Photo by kenteegardin on Flickr

One of my favorite personal finance bloggers, YoungAndThrifty, wrote a post titled “Take Advantage of Your Extended Health Benefits“.  In this post, she talks about using group extended health benefits, and questions why many people don’t use their benefits.  This is an very good question!

Why are so many people reluctant to use their extended health, dental, and vision coverage? People are wasting benefits that they are entitled to, which would improve their health and well-being.  Not only are they squandering their benefits, they are also throwing their money away.  Many employers deduct extended health premiums directly from employees paycheques, and do not allow for employees to opt out.  So why are employees failing to use the extended health benefits they are paying for?

Perhaps benefits go unused because many people think of extended health coverage in the same way as car or home insurance.  It is a common view that if you make an insurance claim, that your premiums may go up. Defined group benefit plans generally do not work this way.  Group benefit plan premiums are determined by “pooled risk”, not individual risk.  In plain English, the insurer looks at the average use and medical history of the type of group to determine premiums, not your individual benefits usage or medical history. For example, premiums for a group of employees in high risk groups, such as those working with hazardous materials, may be higher due to the increased possibility of health problems resulting to exposure over the years. On the other hand, office workers are typically rated lower risk. So If you’re a “desk jockey”, like so many are today, go ahead and get those teeth cleaned! It won’t affect your group health benefits premium at all!

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