Picking up Nickels

Thursday, September 20, 2012

My final health insurance premium increase update

I've been concerned about the large annual price hikes for my basic HMO plan for more than a decade now, and have been documenting my plight since I first mentioned it here in August 2006. Year after year, I watched my monthly premium increase from a car payment to a mortgage payment even as I downgraded my plan four times since 2001 to attempt to keep premium increases to a minimum. However, that trend suddenly changed last year as my renewal packet arrived with a modest 2.1% price increase without having to downgrade to a plan with larger co-pays/deductibles. While I was quite pleased with that development, I considered it to be an anomaly that would almost certainly reverse course in 2012. As luck would have it my 2012 renewal packet offered a 0.4% increase, a mere $6 increase per month! In short, after watching my health insurance premiums increase about 143% between 2001 - 2010 while downgrading coverage four times, my premiums have increased less than 3% percent since then! I'm not completely certain about the cause of these reasonable price increases, but a disturbing trend I observed during the first decade of this century seems to have been turned on its head during the past two years. If nothing else, I wonder if the increased scrutiny that the Federal health care reform legislation has placed on cost containment is starting to bear fruit. If so, this continuing trend would be a major boon to American businesses of all sizes along with Federal, state, and local governments with large healthcare costs.

As always, I think a graphical example of this trend helps emphasizes my point far better than my clumsily written prose:

With that being said, I will not be taking Blue Cross Blue Shield up on this offer. Last month Mrs. Frugalson returned to the workforce after finishing graduate school and she has access to employer-provided healthcare benefits that are far better than anything that I have been able to afford over the past decade. These benefits include employer-subsidized dental insurance (which we haven't had since Bill Clinton was President) and a HMO plan with far more generous co-pays and deductibles that I have not been able to provide us as a self-employed person. I'll never forget seeing the jaw drop the receptionist at my physical therapist's office gave me when she realized I had a $40 co-pay for each physical therapy session followed up by "It's awful how they can do that!".

To illustrate the differences in coverage between my existing HMO plan and my wife's new plan, let's compare the out of pocket cost difference between the two plans for the journey that was my surgery and recovery from a ruptured tendon in my arm earlier this year:

Untitled Document

  Current HMO New HMO
Emergency Room Visit 150 75
Surgeon Office Visit Co-pays (3x) 120 45
Day Surgery Co-pay 250 0
MRI Co-pay 75 0
Physical Therapy Co-pays (9x) 360 135

Total Out of Pocket Cost $855 $255

In short, in addition to costing a fraction of the monthly premium I would have been paying, this new insurance plan would have saved me an additional $600 on the costs of the treatment for my arm injury alone plus I will no longer have to pay for 100% of the dental care for my family out of pocket. As long as Mrs. Frugalson and I continue to keep our jobs, we should see some major relief from one of the largest monthly expenditures that we make for our family. :D

Tuesday, September 11, 2012

September 2012 Financial Asset Roundup

I'll never forget where I was eleven years ago. I was listening to the radio while doing some work for clients in my home office when a news flash broke in to the broadcast to report that a plane had crashed into one of the towers at the World Trade Center in New York City. The initial report led me to believe that this was a tragic accident and an isolated incident, and I wondered how something like that could happen with all of the technical advances available to us in this day and age. Then a second plane crashed into the other tower at the World Trade Center, and it finally dawned on me that the USA was under attack. As I turned on the TV for more information on this inconceivable event, I was horrified to see one tower fall followed by the other. Thousands of people were dead, many more had to flee the scene in a sea of humanity covered by the dust and debris that blanketed the area. Questions raced through my mind. Why? Who would do this? What kind of world will my toddler inherit when such an attack on us and our way of life is possible? Some of those questions have been answered in the ensuing years, but I will never forget how our lives changed on 9/11/2001.

Now, on to more ho-hum things. Here are my current financial assets as of the market close on September 10th, 2012:

Asset Aug 2012 Sep 2012 Change
Checking 791 332 -459
Money Market 45,036 57,591 12,555
Savings Bonds 66,744 66,926 182
Treasury Bills 0 0 0
CDs 68,714 55,875 -12,839
Brokerage 105,433 114,079 8,646
401k 103,014 105,857 2,843
Roth IRA 58,208 59,418 1,210
SEP IRA 311,852 317,830 5,978
529 Savings 68,944 70,889 1,945
Total Assets $828,736 $848,797 $20,061

The S&P 500 has continued an upward trend, rising 1.65% since the last update:

(chart courtesy of msn.com)

On the jobs front, the unemployment rate for August fell to 8.1%, although the typical accompanying bad news tagged along for the ride as a reported 368,000 people stopped looking for work. Oil prices have ticked up to around $97 and one wonders if the impact of Hurricane Isaac will continue to inflate prices in the short term.

On the financial front, I was pleasantly surprised to see that my asset levels have once again reached an all time high, surpassing the previous peak from last month. It's kind of a scary thought (and I don't want to jinx myself), but the milestone of being a "paper millionaire" actually seems to be within reach. I find it amazing that I could add an additional $400k to my bottom line since September 2006 in spite of the economic slowdown, the loss of my largest client, and ever increasing costs for food, energy, and healthcare.

The only other point worth mentioning is that Mrs. Frugalson has officially returned to the workforce for the first time since Bill Clinton resided at 1600 Pennsylvania Avenue. Along with her salary, she will be eligible for employer-provided healthcare and dental insurance, which is something we haven't seen around these parts for quite some time. As someone who has been beating the drum about frighteningly high annual health care cost increases since the early days of this blog, this is an amazing development that will save my family thousands of dollars every year. To say that I am thrilled is a gross understatement. :) We will end up with far better coverage for a fraction of the cost (to us, anyway) with much smaller (and sometimes zero) co-payments. I suppose a health care premium price increase post for 2012 is in order, although I'll have to think about an appropriate format as we transition away from my S Corp's health insurance plan.