First Things First: How First-Dollar Benefits Are Beneficial to You

Last column we talked about strategies to save money on your health care spending. Some of these plans, while saving you money on your taxes, required you to have higher out-of-pocket costs when you used them to realize the savings. What if you have young children or have other, more immediate costs? Well, we have an answer for you, and as an added benefit, we'll continue to save you money on your taxes as well.

Consider this: Statistically speaking, up to the age of 37, if a person winds up in an emergency room (taking junior in at 3am for a 104 degree fever aside), it will be because they hurt themselves. Twisting an ankle playing basketball, falling off a bike, having an allergic reaction to a bee-sting or heaven forbid an automobile accident, all typically land us in an emergency room. A run-of-the-mill, blown-out knee can cost thousands of dollars in an emergency room, with X-rays, braces, MRI, etc. If you have to be admitted for surgery, those bills can get sky high. With the high deductibles now seen in the workplace, this can be a strain on anyone's budget. Additionally, if you have an injury that requires surgery, you typically won't be getting back to work any time soon. All of this can really put you in a financial bind.

Thankfully, in this land of opportunity we call America, industry has stepped up to help. Through the use of first-dollar benefits, you can get a lump-sum benefit of $50 all the way up to $5,000 if you have an ER visit or are confined to the hospital. In some instances, you can get up to $50,000! Additionally, you can be paid hundreds of dollars a day for each day you are in the hospital. This money can be in your hands in days. When I blew out my knee in a karate class, the urgent care visit was $1,000, the subsequent surgery was $25,000. Of course I had to pay my deductible (which was $2,000) and my insurance company paid the rest. It would have been nice to have that $2,000 paid for as well. This is what first-dollar benefits do.

Because my voice or hands weren't affected, I could still do my job. But if I had been in an industry that required walking or lifting or climbing, I'd have been unable to work. In my state, there is no state disability program. Even in states that have a disability program, it oftentimes takes a long time to get and doesn't pay the bills. The lump sums provided by first-dollar benefits can tide me over until I get back to work. I could also purchase a short-term disability policy, which would pay me from day one if I couldn't go to work because of an injury or, in as little as 7 days, if I had an illness. With the national average of disabilities affecting 1 in 2 people during their lifetime and nearly 50 percent of home foreclosures due to a disability, it's well worth the investment.

According to Lorin Westlund, Agency Development Manager in the Las Vegas area for Colonial Life, first-dollar benefits are becoming more and more a necessity rather than an add-on. "With employers increasingly trying to find ways to cut costs, often raising deductibles to $2,000 or more, sometimes even doing away with benefits altogether, first-dollar benefits represent an affordable option to help manage these costs." Part-time employees, tipped employees, and employees on a budget can all take advantage of first-dollar benefits and their low cost. And because these first-dollar benefits are primarily employer-based, (more and more companies, like Colonial, are offering these benefits to individuals), the premiums when deducted pre-tax from your pay start at as little as $5 a week. (The exception is disability, which most times shouldn't be pre-taxed for tax reasons.)

First-dollar benefits aren't just for higher bills, either. A trip to the urgent care for little Jimmy's jammed finger qualifies for payment. Effectively, ANY time someone hurt themself, a benefit can be paid. At the other end of the spectrum, some illnesses, like cancer can wind up costing hundreds of thousands of dollars. Oftentimes, many of these expenses aren't paid for by insurance companies. Examples are: Travel costs to an out-of-state hospital, food and lodging for loved ones, out-of-network charges, experimental treatment as well as many other costs are paid-for by you...unless you have a first-dollar policy. A first-dollar policy pays YOU, not the hospital. How you use those funds are up to you. As an added benefit, most first-dollar plans have a wellness benefit built in.

Options exist in the health insurance industry to help with unanticipated or unexpected bills. First-dollar benefits, being inexpensive and flexible, should be a part of everyone's health insurance strategy.

Until then, stay healthy!