Buying Health Insurance with Cash Back Rewards on Your Credit Card!

Have you seen this Capitol One credit card commercial where the guy earned $36K back in cash back awards?   He said it was enough to pay for his employees health insurance:

Last year, we spent about $30,000 on health insurance for our employees; so, just about what we got in cash back from the Capital One card.

From what I can tell online this company has 7 to 12 employees.  Let’s make the math easy and say they have ten.  So, $3000 a year for each employee covers all their health insurance?  Something doesn’t smell right here especially when you read this recent article that came out on CNN:

Employers and workers together are spending close to $20,000 for family health insurance coverage in 2018, according to a new Kaiser Family Foundation report.

Although premiums have increased fairly modestly in recent years, the growth has far outpaced workers’ raises over time. The average family premium has increased 55% since 2008, twice as fast as workers’ wages and three times as fast as inflation, Kaiser’s Employer Health Benefits Survey found.
Companies pick up most of the tab, shelling out $14,100 a year, on average. Still, workers have to pay an average of $5,550, up 65% from a decade ago.
If my math is correct, this dude had to purchase $2.4 million dollars of business “stuff” to get back $36K.  Good for him. But somehow he is paying $11K less per employee per year for health insurance?  This doesn’t add up.
So who is lying to me?


Douglas Farrago MD

Douglas Farrago MD is a full-time practicing family doc in Forest, Va. He started Forest Direct Primary Care where he takes no insurance and bills patients a monthly fee. He is board certified in the specialty of Family Practice. He is the inventor of a product called the Knee Saver which is currently in the Baseball Hall of Fame. The Knee Saver and its knock-offs are worn by many major league baseball catchers. He is also the inventor of the CryoHelmet used by athletes for head injuries as well as migraine sufferers. Dr. Farrago is the author of four books, two of which are the top two most popular DPC books. From 2001 – 2011, Dr. Farrago was the editor and creator of the Placebo Journal which ran for 10 full years. Described as the Mad Magazine for doctors, he and the Placebo Journal were featured in the Washington Post, US News and World Report, the AP, and the NY Times. Dr. Farrago is also the editor of the blog Authentic Medicine which was born out of concern about where the direction of healthcare is heading and the belief that the wrong people are in charge. This blog has been going daily for more than 15 years Article about Dr. Farrago in Doximity Email Dr. Farrago – [email protected] 

  2 comments for “Buying Health Insurance with Cash Back Rewards on Your Credit Card!

  1. Vardoc
    October 15, 2018 at 10:48 am

    Doug, while I agree with the premise of your post, I believe your math is suspect. The credit card in question pays 2% cash back for purchases of all sorts. Therefore, it follows that the company CEO would have to purchase $1.8M in goods and services to realize $36k cash back. Also, the CEO is quoted as saying he “spent about $30,000 on health insurance for our employees”. That sum could be total company contribution to his employee insurance premium pool, not necessarily covering the entire premium cost. And, as you mentioned in your post, we do not know the denominator in terms of company employees.

    • Doug Farrago
      October 15, 2018 at 1:13 pm

      They make it seem that he “covered” their insurance costs so I am not sure what to believe.

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