Is having health insurance any different than saving a set amount of money in a savings account for medical use only?

  • by Vanessa Jean
  • Nov 26,2017
  • 5 answers

Similar question, if I ve paid my deductible, say $2,000, is the insurance company going to pay their share of my medical expenses only up to the amount equal to that $2,000? Or are they going to pay more than the deductible? Because if they only pay equal to what I ve paid them then I can t see the benefits of having health insurance at all. So why is it different than setting aside money myself?


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Insurance Answers (5)

Insurance Pickle.com last month

It's a lot different. Plus, even if you had the money to afford $250,000 hospital bills, why would you consider risking that $250k? The companies used to have $1,000,000-$5,000,000 limits on them. Now, they're unlimited.

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StephenWeinstein last month

They pay a lot more than just the deductible, sometimes millions of dollars more. You can't set aside that much money yourself unless you're very, very rich, like Bill Gates or Donald Trump.

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Amy last month

No, they do not limit their payments to the amount of your premiums.
The point of insurance is to pool money from many people, and then use it all to pay the medical bills for whoever gets sick. If you're lucky enough to stay healthy, then you don't get any money back. But if you get hit by a car and end up with a $100,000 hospital bill, your insurance pays around $97,000 of it.
On average, the insurer does need to collect a little more in premiums than they pay out in medical expenses, because they are a for-profit company with employees and other expenses. So if you are a millionaire, you're better off not buying insurance. But if you wouldn't be able to pay a large hospital bill on your own, then you need insurance.

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Happy Gramps last month

the 1st paragraph from "Amy" is sort of correct.........insurance companies do not "pool" funds from individuals; rates are based on each person........... and as for a HSA - that will help you pay the deductible, and after the ded. is paid, the ins co will pay the rest of the bill UP TO a certain amount

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amy lynn last month

Here is an example from my personal history:
A couple years ago, I needed a surgery. My insurance deductible was $3,000. My out of pocket max was $4,000. My monthly insurance premium was $250. So, for that year, I paid $3,000 in insurance premiums and had to pay $4,000 out of pocket.
After I paid a total of $3,000 of my expenses to cover my deductible, the insurance company started paying 80% of everything else and I still paid the other 20%. When my total amount spent reached $4,000, the insurance company started paying 100% of everything else.
The total of all doctor bills, lab work, hospital bills, and all other medical expenses related to that surgery was around $55,000 and I paid $4,000 of those bills and insurance paid the rest. (so insurance paid $51,000 of my expenses)
Most years, I don't have enough medical expenses to even reach my deductible amount. But, knowing that I have insurance for the big things is why I keep it.
Now, do you really think you could have a savings account ready to cover that kind of expense instead of having insurance. You never know when a major medical emergency is going to happen.

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