A recent post at the Wall Street Journal about caps on health insurance benefits and ensuing commentary at the consumerist brought to mind a tip/ripoff in buying health insurance that folks should know about: the choice in maximum benefit.
There are two types of maximum benefits that are common: a lifetime limit, and an annual limit. The lifetime limit is more common and applies to an individual’s lifetime while on a certain policy. The annual limit applies to the maximum that an insurer will cover in a given year.
The annual limit, while somewhat uncommon, is a risky bet. I’ve seen annual limits of $100,000. This gets the premium down, but if things go really, really wrong, and you need medical care costing more than $100,000, then you’re in trouble. To get an idea of how much things cost, check out the list of average cost of medical procedures in U.S. hospitals that I generated from a U.S. government database. This is a bad bet for insurance - cover me if things go really wrong, just don’t cover me if they go really, really wrong.
The lifetime limits for comprehensive medical coverage that I’ve seen range from $500,000 for a state guaranteed issue policy to unlimited, with stops at $1 million, $2 million, and $5 million along the way. You’ve got to figure that the cost of care continues to increase, and in your lifetime (assuming that you’ll stay with a plan a long time - which you will have to if you ever get sick while on a plan) it could exceed any of these fixed amounts. Anything that is less than these amounts is probably not a comprehensive medical policy, and the buyer should proceed with great caution.
I have an unlimited lifetime limit, and recommend that for anyone who can get it. I had a $5 million lifetime limit, but became uncomfortable with that plan for that and other reasons. I wouldn’t touch an annual maximum if I had an alternative.
Jonathan Pletzke is a consumer expert on health insurance and author of the health insurance book Get a Good Deal on Your Health Insurance Without Getting Ripped-Off, available online and at bookstores nationally. Additional details can be found at the consumers health insurance book and resources website www.BestHealthInsuranceBook.com. Copyright 2007-2008 Aji Publishing.
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