Understanding Health InsuranceThis article is written to assist consumers sift through multiple options, plans, exclusions and summaries of benefits and understand what Critical questions you should ask when researching health coverage. Finding the most beneficial health insurance plan to meet your unique and individual needs is difficult. This guide will help consumers understand the basics of health insurance and what to look for when comparing plans.14 Costy Mistakes You’ll Want To Avoid1-FREE – Do You Have a “30 Day FREE Look Period?” Can you get your $ back if you are not happy?2- DEDUCTIBLES: How many deductibles do I have per year? Some plans will have more than 1 deductible per person per year!3- NETWORK RATES: Prior to your deductible being met, will your insurance company extend their discounted network rates to you? Example: Insurance Company A – 5 stitches to finger – Total cost $2000, patient responsibility, $800, or Insurance Company B – 5 stitches to finger – Total cost $2000, patient responsibility, $2000. (no network break).4- NEGOTIATED RATE: What is the AVERAGE negotiated rate? (Sometimes referred to Network Rate – very very important!)5- UNCLEAR TERMS Is your $100 “co-pay” for an Emergency Room visit REALLY $100? Some companies the $100 copay is more like a fee AFTER your deductible, and you’ll still pay the co-insurance and the $100.6- LIMITS on benefits, for example: $500 limit or $250 limit on Emergency Room expenses. $50 limit on Dr. Visits. Once the Limit is reached, YOU pay everything else out of pocket. $500 limit on hospital expenses per day (quick way to bankruptcy!)7- PREVENTATIVE – Will you have to meet your deductible, or do you have a 1 year waiting period for preventative? Do you want to wait 1 year before you can have your female exam, or a mammogram?8- TRAVEL – If you are out of state, are you covered for illnesses? If you eat something that doesn’t agree with you and become very sick and need a doctor, will you be covered? (Not just life threatening emergencies.)9- RATE INCREASES – I am buying a “fixed rate”. Ask yourself if it makes sense to pay extra over the next 2 – 3 years for a fixed rate? Make sure your rate is set for at least 12 months but does it make sense to pay in advance for a fixed rate? Sometimes plans will naturally go down in price, so does it make sense to pay extra to have a fixed rate?10- SUPPORT – After I buy this plan, MAY I CALL MY AGENT’S DIRECT LINE with billing issues, or plan questions, or technical problems, or claims questions or concerns of any kind?11- EXCLUSIONS – Read the “Exclusions” in your plan. Are the exclusions available for you to read? Is there an exclusion that you cannot live with? For example: exclude well baby visits. Is this an exclusion that you didn’t catch in the plan details?12- MAJOR MEDICAL plans are designed to pay for MOST of your medical expenses when you become ill or injured. You’ll want a Major Medical plan from a reputable company that has “Credible Coverage.” Discount plans or Limited Medical Plans are NOT designed to protect your losses like Major Medical plans are. They are marketed as “Insurance,” but you MUST ask, is it a Credible Coverage Major Medical plan?13 – MATERNITY – Maternity plans. Do your homework. Does your plan have an outrageous deductible for maternity? Do you have a waiting period of 12 months, 24 months, or more? How many doctors do you get to choose from “In Network” that can deliver your baby? Are you happy with the choices of Doctors in the network that will deliver your baby? What if your doctor is not on-call the night you go in for delivery?14- MEDICATIONS – Is there a limit on how much the insurance company will pay for medications. If you become very ill, this could be a very big problem. Do your research, ask questions. Do you have a deductible on medications?*Did you know that key information about how coverage works is not always disclosed? *When comparing plans, is the language confusing? Why is the language confusing? *Did you know that many consumers compare prices of health insurance plans, but cannot always tell if they are comparing “apples to apples.”How to avoid Medical Bankruptcy!According to a Harvard Law and Harvard Medical School study, they found that ½ of all bankruptcies are caused by illnesses and medical expenses. If you are a breadwinner for yourself, or breadwinner for a family or spouse, and the breadwinner gets sick, you may loose your medical coverage, and a way to pay for your day to day expenses.When you are shopping for a health plan to protect yourself financially from medical bills and bankruptcy, there are many things to consider. Probably the most important thing is to consider is what “Type” of plan you are getting. There are several types of health plans that are available. If you buy a plan that is not “Underwritten” and is “Guaranteed Issue” you are not buying a Major Medical Plan. Major Medical plans will go through a process called “underwriting.”Some plans will pay a certain dollar amount for a procedure, or a certain dollar amount per day while in the hospital. IT IS CRITICAL you understand the implications financially if choosing a non Major Medical plan. Your chance for greater personal losses including Bankruptcy exist with non-Major Medical plans. If you are shopping price with health insurance, and you decide on a discount or limited liability plan, YOU HAD BETTER UNDERSTAND WHAT YOUR RISKS ARE if you end up needing to use that “insurance.”Major medical plans are designed to cover most of your hospital expenses if you become hospitalized.Do you have a disability plan? This type of plan will pay your day to day expenses if you loose your job due to an injury or illness. This should be a very important consideration when getting health insurance. If the breadwinner loses his/her income while injured or ill, how will the day to day expenses be paid for?The 6 costly misconceptions about Health Insurance1 – I don’t need medical insurance, I’m a healthy person, I eat right, exercise and take care of myself. This is risk-taking. You are gambling your financial future.2- I’m not getting insurance because There is no benefit before my deductible. Some Major Medical Plans will A) extend their network rates to you before the deductible is met, but not all. Another benefit before your deductible is met is B) the copays for Dr. Visits and C) Copays for Prescription coverage. Again, check the individual plan.3- If I get sick, or now that I’m pregnant I’ll get insurance. Once you are ill or pregnant, depending on the illness, you may or may not be eligible for health insurance. Certainly once pregnant, you will not be eligible for an individual plan. The insurance company will always reserve the right to underwrite your medical condition and elect to take you on as a risk, or not. You wouldn’t expect to run out and get auto insurance after you’ve banged up your car and have them pay for it. For this reason, it is important to not let your Major Medical insurance lapse for more than 63 days.4 – I will get stuck with a bill that I thought should have been paid for, or the insurance company should have paid. Here again, you must do your homework on the plan you intend to purchase. Look for Limits, deductibles, exclusions, co-pays, and understand these details. Also, if you come into a plan with pre-existing conditions and did not have continuous “credible coverage,’ you can expect to pay for your pre-existing conditions for 1 full year.5- I want excellent care at a cheap price. If you want Major Medical, shop between the competitors, and get the most for your money, but don’t expect the same benefits in a discount plan as in a Major Medical Plan.6- I’m waiting for the President to take care of this mess. It is not a good idea to wait to purchase medical insurance ever!Important to Know:Many People Feel That Health Insurance Companies are Greedy and Corrupt According to the Wellpoint Institute of Health Care Knowledge:”Popular theories suggest that health insurance premiums are driven by an aging population, excessive insurer profits or medical malpractice. Objective research, however, clearly indicates that these factors have a minimal impact on the high price of health insurance premiums.If meaningful health care reform, including health care cost containment, is to occur, emphasis must be placed on the real drivers of increased health care costs and concomitantly, health care premiums. These include the following key factors: such as* Advances in medical technology and subsequent increases in utilization* Price inflation for medical services that exceeds inflation in other sectors of the economy* Cost-shifting from people who are uninsured and those receiving Medicaid to the private sector* High cost of regulatory compliance* Patient lifestyles, such as physical inactivity and increases in obesity.”Other Important FactsWill they check my credit score. NOWill they require a physical or blood work? In most cases, NO.All insurance companies are the same. No they are not.My Premiums keep going up. You can do very little about increases in health care costs. You may want to change plans or increase your deductible to try and save money. Try and find a company that will guarantee their rates for at least 1 year. No need to pre-pay for future rate increases.Definitions:DEDUCTIBLES (Phase 1)- Money that you pay out of your pocket before traditional insurance begins. Ranging traditionally from $0 to $10,000. Usually if you choose a lower deductible, your premiums will cost more, if you have a higher deductible, your premiums will be lower (you are assuming a higher risk in exchange for lower premiums).CO-INSURANCE – (Phase 2) – After you meet your deductible, you’ll pay a “co-insurance.” “Co” meaning 2, two entities will share the burden of the bill; usually you’ll see “co-insurance” as a 70/30, 80/20, 50/50, 60/40, 90/10. The larger portion of the co-insurance the insurance company will pay, the lesser portion you will pay.MAXIMUM OUT OF POCKET – (Phase 3) – After you’ve paid your deductible, and then your portion of the co-insurance, you finally reach your maximum out of pocket. From this point on, the insurance company will pay the rest of the bill. (Major Medical Plan.)CO-PAY – A flat dollar amount to be paid at the Doctors office. Sometimes referred to as a “first dollar benefit” (before deductible). Meaning, you pay a flat $30 or $20 or $40 dollar copay, or whatever the copay is, and the visit is paid in full. WATCH FOR LIMITS! Make certain the copay is a flat dollar amount paid BEFORE your deductible.HMO is Health Maintenance Organization, usually a limited regional/geographical area, with a certain number of providers in the HMO. You will select 1 Dr to manage your care, and your Dr. will “help you decide” if you need a referral or not. HMO’s usually have very low deductibles and copays.PPO Insurance is Preferred Provider Organization. You may visit anyone you wish in the network, still you must know the geographical area of your Network, even with a PPO plan. If you are on vacation and become ill, will your plan out of state cover you (in network)?CREDIBLE COVERAGE In order to cover your pre-existing conditions when moving from one plan to another, you must have a Credible Coverage Major Medical plan. It is a document given to you from your insurance company as proof that you had a Major Medical plan protecting you from a start date to an end date. You must not go further than 63 days from one Major Medical Insurance coverage to the next, if you do go beyond the 63 days, you will have a pre-existing condition clause in your new policy that states you will not be covered for any of your pre-existing conditions for 1 full year (at a minimum.)If you go beyond 63 days without “Credible Coverage,” the new insurer will look to your previous 6 months (average) health history and condition, and not cover you for any ailment you have (pre-existing.)Now don’t be mistaken, that when you want to go from one insurer to the next, if you were covered with “credible coverage” that you are automatically guaranteed a plan. This is not true. You will still need to be underwritten, and the new company is not obligated to take you on as an insured if you don’t fit their underwriting guidelines.Please Note: This Free Consumers Guide is meant to be used as informational only. The author herein will not accept liability for any circumstances in which an outside company may define their features and benefits differently than in this document. Consumers will accept this document as informational only, and not a legal document. Consumers will be held responsible for their own purchases, and not hold the authors in this document liable for any actions taken by any consumer. Consumers must verify the plan in which they purchase, and will not hold the information in this document as a specific reason to take or not to take a certain action. This document is produced by a licensed health agent. The 14 Costly mistakes you should avoid when selecting your health plan.
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