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Reaume Benefits Blog Entries Group Health Insurance News and Tips

Two Costs of Health Insurance

Group health insurance seems easy enough. Review the many options and select one that has a reasonable co-pay and affordable premiums. Unfortunately, in the California small group health insurance market place, a reasonable co-pay and affordable health insurance premiums do not go together.

Many confusing terms like, HSA, FSA, POP, Section 125, HSA, and maximum out of pocket are a few terms that keep the consumer confused.

If you are an employer and want to offer an attractive yet affordable California small group health plan you must understand the Two Costs of Health Insurance. Fixed costs: you can control your fixed costs by selecting a more affordable health plan. Your selection is fixed for the coming 12 months. This is your cost before you fill your first prescription. Variable costs: these are expenses you incur when you see the doctor and have a co-pay or plan deductible. We don’t have a crystal ball so we must calculate your variable costs in small and large claim years. When you solve for the best plan you must run the numbers. You must know the end result (fixed and variable costs) in good and not so good claim years.

Few have taken the time to really understand the Two Costs of Health Insurance. It’s a sad commentary but most health insurance brokers that specialize in health insurance don’t know how to solve for the best policy/ price combination.

You can’t expect an engineer to know the capacity of a 10 story building until they run the calculations. It’s not enough to assume it will hold up under pressure. The engineer must know what will happen on a windy day or in earthquake like conditions. It is no different with your health plan yet few really comprehend the end result of “this” policy. I make it a point to prove, by the numbers, which policy serves the consumer best.

Patrick Reaume, CFP, RHU is a California small group health insurance broker based in Redlands, California. He can be reached at 909-747-0280 or at

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