John Fredrick On The Financial Advantages Of High-End Defined Benefit Plans

Medical bills are one of the fastest ways to turn a normal life into a financial crisis, and the scary part is how often it happens to people who already have health insurance. We dig into the uncomfortable question behind that reality: if you’re paying big premiums for major medical coverage, why can deductibles and behind-the-scenes pricing still put families on the edge?

We walk through a simple framework that makes health insurance easier to evaluate: convenience versus control. Major medical can feel effortless at the point of care, but it can also keep you blind to network rates, negotiated “allowed amounts,” and the real math behind your out-of-pocket costs. Then we explain how high-end indemnity and defined benefit plans can flip that dynamic by paying set benefits for services, sometimes creating cash back when the benefit exceeds the contracted visit price. It’s a practical look at how plan design can affect both healthcare access and your monthly budget.

We also get specific about who these plans can fit: self-employed and 1099 workers, employees at small companies that don’t offer benefits, and families getting hammered by the cost to add a spouse and kids to an employer plan. We address underwriting realities, clear up common myths, and talk about the mindset shift required to stop defaulting to “whatever I’m used to” and start choosing coverage that matches real life. Finally, we explore the overlooked piece of financial protection: what happens when you can’t work, and why certain indemnity structures can include cash benefits that help keep the lights on during a serious diagnosis.

If you want health insurance options that feel clear instead of confusing, subscribe, share this with someone who’s overpaying, and leave a review with the biggest question you still have about your coverage.

To learn more about Fredrick Insurance Brokers visit:
https://www.FredrickInsuranceBrokers.com
Fredrick Insurance Brokers
Dallas-Fort Worth, Texas
972-375-0507 

Transcript

Welcome And Big Claim

SPEAKER_00 0:03

Welcome to the Frederick Insurance Brokers Podcast, where health insurance finally makes sense. Your hosts, Katherine Clark and John Frederick, are independent health insurance specialists and co-owners of Frederick Insurance Brokers. Family-owned, faith-grounded, and serving individuals, families, the self-employed, and small businesses across the country with options instead of headaches. Around here, they're known as health insurance brokers with a heart, guiding you toward quality care that's simple, affordable, and aligned with real life. So if you've ever thought health insurance is confusing, expensive, and definitely not fun, you're in the right place. Let's dive in and take the fear out of coverage one conversation at a time.

SPEAKER_01 1:00

Some plans don't just protect your health, they can actually strengthen your financial picture when used strategically. Welcome everyone.

SPEAKER_02 1:15

You too as well. Thanks.

SPEAKER_01 1:17

Thanks. We're excited to learn from you about what are the financial advantages of high-end defined benefit plans.

How Indemnity Pays Cash Back

SPEAKER_02 1:25

Well, there's multi-phases to that. The one thing that I always tell my customers is that there's convenience and there's control. When we're talking about high-end indemnity plans on one side, and the biggest comparison is to major medical. Major medical is the convenience, it's what you're used to, it's what the government has given you. It's basically teaching everybody that this is it, this is the only way to go. And then on the high-end indemnity side, you have what we call control. And I can give examples of that later. But I think the numbers like around 80% of bankruptcies and home foreclosures are due to medical bills. And then out of that 80%, 75% of them had health insurance. Well, why are you getting foreclosed on? Why do you have bankruptcies happening? Because medical bills, when you have major medical insurance, it's because there's a lot of different things going behind there's agreements and deals between the insurance carriers and the healthcare providers that we don't see as consumers. We see one bill, there's an under-the-table handshake that that they're only going to pay this much of it, but we still have to pay our$8,000,$5,000 deductible while they're making deals behind behind our backs. Okay. So think of that, you have convenience, you have control, right? So an example for that would be you go to the doctor with your major medical plan, your convenience plan, and you're paying, let's say, a thousand dollars a month for your plan for the right to have a$40 copay to see the doctor. Okay. Well, the insurance has an agreement with the doctor through a network that says, oh, it's an$80 plan or$80 visit. Well, as the policyholder, I have to pay$40 of that$80 while also paying$1,000 a month. On the flip side of that, with a high-end indemnity plan, you get there's different ones out there, four visits a year,$12,$20, but they pay$140 or$120 per visit. Well, if that's the case and the network rate is only$80, that means that the plan is overpaying by$60 if it's a$140 visit or payment. Well, with a high-end indemnity plan, that extra$40 or extra$60 comes back to the policy holder as a check in the mail. So it's more of having control and understanding how to use the system in your favor, and that's what we teach.

SPEAKER_01 4:17

And is it easy for someone to transition from another plan into something like that, like an indemnity plan? Does it take time?

SPEAKER_02 4:26

It's not, it's not hard at all. Um it's more of getting out of that mindset of convenience. Oh, I present my card and I just pay what they tell me to pay. Um, whereas, but a lot of these uh new high indemnity plans, you don't have to do the self-pay and file your own claim. With mine, I don't have to. Used to, it was like that, where you had to say, oh, I'll I'll do self-pay and it's you know 80 bucks, and then I go file the claim and I get my$160 check in the mail from the insurance. That's how it used to be. Um But now when I go to the my me or my son, I go, they have my card on file. I don't pay anything. I don't pay anything at the doctor. All I do know is in about two weeks I get a$40 check in the mail for going to the doctor.

SPEAKER_01 5:11

So yeah, that's amazing. Um, I think like I know in previous episodes with Catherine, too, your mother, you know, she really um helped us see the light because this can be such a tricky and um seemingly complicated, you know, industry for us that are not familiar with it. Um, so who could be like the best candidate for a plan like this? Is it somebody that is um usually not sick? Is somebody that doesn't have some you know underlying health condition?

Who Qualifies And Who Benefits

SPEAKER_02 5:43

They are underwritten plans. Um so as far as like a lot of them, if they've had cancer in the past, they can't get them until they're like five years clear of cancer. Um, a big myth is that if you take metformin, which is a precautionary diabetic medicine, if you take metformin, the big myth is, oh, they're not you can't get on that plan. Well, yes, you actually can on most of them. Um, so they are there are lenient underwritings. It's mainly the major stuff that wouldn't let them get on. But the main people that benefit from this is somebody who works for a company that has less than 50 employees and they don't do not provide health benefits, they would need to come to us so we could find the right plan for them. We have multiple options and we try to make sure we choose a plan or help them choose a plan that fits their needs. Another customer would be the self-employed, the 1099 workers that um are trying to have a small startup they're getting going, they need health insurance. I help quite a few people that let's say their spouse has a group benefit plan, right? And the company covers um that spouse's plan, her portion in full. But to add her spouse and her kids, it's$1,800 a month just to add. That comes out of their paycheck. So at that point, we say, hey, spouse, you stay on your company plan because it's free, but I can take care of your two kids and your husband for$700 instead of$1,800 and get better coverage and uh so forth. But when it comes to like the self-employed and the 1099, a lot of people think that their only option is go through the Affordable Care Act or Care or whatever you want to call it, and they're stuck with an HMO where they're overpaying for a policy that doesn't do anything for them. Um people are shocked all the time when they come and they're like, wait, I can get a PPO. Yeah, you can get a PPO, and you can have that control um over what you're spending your money on and the coverage that you have, and you can build it to where you cover what you need and you're not paying for, you know, how many times I've told somebody they want an Affordable Care Act? Well, they're 57 years old and they're overpaying on the Affordable Care Act. And I said, Well, do you need maternity coverage, ma'am? No, no offense, but you're 57 years old. Why don't we go with this indemnity plan that covers your uh wellness every year, that covers everything you're concerned about? You have your doctor visits, you got free generic prescriptions, you have free uh teledoc over phone unlimited, but it doesn't cover maternity. And you can go from paying$1,300 a month to$600. So a lot of instances. Everybody's situation is different, and we we try to tackle each one individually, almost like in a boutique style.

Fear Of The What-Ifs

SPEAKER_01 8:45

Yeah, and you know, if we continue on with that, like the customized style that you give to each client, because like you said, everybody's a different situation. And we've spoken about this with Catherine too. What about um kind of conquering the mindset people may have, or maybe that's a wrong word to use conquering, but help them shift how they think about health plans? Because we have been instilled with like this fear that if we don't have like a proper traditional health insurance plan and something happens, like that's it. And Catherine has you know mentioned a couple times in episodes what are the chances of something you know crazy happen to you health-wise if you're uh overall pretty healthy person. How do you help people kind of address that? Like you can do other plans, you can possibly even make money off the plan, and you don't have to be as maybe scared of the unknown.

Income Protection And Real Cancer Story

SPEAKER_02 9:38

It's all about education. Um, I've had a few um actual doctor offices that learned, and like I was getting all these referrals, like, yes, I'm from this doctor's office down in Houston, I've in Austin, and they said they told me to call you because they didn't take my plan or my plan. I had to pay too much money to come see the doctor. And once those doctor offices figured out, that was really helpful for us because all of a sudden they were like, you need to call this person, you need to call them, they will get you taken care of on a better plan. That would be real helpful. I've tried communicating with local doctors' offices and you know to try to educate so they can help their patients. Um, but from our standpoint, it's a lot, it's a lot about education and those those scary factors that people talk about about the big what-ifs. I try to educate people that 92% of hospital confinements are accidents. You know, the and then some of that 92% is like your big, and then a very little bit of it is like your big your cancer, your specified disease and stuff like that. But the majority of it is all accidents. So on these indemnity plans, I educate them and say, okay, let's break it down. All right, your plan is going to take care of you, right? It's going to take care of you, but you're the reason why these bankruptcies and foreclosures happen is that there's nothing after what the plan takes care of you to help with everything else. The plan's going to take care of the health. But what happens when you can't go to work? So that's the second factor of these high luxury indemnity plans. It's income protection. So let's say a patient had cancer, okay? They have our plan. They're going to be taken care of on the health side of things. That's going to be taken care of. But what plan do you know also pays out an additional$50,000 on top of that, on what it pays? So that I don't want to get too technical here because I hate it because then it confuses people. But you have a separate plan that's built into these high indemnity plans that will cover, has up to$50,000 that will cover that. And then it is 100% coinsurance after that, everything's done taken care of. Meanwhile, your original plan is still paying everything that it should be paying. We had a cancer patient one time on our policy like four years ago. And while they fought colon cancer, couldn't go to work, everything else, they ended up putting over$100,000 in their pocket, which was able to get their family by for a whole year, keep a roof over their heads, make their car payments, feed their family. What major medical or affordable care act plan can you say does that?

SPEAKER_01 12:31

That's that's amazing. Thank you for helping them, John, and you know, breaking this down very clearly. I have a couple more questions about this plan and other uh real-life examples you could share with us of how you guys helped, you know, other individuals in the next episode. But uh, this was awesome. Thank you very much.

SPEAKER_02 12:49

Thank you.

SPEAKER_00 12:55

You've been listening to the Frederick Insurance Brokers podcast with Katherine Clark and John Frederick. Health insurance brokers with a heart. If you're ready for health coverage that actually fits you, not the other way around, schedule a no-obligation consultation today. Visit Frederick Insurance Brokers.com or call 972-375-0507. Because peace of mind shouldn't be a mystery, and your health insurance shouldn't need a translator.