January 20, 2010

Health Insurance: 5 Ways To Save When Buying Your Own



Over the past year we’ve all heard of the staggering number of Americans who have lost their health care coverage.  Some lost their insurance when their job was eliminated.  Others still have a job but their employer couldn’t afford to continue offering health insurance.  Many retirees lost benefits and still others have seen their premiums soar out of reach.  Millions of Americans are now left to sift through the convoluted language of health insurance policies to try and compare apples to apples to get the coverage they need at a price they can afford.  Even if you read the policy and the slick marketing materials provided, often it can cost you thousands of dollars in what turns out to be uncovered events because the policy language is like reading a foreign novel.

Taking control of your health care coverage is something I think is greatly needed.  Many are at the mercy of whatever someone in HR thinks is acceptable, regardless of what each individual employee really needs.  Sure, it’s impossible to tailor a plan to each person but many end up getting less because the costs of providing some services are too high.  In addition, healthy people are often over-charged because they are pooled with others in the company who have serious health problems.

Health insurance is regulated at the state level, and some states are more protective of their citizens than others.  There is no federal/national oversight and the insurance companies are often left to police themselves.  This has left us with the ongoing and very contentious debate about health care that has been in the news for the past several months.

What do you look for in choosing your health insurance policy?  First, you want to compare them side by side.  I came across this booklet that will allow you to do just that.  It is a PDF and you can download it directly to your computer.

Here are 5 Ways To Save When Buying Your Own Health Insurance:

1.  Shop around – as with many things, get quotes from different companies and use the worksheets from this booklet to compare the plans side by side.  If you belong to a professional organization (realtor, lawyer, actor) check with them to find out if there is an arrangement with an insurer to offer discounted plans to members.  Check with friends who own small businesses, as they might have a contact they feel offers a good product.  Call the company that handles your life insurance or investments to see if they offer health insurance.  Once you have chosen a few, check them out with your state insurance department to make sure they do not have open complaints.

2.  Purchase only the coverage you need – do not over insure yourself or your family.  It’s a waste of money and if you’ll never use the coverage they why pay for it?  For example, if there is no possibility you or someone you will be covering will become pregnant then do not have that coverage.  If you need to cover your entire family but one person has a medical condition that may have high premiums associated with it, consider getting separate policies.  No one said a husband and wife had to have the same policy.  And family coverage might not be the best price if one parent is ill but the other and children are not.  Your goal is to buy the most comprehensive policy at the lowest price.

3.  Deductible – know exactly what is covered in the deductible.  If drug costs and doctor co-pays do not apply, make sure you take this into consideration when evaluating the policy against the others.  If the policy covers more than one person, find out if the deductible is for everyone or if each person must meet that number.  This could mean thousands out of pocket if you are unsure.

4.  Out Of Pocket Maximum – You want a policy that has an annual out of pocket maximum that you can afford.  If you have saved and have a sizable emergency fund, then you may be able to raise your out of pocket maximum and get your premiums lowered. It is important to know what is and is not included in this maximum so you are not caught off guard in an emergency or urgent situation.  Avoid: Policies that exclude the deductible or any copay or coinsurance from the out-of-pocket maximum.

5. No caps on lifetime or annual benefits – The problem with any kind of limit on lifetime or annual benefits is that you could be left on your own to pay for treatment costs that are much greater than you expected. If you or a family member get sick, you want your policy to easily accommodate those big bills.  Check to ensure that the policy has no cap on specific kinds of treatment, such as hospital and outpatient medical treatment, doctor visits, drugs and diagnostic imaging tests.

And speaking of checking the policy, ask for the complete policy, often called Evidence of Coverage (EOC), before making any decision.  The broker or agent may balk and tell you that you will get that when you sign up, but don’t take NO for an answer.  You can not possibly evaluate the policy fully if you are only given a glossy marketing brochure.  If you can not get the Evidence of Coverage, contact your state insurance regulator, and continue looking for a policy that offers you the most coverage and the least cost.

As a final note, I do want to point out that if you are covered by your employer health plan but do not feel you get the coverage you need/want for the price YOU pay then consider shopping around for an individual policy.  You are not obligated to be covered by your employer health plan.  If you have an employee portion you are responsible for, remember that is YOUR MONEY!  You have the right to spend your money wisely and might even be shocked to find that you can buy a better individual policy for your same (or even less) contribution.  And to think your employer says you are only paying a small portion of the total premium.  I have seen it first hand where my friends have gone out on their own and get better coverage for less per month than what their employer-sponsored plan provided.

Stand up and be counted in this health care debate!

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