Health Insurance Buyers Guide

Health Insurance Buyers Guide

Medical bills are the #1 cause of Bankruptcy in the U.S. As a result, purchasing Health Insurance is one of the most important decisions in your life.

Top 10 Health Insurance Tips

Please read the following tips to make sure you make the right decision.

1. Purchase Health Insurance from Licensed Agents, not Telemarketers!

In the past few years, Call Centers have started selling Health Insurance and Mini-Med or Supplemental Benefit plans by Telemarketers who are not Licensed Insurance Agents. These Telemarketers are only concerned with selling a policy and normally do not understand the difference between Insurance Carriers, plans and underwriting conditions.

A majority of Telemarketers sell Guaranteed Issue Mini-Med or Supplemental Benefit plans without telling you that it is not Major Medical/Catastrophic Health Insurance.

Warning: Guaranteed Issue plans are almost always Mini-Med or Supplemental Benefit plans and not Health Insurance.

Solution: Only purchase from a Licensed Agent that represents multiple Insurance Carriers.

2. Do Not Believe Online Internet Quotes!

Rate quotes from online Web sites only show Preferred Rates, which many people do not qualify for. Standard rates will be 10%-20% higher and pre-existing medical conditions can result in additional rate increases or declined policies.

Solution: Verify whether premiums have been rated-up for pre-existing conditions. Ask the Agent if they have conducted an Underwriting Pre-Screen Evaluation to determine if all applicants qualify for coverage or premiums may be increased.

3. What Type of Coverage Do You Need?

a. Traditional Major Medical with Doctor Office Visit & Prescription Drug Co-pays

b. Health Savings Account (HSA); No Co-pays; Lower Premiums & Tax Advantages

c. Catastrophic / High Deductible Major Medical

d. Short-Term Medical; Low Premiums; Not Renewable After Term

e. Guaranteed Issue for Un-Insurable Individuals

f. Association/Employer Group Coverage

4. Do You Want Top Quality Coverage, Lowest Premiums or Both?

Most Individuals and Families purchase Health Insurance coverage solely based on the lowest price! However, no one in a Hospital bed facing a Major Operation wants the least expensive coverage. They also do not want to be operated on by the cheapest Surgeon or Dr. Kevorkian.

Solution: Determine which factors are most important in making your decision. Are you most interested in plans that provide the lowest premiums, best coverage, greatest protection and/or tax advantages? This will determine the type of plan you should select.

5. Understand Coverage Benefits & Limitations

Most people do no take time to understand the coverage benefits, limitations and exclusions between various Health Insurance plans. In fact, virtually everyone spends far more time buying a car than insurance to protect their Health. Your body is out-of-warranty, cannot be replaced and will require more care as you age. Make sure you know who is going to pay for repairs.

Solution: Determine plan coverage benefits and limitations on Doctor Office Visits; Prescription Drugs; Hospitalization; Surgery; Inpatient/Outpatient Treatment; Preventive/Wellness Care; Chemotherapy; Miscellaneous/Ancillary Expenses, Organ Transplants; etc.

6. Risk of Un-Insurability

Very few people understand the risk of becoming un-insurable for life, due to an Accident or Illness, while covered under Employer Group and many Individual plans. Can you or your dependents be singled out for rate increases or cancellation?

If it can happen to Superman and Michael J. Fox, it can happen to you!

Solution: Sign-up for an Individual Health Insurance plan that does not allow you to be singled out for rate-up or cancellation regardless of changing medical condition or claims history.

7. Independent Insurance Brokers vs. Captive Insurance Agents

A majority of Insurance Agents represent one Insurance Carrier. As a result, they must fit their plans to the client, rather than selecting the best plan for the client.

Solution: Purchase Insurance from an Independent Insurance Broker, who represents multiple Insurance Carriers.

8. Insurance Company Ratings

Before you purchase your next health insurance policy, you should know something about how insurance companies are rated. A.M. Best and S&P rate the quality and financial condition of Insurance Carriers. The ratings the A.M. Best Company assigns are:

A++ and A+ (Superior)

A and A- (Excellent)

B++ and B+ (Very Good)

B and B- (Fair)

C++ and C+ (Marginal)

C and C- (Weak)

D (Poor)

E (Under State Control)

F (In Liquidation)

Solution: Only purchase Insurance from highly rated and reputable Insurance Carriers.

9. All Health Insurance Companies Do Not Pay Claims The Same Way

There are two main methods by which claims may be considered for payment:

1. The insurance company decides how much they should pay.

2. An independent third party in the industry decides.

In many cases, the insurance company decides what they want to pay, using wording like: Normal, Prevailing, Average, Permissible, Regular, Negotiated Fee, Allowable Amount, Limited Fee Schedule, etc.

Only the company knows what the meaning actually is. Frequently it is not what the hospital, doctor or policyholder feel it should be, resulting in misunderstanding.

Solution: The American Medical Association (AMA) recognizes a term called Usual, Customary and Reasonable Charges (UCR), which sets the highest standard for all health insurance claims. These charges are based on what the majority of costs are for the same or similar service within the geographic area. UCR amounts are NOT decided by ANY insurance company. They are decided by a recognized, neutral third party. Choose an insurance plan that pays UCR after deductibles or co-payments have been met.

10. All Health Insurance Companies Do Not Increase Rates The Same Way

Many Individual Insurance Carriers can single individuals out for rate increases independently of all the other policyholders. They may raise your rates because you have caused them to pay out a lot of money for claims. The purpose of a rate increase is to offset claims loss and inflationary increases. Since all insurance companies are subject to paying claims and economic variances, there will always be a need for periodic rate increases. However, you should not accept a plan that allows you to be singled out for rate increase due to your medical condition or claims history.

Solution: Make sure you cannot be singled out for rate increases on an individual basis. Purchase a plan that performs any necessary rate increases on all the policyholders of the same type in your particular state.

Unfortunately, most people don't understand the answers to these questions, until it is too late!

Understanding

Health Insurance Terms

Catastrophic Coverage

High Deductible Health Insurance plans with no benefits prior to satisfying the deductible.

Centers of Excellence

Designation for the Top U.S. Hosptitals, which historically have a >50% higher mortality rate for treatment of Critical Illness or Organ Transplants. Some of the facilities include: Mayo Clinics, Cleveland Clinic, UCLA Medical Center, Johns Hopkins, Cedars-Sinai, M.D. Anderson (Houston Cancer Center and many more. Center of Excellence provisions allow the insured party to be treated at any of these facilities on an In-Network basis.

COBRA

The COBRA act provides continuation of Employer Group coverage for a maximum of 18 months following employment. COBRA is generally 2 times more expensive than Individual coverage, since the ex-employee is responsible for 100% of the premium.

Co-insurance

The amount you are required to pay for medical care in fee-for-service plan or Preferred Provider Organization (PPO) after satisfying the deductible. The co-insurance rate is usually expressed as a percentage of billed charges. For example, if the insurance company pays 80 percent of the claim, you pay 20 percent.

Co-payment

Co-pays are normally available immediately and prior to satisfying your deductible.

Deductible

The amount of money you must pay upfront each year to cover your medical care expenses before your insurance policy starts paying benefits. Deductibles can range from $500 to $5,000 Per Individual or $2,000 to $10,000 Combined Per Family.

Doctor Office Visit Co-pays

Doctor Office Visit Co-pays may be limited (2-4/Person Per Year) or Unlimited Visits.

Employer Group Coverage

Employer Sponsored Health Insurance plans offer coverage for Employees regardless of medical condition. As a result, Small Employer Group premiums can be 30%-100% higher than comparable Individual plans. Employers may pay a portion of the premiums for Employees and their Dependents. However, most employers have dramatically increased the cost to Employees for Dependent coverage.

The greatest risk of Employer Group Coverage is the possibility of the Employee and/or Dependents becoming Un-Insurable, due to pre-existing medical conditions. If that occurs, their only option is normally COBRA for a maximum of 18 months, followed by HIPAA (See Explanations).

Exclusionary Riders

Exclusionary riders eliminate coverage for specific conditions or circumstances for which the policy will not provide benefits.

Guaranteed Issue Plans

Mini-Med, Supplemental Benefit or Discount plans that provide limited coverage to Un-Insurable Individuals. Plans can also be used to fully or partially offset your deductible and out-of-pocket costs when combined with Major Medical Insurance.

Health Maintenance Organization (HMO)

Prepaid health plans in which you pay a monthly premium and the HMO covers your doctor's visits, hospital stays, emergency care, surgery, preventive care, checkups, lab tests, X-rays, and therapy. You must choose a primary care physician who coordinates all of your care and makes referrals to any specialists you might need. In an HMO, you must use the doctors, hospitals and clinics that participate in your plan's network.

Health Savings Account (HSA) Qualified Plans

HSA plans are Major Medical/Catastrophic plans that typically offer lower premiums, since they do not allow a) Co-pays for Doctor Office Visits or Prescription Drugs and b) Maternity Benefits.

HSA plans consist of 2 parts: a) Major Medical/Catastrophic Health Insurance and b) optional medically related IRA. The optional HSA/IRA fund allows you to deposit pre-tax dollars up to the Federal maximum of $2,850 (Individual) or $5,850 (Family) in 2007. Funds can be used to pay virtually all medically related expenses, including: Deductible, Doctor Visits, Prescription Drugs, Dental, Vision, Chiropractic, Long Term Care Premiums, etc. Un-used funds continue to earn interest and roll over every year, until retirement when they can be withdrawn for any purpose with no penalty.

HIPAA

The Health Insurance Portability & Accountability Act guarantees that Insurance Carriers must offer coverage to any Individual who completes 18 months of COBRA regardless of pre-existing medical conditions. Unfortunately, the legislation did not regulate the premiums or benefits. As a result, HIPAA plans provide limited benefits and are normally rated-up 300%-400% over standard rates.

Indemnity Plans

Indemnity plans allow the insured party to go to any Hospital, Doctor, Surgeon, Lab or Clinic. Indemnity plans do not utilize PPO or HMO Networks, which means the insured party does not receive network discounts. Indemnity plans may also have daily or per procedure limitations on benefits, such as: Hospitalization @ $500/day; Outpatient Testing @ $1,000-$2,000, etc. These limitations can cause significant out-of-pocket risk.

Out-of-Pocket Maximum or Stop Loss

The maximum amount you will be required to pay in a year for deductibles and co-insurance. It is a stated dollar amount set by the insurance company, in addition to regular premiums.

Portability

The ability for an individual to transfer from one health insurer to another health insurer with regard to pre-existing conditions or other risk factors.

Pre-existing Condition

A health problem that existed before the date your insurance became effective. Many insurance plans will not cover pre-existing conditions. Some will cover them only after a waiting period.

Preferred Provider Organization (PPO)

A network of health care providers with which a health insurer has negotiated contracts for its insured population to receive health services at discounted costs. Health care decisions generally remain with the patient as he she selects providers and determines his or her own need for services. Patients have financial incentives to select providers within the PPO network.

Prescription Drug Co-pays

Traditional plans normally provide co-pays for Prescription Drugs. Brand Name Drugs normally require satisfying a deductible, which can range from $100-$500, before co-pays are available.

Primary Care Physician

Under a health maintenance organization (HMO) or point-of-service (POS) plan, usually your first contact for health care. This is often a family physician, internist, or pediatrician. A primary care physician monitors your health, treats most health problems, and refers you to specialists if necessary.

Rate Increases

Insurance Carriers can increase rates based upon Age, Claims History, Medical Condition, Risk Group, State or Zip Code, etc. The best plans guarantee that you will not be singled out for rate increase, due to changing medical condition or claims history. If possible, select an Insurance Carrier that increases rates annually based on Age. Avoid Insurance Carriers that have a history or huge Quarterly, Semi-Annual or Annual rate increases.

Rate Lock

Most Insurance Carriers provide an initial 12-month rate lock. However, some Insurance Carriers can increase rates quarterly.

Riders

Riders are an amendment to a policy that can add or delete coverage benefits. Maternity riders add coverage for pregnancy, pre-natal care and/or delivery. Exclusionary riders waive coverage for pre-existing medical conditions.

Short-Term Medical Plans

Limited benefit plans with lower premiums that are not renewable. Plans normally provide a $1.0M to $2.0M maximum benefit for a period of 1-36 months. Ideal solution for College Students, Job Seekers or Seniors trying to bridge the gap to Medicare. STM plans offer simplified underwriting with no requirement for medical records or a Paramed exam.

State-to-State Portability

Does the plan allow continuation of coverage if you move to another state? Most plans, except Blue Cross, allow a transfer to states where they are licensed to provide coverage.

Underwriting Approval & Pre-Screen Evaluation

All Individual Insurance Carriers have the right to decline applications, rate-up premiums and/or waive coverage for pre-existing medical conditions.

Note: Make sure your Agent conducts an Underwriting Pre-screen Evaluation of your medical information prior to submitting an application, which will reduce the possibility of being declined.

Un-Insurable Individuals

Individual with pre-existing medical conditions, including: AIDS; Alzheimer's Disease; Angioplasty; Cancer; Bi-Polar Disorder; Cirrhosis of the Liver; COPD; Cystic Fibrosis; Diabetes; Emphysema; Gastric Bypass; Heart Attack; Hemophilia; Hepatitis C; Kidney Disease; Leukemia; Lupus; Multiple Sclerosis; Obesity; Parkinson's Disease; Pulmonary Fibrosis; Rheumatoid Arthritis; Stroke; Ulcerative Colitis; and hundreds of other conditions.

Usual, Customary and Reasonable (UCR) Charges

The amount a health plan will recognize for payment for a particular medical procedure. It is typically based on what is considered "reasonable" for that procedure in your service area.

Do not purchase a plan that does not pay UCR charges or the Hospitals, Doctor�s, Surgeons, Labs and Clinics will bill you for the difference.


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