about unless something really, really bad happens that would’ve otherwise bankrupted your family, which is what was scaring me. That might cut your premiums by a third or as much as in half. All you’re buying then is the catastrophe side of the insurance. If you go over $5,000, it pays 100% and you’re actually allowed to save money into a health savings account tax deductible to cover that high deductible if that’s the case.