The Seven Most Important Factors to Consider
Bernadette Ancog
January 29, 2009
Before Purchasing an Individual or Family Health Insurance Plan
From: Thomas Henry, JD
Are you shopping for an individual or family health insurance policy and finding it difficult to sort through all of the choices? In this article I will help clear up some of the fundamentals and give you solid basic information that will make it easier for you to make an informed decision. These are my opinions based on 25 years experience in the health insurance business.
Words in italics are defined at the end of this article. To find updates on this article, go to www.realcare.biz/updates.
Investigate the insurance company. Choose a carrier that has a large block of individual insurance business in your state. If it is one of the top three or four as far as individual plan enrollments, the odds are the block is well managed and profitable. This minimizes the chance of the carrier deciding to cease writing individual policies in your state, something that has happened often enough over the years that it is a valid concern. If the choice of carriers is a close call, choose one that is domiciled in your state for this same reason.
Check out the financial strength of the carrier. You can go to A. M. Best rating service to get a rating of most carriers. There is no charge for the basic overview. The carrier should have a minimum rating of B+ and a "stable" outlook.
Buy a policy with a high deductible. Why? Because, if you can qualify for an individual policy you are healthy by definition. This means it is very unlikely that you will have major claims for at least a few years. Take the money you would save from the premium difference between a low deductible and high deductible plan and save it for the time when you have a higher claims year. In one or two years, you will typically have saved more than the deductible and co-insurance maximum specified in your policy. An even better idea is to select an HSA (Health Savings Account) compatible high deductible plan. This allows you to put some or all of the premium savings in a tax deductible account that you own. You can use those funds to pay for medical expenses. The best place to learn about how HSAs work is at www.hsabank.com. The site provides objective free information about HSAs, who is eligible, how much you can contribute, etc.
Buy a policy that has an annual deductible and co-insurance maximum. Policies that have per-occurrence deductibles generally have lower limits of coverage for each condition. Thus if you develop a catastrophic condition you may find yourself with medical bills that are not fully covered. There are numerous serious conditions that remain with you the rest of your life and can easily exceed the limitation. With a per-occurrence policy those conditions are not covered beyond the limit specified.
It is also difficult to determine what an "occurrence" really is. For example, if you had a car accident that resulted in lacerations and a concussion that´s probably one occurrence. But if you later developed an infection at the hospital, is that a new occurrence? If the concussion left you with seizures that have to be treated with drugs, is that a separate occurrence? A policy like this is not worth the unknown unless you simply cannot afford a policy with an annual deductible.
Buy a policy that has at least a $2,000,000 lifetime maximum claims limit. Higher limits are better but may not be available in all states. Remember, if you get a serious injury or disease, you may have this policy until you reach Medicare age. The higher lifetime maximum then becomes very important.
Review the PPO list. Make sure the best doctors and hospitals in your area are contracted providers of the carrier you choose.
Review your policy annually. Check every year or so to see if your rates are still the most affordable for you. Also make sure that you are not buying benefits you don´t need. Maternity coverage is a good example. If you have that benefit in your policy and do not need it, you can probably find a more affordable plan that does not include it.
Use an agent. Agents typically represent multiple carriers and can make objective recommendations. There is no cost to use an agent so you get a personal advisor for free. (Agents are paid by the carrier in the form of commissions. The cost of the policy is the same whether you buy direct or through and agent.) He or she should know the strengths and weaknesses of the major insurers and can help you select which works best for you. A captive agent will rarely tell you the weaknesses of his own company or the strengths of the competition. In addition, if problems arise with claims, a good agent will advocate for you if the carrier has not acted correctly. You will not get this service from an in house agent or captive agent. Finding a good agent is not always easy. Look for one who is a member of an ethical association such as the National Association of Health Underwriters or the Association of Health Insurance Advisors. A high percentage of the members of those organizations are excellent agents.
If you cannot afford or qualify for major medical insurance there are some decent alternatives. Go to www.realcare.biz/saveme$.
From: Thomas Henry, JD
Are you shopping for an individual or family health insurance policy and finding it difficult to sort through all of the choices? In this article I will help clear up some of the fundamentals and give you solid basic information that will make it easier for you to make an informed decision. These are my opinions based on 25 years experience in the health insurance business.
Words in italics are defined at the end of this article. To find updates on this article, go to www.realcare.biz/updates.
Investigate the insurance company. Choose a carrier that has a large block of individual insurance business in your state. If it is one of the top three or four as far as individual plan enrollments, the odds are the block is well managed and profitable. This minimizes the chance of the carrier deciding to cease writing individual policies in your state, something that has happened often enough over the years that it is a valid concern. If the choice of carriers is a close call, choose one that is domiciled in your state for this same reason.
Check out the financial strength of the carrier. You can go to A. M. Best rating service to get a rating of most carriers. There is no charge for the basic overview. The carrier should have a minimum rating of B+ and a "stable" outlook.
Buy a policy with a high deductible. Why? Because, if you can qualify for an individual policy you are healthy by definition. This means it is very unlikely that you will have major claims for at least a few years. Take the money you would save from the premium difference between a low deductible and high deductible plan and save it for the time when you have a higher claims year. In one or two years, you will typically have saved more than the deductible and co-insurance maximum specified in your policy. An even better idea is to select an HSA (Health Savings Account) compatible high deductible plan. This allows you to put some or all of the premium savings in a tax deductible account that you own. You can use those funds to pay for medical expenses. The best place to learn about how HSAs work is at www.hsabank.com. The site provides objective free information about HSAs, who is eligible, how much you can contribute, etc.
Buy a policy that has an annual deductible and co-insurance maximum. Policies that have per-occurrence deductibles generally have lower limits of coverage for each condition. Thus if you develop a catastrophic condition you may find yourself with medical bills that are not fully covered. There are numerous serious conditions that remain with you the rest of your life and can easily exceed the limitation. With a per-occurrence policy those conditions are not covered beyond the limit specified.
It is also difficult to determine what an "occurrence" really is. For example, if you had a car accident that resulted in lacerations and a concussion that´s probably one occurrence. But if you later developed an infection at the hospital, is that a new occurrence? If the concussion left you with seizures that have to be treated with drugs, is that a separate occurrence? A policy like this is not worth the unknown unless you simply cannot afford a policy with an annual deductible.
Buy a policy that has at least a $2,000,000 lifetime maximum claims limit. Higher limits are better but may not be available in all states. Remember, if you get a serious injury or disease, you may have this policy until you reach Medicare age. The higher lifetime maximum then becomes very important.
Review the PPO list. Make sure the best doctors and hospitals in your area are contracted providers of the carrier you choose.
Review your policy annually. Check every year or so to see if your rates are still the most affordable for you. Also make sure that you are not buying benefits you don´t need. Maternity coverage is a good example. If you have that benefit in your policy and do not need it, you can probably find a more affordable plan that does not include it.
Use an agent. Agents typically represent multiple carriers and can make objective recommendations. There is no cost to use an agent so you get a personal advisor for free. (Agents are paid by the carrier in the form of commissions. The cost of the policy is the same whether you buy direct or through and agent.) He or she should know the strengths and weaknesses of the major insurers and can help you select which works best for you. A captive agent will rarely tell you the weaknesses of his own company or the strengths of the competition. In addition, if problems arise with claims, a good agent will advocate for you if the carrier has not acted correctly. You will not get this service from an in house agent or captive agent. Finding a good agent is not always easy. Look for one who is a member of an ethical association such as the National Association of Health Underwriters or the Association of Health Insurance Advisors. A high percentage of the members of those organizations are excellent agents.
If you cannot afford or qualify for major medical insurance there are some decent alternatives. Go to www.realcare.biz/saveme$.
Print
Email
.JPG)
