Medical Insurance Inflation: Factoring Into a Settlement Solution

by John Darer CLU ChFC MSSC RSP CLTC

The AVERAGE year over year rate of increase in health insurance premiums for New York City residents across 8 leading insurers was 11.23% based on data assembled by the New York Public Interest Research Group (NYPIRG) and published in the August 29, 2010 Daily News. According to the report "Self-Insured Feeling Pinch" there has been MORE THAN A DECADE of double digit increases.

The increasing federal deficits may make it increasingly difficult to shift tortfeasor responsibility to government based initiatives like Medicaid and Medicar.

Buying medical insurance is a solution. In some states like New York and New Jersey there is guaranteed issue community rated medical insurance. These have been around for close to 20 years, originally as a private insurance solution to the Clinton era threat of Universal Health Care. As an alternative to the restrictions found in government funded benefits private health plans in such states may offer more flexibility in physician selection

Some states offer catastrophic health insurance pools. Then of course we now have "Obamacare"

When calculating the cost of such solution one must be cognizant of the cost of medical insurance increases. Moreover, be aware that these are just increases in premiums and do not reflect the deductibles, co-pays and co-insurance that may apply. Those must be factored in as well. An additional wrinkle is that most structured annuity issuers will cap contractually based increases to 5% or 6%.  One must account for the gap and determine how it is to be funded.