Heath Insurance Book, Chapter 1, Section 2

Figure 1.1: What Makes a Good Deal?

Let’s explore getting the most for your money in more detail.

1. Value

Getting the most for your money means getting the best value for you. This may not be the same value as your sister, your best friend, or your neighbor. For example, two different people drive cars – one sees the best value in getting the most miles to a gallon of gas. Another sees getting the most enjoyment from a gallon of gas. While the first may be trying to save money, the second may be trying to enjoy the act of driving, placing that at a higher priority than the additional cost of fuel. Both are trying to get the most for their money, but they are after different goals. This is true of health insurance, where different coverages and approaches will be better for different people – not a one-size-fits-all approach. Some people are more attracted to having a lower monthly payment, others are more attracted to having a lower deductible.

2. Necessity

Each and every feature that is included in a health insurance plan has a cost. Many plans are combinations of features that are offered together as an attractive package. Few allow à la carte choice in features, allowing you to configure your own coverage. Having additional features may be nice, but if you never use them, then you are paying money for nothing.

You can look at this like the way different automotive manufacturers sell cars. The first manufacturer offers many different options that you could add on separately if you desired. It takes a lot more time to go through all the options you could add on, but this process also ensures that you buy only what you need, assuming you do not get tempted by all the cool accessories. Another manufacturer’s purchasing process offers a few packages that group many options together. This process is a lot simpler and less time-consuming for a buyer. However, you end up paying for an option that is part of a group whether you need it or not. It can be the same with health insurance policies that group features together. For health insurance, however, you may end up paying for an unnecessary feature over and over every month and every year that you have the unused feature, which, as you might imagine, can be extremely costly.

Gaps are health insurance needs that are not paid by your plan. For example, having a limited number of days in the hospital for an illness may mean that the plan stops paying after you’ve been in the hospital for a maximum number of days, for example, Medicare’s 150 day hospital maximum. It is also possible that your insurance will only pay up to a certain amount, the daily maximum, and you pay the rest. An example of this is a health insurance policy with a hospital room and board maximum of $300 in an area where hospital charges always exceed this amount.

It is hard to know where the gaps are in any insurance plan. They all have some gaps, some are small and some are large. Reading the sales material before applying for health insurance doesn’t answer many questions about gaps. Even reading the material that comes with any purchase may not clearly answer what is and is not covered because these decisions are made and revised over time, sometimes getting broader in what is covered, sometimes narrower. Your best bet to avoid encountering price gaps is to choose a plan offered by an insurer who is concerned about quality. You will see how to refine your search for health insurance for factors like quality in Chapter 7, and to avoid rip-offs in Chapter 10.

4. Long Term

A cheaper monthly payment may be attractive now, but if it means that in the future you will have big expenses because of what is and is not covered, then it is not a good deal. There are plans out there that cover what you need now for prevention and don’t run out when you need them most in the future if something bad happens. Examples of plans that may lead to future hardships include a plan that offers a low annual maximum of $100,000 that would not likely pay enough in a year to cover an extremely serious medical problem. Or a low lifetime maximum ($500,000 to $1 Million) that might stop paying twenty years down the road after you’ve had a serious ongoing medical condition for many years and inflation has more than quadrupled the current costs of treatment.

5. As Promised

You are buying a plan that is supposed to pay for what it says, but sometimes you don’t get what you pay for. It’s important to choose a plan from a company that values quality and pays claims promptly and fully. You can ensure this by buying from a company of quality and checking out the complaints against any particular insurer with your state. Chapter 7 covers evaluating the quality of the insurance companies and the complaints against the companies.

6. Easy to Use

A good deal means that you don’t have to continually file paperwork, deal with claim rejections and inquiries, and pay for medical expenses with little hope that you’ll get reimbursed – often getting paid late if at all.

All of the factors involved in a good deal must be considered – both what you get as well as how much it costs. Remember, it’s the best deal for you, not someone else.

Heath Insurance Book, Chapter 1, Section 3

There are many different stories of people who do not have health insurance and their reasons why. Whether to purchase health insurance and the cost of it is a major topic of discussion throughout the United States. Figure 1.2 lists the biggest risks of not having health insurance, some less obvious than others.

Figure 1.2: Biggest Risks of Not Having Health Insurance

If you don’t have health insurance in this country and need medical attention, the doctor will expect you to pay a much higher rate than they’ve negotiated with the major insurers. While this is unfair for customers paying cash, it is due to the leverage that the insurers use to negotiate the rates down for their benefit. Since the individual does not have much leverage, and is less likely to pay the bill, you can see why doctors’ offices do this. If you want to negotiate the fees, you’ll have to do that with the office manager in advance of the appointment – if they’ll even negotiate – and continue to negotiate with everyone in the healthcare chain, including labs, hospitals, pharmacies, and so on. If you try this route, you’ll want to keep track of all your negotiations in writing.

One health insurance agent told me that he thought because I kept the COBRA coverage from my previous employer (the option to keep health insurance from an employer where you pay the full amount that the employer pays) for so long was because we had health problems. Most folks only keep it for a few months until they find something else, unless they have a medical condition that would prevent getting individual coverage.

One of the most difficult things to overcome when purchasing health insurance is a pre-existing medical condition. It also happens to be one of the most popular reasons why some people fear being unemployed, because they or a dependent have a pre-existing condition that would limit their available health insurance options. You’ll find more information about pre-existing conditions and coverage for those with a medical condition in Chapters 2, 6, 9, and 10.

Heath Insurance Book, Chapter 1, Section 4

To get an idea of how much the health insurance premiums go up each year, let’s look at some statistics from organizations that study these markets. The Kaiser Family Foundation, and the Health Research and Educational Trust, both independent non-profit groups with a mission to provide healthcare information, publish an annual survey entitled “Employer Health Benefits.” This is an annual survey of the trends of purchasing group plans by employers. This is not exactly the same as an individual buying insurance, but it gives some idea about the upward nature of rates for both types of insurance.

This study has shown double digit increases in the first few years of the new century, as high as 13.9% in 2003. However, the trend is currently downward, with a 7.7% increase in 2006. But this downward trend is still more than twice the overall inflation rate, and the overall increase since 2000 for family coverage has been 87%.

Heath Insurance Book, Chapter 1, Section 5

• After you get a rate increase.
• After you change age (usually in 5 year bracket – 40, 45, 50, etc.).
• When you add or remove dependents.
• When your health changes (for the better or worse).

Although managing your own health plan may seem like a lot of work, it does allow you the flexibility to buy and pay for only what you need. It ultimately gives you control over how you spend your money with regards to your health. For example, you can change plans when you need to, you can cover family members individually, and you can take advantage of the constantly changing health insurance plans available to cut your costs.

Unlike an employer’s group plan, in many cases as an individual you can change coverage or insurers anytime in a year. This means you have control over how you are covered – and as new products come out on the health insurance market, you can be first in line to buy them.

New companies, products, and approaches are appearing to satisfy the new needs and desires of those buying health insurance. If you aren’t thrilled with the options available, keep shopping and new options will open up. For example, when I first left my job I went with the COBRA option, and checked with that insurer for any individual policies. There weren’t any. But as I am doing this research, well over a year later, it is possible to obtain insurance through this company – as part of an association. This makes it a very appealing option, since the network, doctors, and policies appear to be very similar between the plan available through COBRA and through the association plan. You’ll want to read Chapter 6 about association insurance and whether it’s the right choice for you.

If you find yourself traveling to different locations, whether frequently or for short or long periods of time, make sure that you investigate plans that provide you and your dependents with coverage where you go. Some HMO/PPO plans have nationwide networks, some have only local networks. With some it doesn’t matter who you see (traditional indemnity insurance), and coverage outside of the U.S. varies, with a majority of plans not covering anything but an emergency. Additional international policies may be found, you could self-insure for trips, or you could look into short-term health coverage at your destination when traveling outside your main plan area.

Check into the available healthcare in the places that you will frequent. If you spend most of your time at home, but have a national network in a PPO, you’ll be able to get covered healthcare when you are away from home on travel. If you travel internationally, you can either use a plan with built-in international coverage, or get a short term international policy.

If you move to a different part of the state, or to a different state, then you may not be able to keep your current health insurance coverage. If you have any significant medical condition, it may make sense to reconsider a move, or at least maintain residency in the location of your current health plan to avoid major increases in premiums when shopping for a new plan, or outright denial of coverage. The place to start for your annual health insurance checkup is with your agent, web sites in this book, and www.BestHealthInsuranceBook.com.

Heath Insurance Book, Chapter 1, Section 6

The steps to get the best deal are presented in Figure 1.3. Read through the overview of the steps to get an idea of what is involved. Each of the chapters that follows includes one or more of these steps, as well as tips, diagrams, and other resources. There are also more resources available at our website, www.BestHealthInsuranceBook.com.

Figure 1.3: Steps to Get the Best Deal

Heath Insurance Book, Chapter 1, Section 7

Sometimes it seems that the alphabet soup of insurance terms and abbreviations are only intended to intimidate you. In Chapter 2, you’ll get a quick review of the most important terms and some graphics to help illustrate the meaning of the terms for the “picture people”. Chapter 3 tells you the many places that you can get health insurance – and some of the characteristics of each place to get health insurance. Chapter 4 provides more terms related to the various features that you may encounter in plans while shopping, along with a way to keep track of features important to you.

Predicting your health expenditures is not an exact science, but it can be helpful to get an idea of what you’ve spent and then project that into the future, as explained in Chapter 5. Chapter 6 helps you to understand different types of health insurance – including individual or group, with comparisons between the various types.

Chapter 7 helps you to obtain the list of authorized insurers from your state and leads you through the process of narrowing down these insurers. Once you have the short list of insurers that meet your criteria, you can proceed to accumulate quotes and options from these insurers, as detailed in Chapter 8. This is where the most legwork is involved, as you gather information from each company, either directly from an insurer or through an agent. This chapter also shows a mathematical way to compare all the numbers provided – and a way for you to determine which company and plans to pursue further. After helping you to make a decision, Chapter 9 explains the process of applying for new insurance, and the steps that follow.

Chapter 10 provides tips to keep you from becoming the victim of the many rip-offs that exist in the health insurance marketplace. The appendices provide contact information and internet addresses for resources that you’ll need as you work through the steps in this book.

You’ll also want to keep up-to-date with additional information along with downloads and online tools from the website, www.BestHealthInsuranceBook.com.