A couple of recent articles, from the New York Times and the Fortune specifically, discuss Wal-Mart’s, ticker: WMT, plans to increase health insurance options for their employees. Wal-Mart has received a ton of negative publicity over the past few years because of their employment practices, but these recent changes to their corporate policies have alleviated a lot of the pressure on them from labor groups and state governments. They are offering a wide variety of health care plans, with premiums ranging from less than $200 per year to more than $7,000 per year for comprehensive family coverage with a $400 annual deductible. 

While more of their employees are now covered for catastrophic medical issues, a quick look at these plans shows that for Wal-Mart’s average employee, the comprehensive plans will be unaffordable. The coverage provided by the plans that are affordable is basic at best, and while it affords some financial protection from catastrophic illness, the preventative and routine medical benefits seem very poor.

Those articles, and recent e-mails from my HR people, have got me thinking about my own insurance needs. My employer offers a wide range of policies, and it can be difficult to decide which one would actually best suite one’s needs. In many cases, the cheaper plans not only have cheaper premiums, but require fewer out-of-pocket expenses if you stick to their in-network physicians. I’m a little paranoid about health care expenses, so I carry fairly good coverage, but after doing the math and seeing that the cheaper plan would have saved me hundreds of dollars, I may switch to the cheap plan, if I decide the extra peace of mind isn’t worth it.

I’d highly recommend that you periodically review your property, rental, health, life, and auto insurance policies, as applicable. One thing that particularly concerns me is auto insurance, which is one area where people tend to not have enough coverage and tend to over pay for coverage. A lot of insurance companies, particularly those targeting people with low socioeconomic status, advertise costly plans to “keep you legal.” The problem is that state’s legal minimums are fairly ridiculous, check out this reference for details. In California, the minimum property damage insurance requirement is only $5,000! And the people who have minimum coverage tend to be those who don’t have significant financial reserves to cover large expenses.

Bottom line: Check your policies regularly. Comparison shop once a year. The bottom end insurance policies and the top end insurance policies tend not to be cost effective.

Philby

This entry was posted on Thursday, November 15th, 2007 at 4:08 pm and is filed under Personal Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.