I have been a health insurance broker for over a decade and every
day I read more and more “horror” stories that are posted on the
Internet regarding health insurance companies not paying claims,
refusing to cover specific illnesses and physicians not getting
reimbursed for medical services. Unfortunately, insurance companies are
driven by profits, not people (albeit they need people to make profits).
If the insurance company can find a legal reason not to pay a claim,
chances are they will find it, and you the consumer will suffer.
However, what most people fail to realize is that there are very few
“loopholes” in an insurance policy that give the insurance company an
unfair advantage over the consumer. In fact, insurance companies go to
great lengths to detail the limitations of their coverage by giving the
policy holders 10-days (a 10-day free look period) to review their
policy. Unfortunately, most people put their insurance cards in their
wallet and place their policy in a drawer or filing cabinet during their
10-day free look and it usually isn’t until they receive a “denial”
letter from the insurance company that they take their policy out to
really read through it.

The majority of people, who buy their own
health insurance, rely heavily on the insurance agent selling the policy
to explain the plan’s coverage and benefits. This being the case, many
individuals who purchase their own health insurance plan can tell you
very little about their plan, other than, what they pay in premiums and
how much they have to pay to satisfy their deductible.

For many
consumers, purchasing a health insurance policy on their own can be an
enormous undertaking. Purchasing a health insurance policy is not like
buying a car, in that, the buyer knows that the engine and transmission
are standard, and that power windows are optional. A health insurance
plan is much more ambiguous, and it is often very difficult for the
consumer to determine what type of coverage is standard and what other
benefits are optional. In my opinion, this is the primary reason that
most policy holders don’t realize that they do not have coverage for a
specific medical treatment until they receive a large bill from the
hospital stating that “benefits were denied.”

Sure, we all
complain about insurance companies, but we do know that they serve a
“necessary evil.” And, even though purchasing health insurance may be a
frustrating, daunting and time consuming task, there are certain things
that you can do as a consumer to ensure that you are purchasing the type
of health insurance coverage you really need at a fair price.

Dealing
with small business owners and the self-employed market, I have come to
the realization that it is extremely difficult for people to
distinguish between the type of health insurance coverage that they
“want” and the benefits they really “need.” Recently, I have read
various comments on different Blogs advocating health plans that offer
100% coverage (no deductible and no-coinsurance) and, although I agree
that those types of plans have a great “curb appeal,” I can tell you
from personal experience that these plans are not for everyone. Do 100%
health plans offer the policy holder greater peace of mind? Probably.
But is a 100% health insurance plan something that most consumers really
need? Probably not! In my professional opinion, when you purchase a
health insurance plan, you must achieve a balance between four important
variables; wants, needs, risk and price. Just like you would do if you
were purchasing options for a new car, you have to weigh all these
variables before you spend your money. If you are healthy, take no
medications and rarely go to the doctor, do you really need a 100% plan
with a $5 co-payment for prescription drugs if it costs you $300 dollars
more a month?

Is it worth $200 more a month to have a $250
deductible and a $20 brand name/$10 generic Rx co-pay versus an 80/20
plan with a $2,500 deductible that also offers a $20 brand
name/$10generic co-pay after you pay a once a year $100 Rx deductible?
Wouldn’t the 80/20 plan still offer you adequate coverage? Don’t you
think it would be better to put that extra $200 ($2,400 per year) in
your bank account, just in case you may have to pay your $2,500
deductible or buy a $12 Amoxicillin prescription? Isn’t it wiser to keep
your hard-earned money rather than pay higher premiums to an insurance
company?

Yes, there are many ways you can keep more of the money
that you would normally give to an insurance company in the form of
higher monthly premiums. For example, the federal government encourages
consumers to purchase H.S.A. (Health Savings Account) qualified
H.D.H.P.’s (High Deductible Health Plans) so they have more control over
how their health care dollars are spent. Consumers who purchase an HSA
Qualified H.D.H.P. can put extra money aside each year in an interest
bearing account so they can use that money to pay for out-of-pocket
medical expenses. Even procedures that are not normally covered by
insurance companies, like Lasik eye surgery, orthodontics, and
alternative medicines become 100% tax deductible. If there are no claims
that year the money that was deposited into the tax deferred H.S.A can
be rolled over to the next year earning an even higher rate of interest.
If there are no significant claims for several years (as is often the
case) the insured ends up building a sizeable account that enjoys
similar tax benefits as a traditional I.R.A. Most H.S.A. administrators
now offer thousands of no load mutual funds to transfer your H.S.A.
funds into so you can potentially earn an even higher rate of interest.

In
my experience, I believe that individuals who purchase their health
plan based on wants rather than needs feel the most defrauded or
“ripped-off” by their insurance company and/or insurance agent. In fact,
I hear almost identical comments from almost every business owner that I
speak to. Comments, such as, “I have to run my business, I don’t have
time to be sick! “I think I have gone to the doctor 2 times in the last 5
years” and “My insurance company keeps raising my rates and I don’t
even use my insurance!” As a business owner myself, I can understand
their frustration. So, is there a simple formula that everyone can
follow to make health insurance buying easier? Yes! Become an INFORMED
consumer.

Every time I contact a prospective client or call one of
my client referrals, I ask a handful of specific questions that
directly relate to the policy that particular individual currently has
in their filing cabinet or dresser drawer. You know the policy that they
bought to protect them from having to file bankruptcy due to medical
debt. That policy they purchased to cover that $500,000 life-saving
organ transplant or those 40 chemotherapy treatments that they may have
to undergo if they are diagnosed with cancer.

So what do you think
happens almost 100% of the time when I ask these individuals “BASIC”
questions about their health insurance policy? They do not know the
answers! The following is a list of 10 questions that I frequently ask a
prospective health insurance client. Let’s see how many YOU can answer
without looking at your policy.

1. What Insurance Company are you
insured with and what is the name of your health insurance plan? (e.g.
Blue Cross Blue Shield-“Basic Blue”)

2. What is your calendar year
deductible and would you have to pay a separate deductible for each
family member if everyone in your family became ill at the same time?
(e.g. The majority of health plans have a per person yearly deductible,
for example, $250, $500, $1,000, or $2,500. However, some plans will
only require you to pay a 2 person maximum deductible each year, even if
everyone in your family needed extensive medical care.)

3. What
is your coinsurance percentage and what dollar amount (stop loss) it is
based on? (e.g. A good plan with 80/20 coverage means you pay 20% of
some dollar amount. This dollar amount is also known as a stop loss and
can vary based on the type of policy you purchase. Stop losses can be as
little as $5,000 or $10,000 or as much as $20,000 or there are some
policies on the market that have NO stop loss dollar amount.)

4.
What is your maximum out of pocket expense per year? (e.g. All
deductibles plus all coinsurance percentages plus all applicable access
fees or other fees)

5. What is the Lifetime maximum benefit the
insurance company will pay if you become seriously ill and does your
plan have any “per illness” maximums or caps? (e.g. Some plans may have a
$5 million lifetime maximum, but may have a maximum benefit cap of
$100,000 per illness. This means that you would have to develop many
separate and unrelated life-threatening illnesses costing $100,000 or
less to qualify for $5 million of lifetime coverage.)

6. Is your plan a schedule plan, in that it only pays a
certain amount for a specific list of procedures? (e.g., Mega Life
& Health & Midwest National Life, endorsed by the National
Association of the Self-Employed, N.A.S.E. is known for endorsing
schedule plans) 7. Does your plan have doctor co-pays and are you
limited to a certain number of doctor co-pay visits per year? (e.g. Many
plans have a limit of how many times you go to the doctor per year for a
co-pay and, quite often the limit is 2-4 visits.)

8. Does your
plan offer prescription drug coverage and if it does, do you pay a
co-pay for your prescriptions or do you have to meet a separate drug
deductible before you receive any benefits and/or do you just have a
discount prescription card only? (e.g. Some plans offer you prescription
benefits right away, other plans require that you pay a separate drug
deductible before you can receive prescription medication for a co-pay.
Today, many plans offer no co-pay options and only provide you with a
discount prescription card that gives you a 10-20% discount on all
prescription medications).

9. Does your plan have any reduction in
benefits for organ transplants and if so, what is the maximum your plan
will pay if you need an organ transplant? (e.g. Some plans only pay a
$100,000 maximum benefit for organ transplants for a procedure that
actually costs $350-$500K and this $100,000 maximum may also include
reimbursement for expensive anti-rejection medications that must be
taken after a transplant. If this is the case, you will often have to
pay for all anti-rejection medications out of pocket).

10. Do you
have to pay a separate deductible or “access fee” for each hospital
admission or for each emergency room visit? (e.g. Some plans, like the
Assurant Health’s “CoreMed” plan have a separate $750 hospital admission
fee that you pay for the first 3 days you are in the hospital. This fee
is in addition to your plan deductible. Also, many plans have benefit
“caps” or “access fees” for out-patient services, such as, physical
therapy, speech therapy, chemotherapy, radiation therapy, etc. Benefit
“caps” could be as little as $500 for each out-patient treatment,
leaving you a bill for the remaining balance. Access fees are additional
fees that you pay per treatment. For example, for each outpatient
chemotherapy treatment, you may be required to pay a $250 “access fee”
per treatment. So for 40 chemotherapy treatments, you would have to pay
40 x $250 = $10,000. Again, these fees would be charged in addition to
your plan deductible).

Now that you’ve read through the list of
questions that I ask a prospective health insurance client, ask yourself
how many questions you were able to answer. If you couldn’t answer all
ten questions don’t be discouraged. That doesn’t mean that you are not a
smart consumer. It may just mean that you dealt with a “bad” insurance
agent. So how could you tell if you dealt with a “bad” insurance agent?
Because a “great” insurance agent would have taken the time to help you
really understand your insurance benefits. A “great” agent spends time
asking YOU questions so s/he can understand your insurance needs. A
“great” agent recommends health plans based on all four variables;
wants, needs, risk and price. A “great” agent gives you enough
information to weigh all of your options so you can make an informed
purchasing decision. And lastly, a “great” agent looks out for YOUR best
interest and NOT the best interest of the insurance company.

So
how do you know if you have a “great” agent? Easy, if you were able to
answer all 10 questions without looking at your health insurance policy,
you have a “great” agent. If you were able to answer the majority of
questions, you may have a “good” agent. However, if you were only able
to answer a few questions, chances are you have a “bad” agent. Insurance
agents are no different than any other professional. There are some
insurance agents that really care about the clients they work with, and
there are other agents that avoid answering questions and duck client
phone calls when a message is left about unpaid claims or skyrocketing
health insurance rates.

Remember, your health insurance purchase
is just as important as purchasing a house or a car, if not more
important. So don’t be afraid to ask your insurance agent a lot of
questions to make sure that you understand what your health plan does
and does not cover. If you don’t feel comfortable with the type of
coverage that your agent suggests or if you think the price is too high,
ask your agent if s/he can select a comparable plan so you can make a
side by side comparison before you purchase. And, most importantly, read
all of the “fine print” in your health plan brochure and when you
receive your policy, take the time to read through your policy during
your 10-day free look period.

If you can’t understand something,
or aren’t quite sure what the asterisk (*) next to the benefit
description really means in terms of your coverage, call your agent or
contact the insurance company to ask for further clarification.

Furthermore,
take the time to perform your own due diligence. For example, if you
research MEGA Life and Health or the Midwest National Life insurance
company, endorsed by the National Association for the Self Employed
(NASE), you will find that there have been 14 class action lawsuits
brought against these companies since 1995. So ask yourself, “Is this a
company that I would trust to pay my health insurance claims?

Additionally,
find out if your agent is a “captive” agent or an insurance “broker.”
“Captive” agents can only offer ONE insurance company’s products.”
Independent” agents or insurance “brokers” can offer you a variety of
different insurance plans from many different insurance companies. A
“captive” agent may recommend a health plan that doesn’t exactly meet
your needs because that is the only plan s/he can sell. An “independent”
agent or insurance “broker” can usually offer you a variety of
different insurance products from many quality carriers and can often
customize a plan to meet your specific insurance needs and budget.

Over
the years, I have developed strong, trusting relationships with my
clients because of my insurance expertise and the level of personal
service that I provide. This is one of the primary reasons that I do not
recommend buying health insurance on the Internet. In my opinion, there
are too many variables that Internet insurance buyers do not often take
into consideration. I am a firm believer that a health insurance
purchase requires the level of expertise and personal attention that
only an insurance professional can provide. And, since it does not cost a
penny more to purchase your health insurance through an agent or
broker, my advice would be to use eBay and Amazon for your less
important purchases and to use a knowledgeable, ethical and reputable
independent agent or broker for one of the most important purchases you
will ever make….your health insurance policy.

Lastly, if you
have any concerns about an insurance company, contact your state’s
Department of Insurance BEFORE you buy your policy. Your state’s
Department of Insurance can tell you if the insurance company is
registered in your state and can also tell you if there have been any
complaints against that company that have been filed by policy holders.
If you suspect that your agent is trying to sell you a fraudulent
insurance policy, (e.g. you have to become a member of a union to
qualify for coverage) or isn’t being honest with you, your state’s
Department of Insurance can also check to see if your agent is licensed
and whether or not there has ever been any disciplinary action
previously taken against that agent.

In closing, I hope I have
given you enough information so you can become an INFORMED insurance
consumer. However, I remain convinced that the following words of wisdom
still go along way: “If it sounds too good to be true, it probably is!”
and “If you only buy on price, you get what you pay for!”

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