Health insurance Part 2
Choosing a policy
Once you?ve decided on a state (See Part 1), obtaining affordable individual coverage can be a challenge. It may be difficult to find a company that will sell you a policy, particularly if you have a serious medical problem. You may have to prove you are insurable by getting a medical exam and taking tests that rule out certain conditions the company does not want to pay for. Premiums for individual coverage are generally higher than for group coverage and you may get less overall coverage. Companies may exclude treatment for certain conditions which you have had in the past.
In obtaining coverage, you need to weigh your medical needs against what you can afford to get the best coverage for your money. As you may have discovered, the same coverage in one state can cost more than in another.
The main types of policies are:
- Fee-for-service insurance (indemnity insurance): Traditional type of health insurance that pays a portion of each medical service you get, such as doctor?s visits and hospital stays, while you pay the remaining cost. Premiums are generally higher than Managed Care.
- Managed Care Plans: Also known as HMOs (health maintenance organizations) or PPOs (Preferred provider organization). The health insurance company has contracted with doctors and hospitals to provide services. You pay a monthly premium and then a small amount for each visit or service (usually $10-$15) called a co-pay. Some plans allow you to use doctors and hospitals outside of the plan network but you pay more per visit.
An independent agent or broker can help you compare several companies. (See resources.) Talk to several to find one you are comfortable with and who offers policies from several companies. Ask questions about each policy and make a comparison chart. An agent can answer many of these questions, but examine the policy itself as well. (Note: Under the Patient Protection and Affordable Care Act, the health care reform bill passed in 2010, some of these will change. However, guaranteed coverage will not be phased in until 2014.)
- How much of my doctor and hospital bills will this plan pay for?
- What is the monthly premium?
- How much will I have to pay for a hospital stay before the plan begins to pay?
- How much will I have to pay for office visits to the doctor?
- Does the plan pay for preventive health care, such as routine checkups?
- Does this plan have rules for people who already have serious, chronic medical problems? Will this keep me from getting the care I need? A preexisting condition should be described as a condition "for which you have received treatment, medication, or advice in the past six months" as opposed to having manifested itself for a particular time before the policy began. In the second case, a company could deny coverage of cancer because it might have been growing for more than six months even if you had no knowledge of it.
- If there is a deductible, does it start over each year (preferable) or for each new illness?
- What services are covered by this health insurance? Will it pay for visits to the emergency room or urgent care center? Does it cover routine surgery, hospital stays, doctor visits, skilled nursing facility care, home health care, and medical equipment and supplies?
- Does the plan cover visits to an eye doctor, dentist or prescription drugs?
- Does the plan pay for catastrophic medical costs?
- Is there a yearly or lifetime limit to how much the plan will pay for medical costs? The lifetime limit should be at least five million dollars. (Note: as of 2010, the plan should have no lifetime limits under the new law, but may have annual limits until 2014.)
- Are rate hikes based on individual or pooled claims? (In the case of pooled claims, the company raises the rates of an entire category, not individuals.)
- Are rates based on my age at the time the policy is issued (preferable) or my "attained" age?
- Is the policy Guaranteed Renewable/Non Cancelable (preferable) or is it just Guaranteed Renewable?
Check out the company
Good agents will give you insight into the companies they recommend. Check the financial stability of each company by asking for its A.M. Best rating. It should be an "A" or a "B." Verify this at the A.M. Best Web site.
Check also with the State Insurance Department or Commission about any company you are considering. Make sure the company you are considering is regulated by your state. If not, the company may hike rates or drop coverage for those who file "excessive" claims. Check to see if there is a history in this state of companies filing for bankruptcy and passing the clients over to a "sister" company, at higher rates, thus eliminating high risk clients. In some states, companies will leave the state or stop issuing individual policies if costs get too high. Do a Google search or link to them through the Georgetown Web site.
Reducing monthly premiums
Companies often offer indemnity policies with differing deductibles. The larger the deductible, the lower the monthly premiums. The percentage the company pays after you have paid out your deductible may be either 50% or 80%. If you are relatively healthy and have money in the bank to cover your deductible if something major happens, you might choose a higher deductible and the lower coverage. Or, set up a medical savings account or a health savings account to cover out-of-pocket expenses (check with your tax preparer on eligibility and how to do this).
If both you and your spouse are seeking coverage, check into getting two individual policies rather than a couples' policy. For example, for about the same monthly premium, you would each have a $2500 deductible rather than a $5,000 deductible for the two of you. If only one of you becomes ill or has an accident, your insurance will begin coverage after you have paid out $2,500 rather than $5,000. This is especially recommended if one has a better health record than the other.
You may be eligible for group health insurance at lower rates through a group or association. However, caution is advised. RVer Shaneen obtained association health insurance provided by an out-of-state company. Her premiums were jacked up from $125/month to $1800/month after a bout with breast cancer. She had no recourse because Florida does not regulate out-of-state companies. In some states, association policies fall under different regulations as well. Be sure to check with your state insurance department.
Read and study your policy. Remember, a lower premium may indicate poor coverage, not savings.
Individuals with preexisting conditions will have more difficulty finding health insurance coverage. Depending on the state, you may be able to obtain coverage through one of the following ways:
- Open enrollment: Managed care companies in some states must have an open enrollment period each year where the company cannot consider any pre-existing conditions.
- Health Insurance Portability and Accountability Act (HIPAA): This federal law may help you convert your group or COBRA policy to an individual policy.
- State requirements: A dozen or so states require that insurance companies offer health insurance to individuals who have not been able to get health insurance because of their health status even though they don?t want to cover you. You may meet income requirements for subsidized programs.
- High-risk pools: are available in some states for those who have not been able to get insurance because of a serious medical condition. A new federal high-risk pool has been formed. You should be able to access that through your state high-risk pool website.
- Temporary coverage: You may be able to get a policy for up to a year that will cover catastrophic expenses such as hospitalization from an accident. They generally exclude existing or preexisting conditions but give some protection.
Check with the state insurance department to find out if any of these options apply to you.
Part III will provide some ideas and resources for those with no health insurance or who want to keep medical costs down.
A.M. Best Company, the Insurance Information Source.
National Association of Health Underwriters (NAHU) an association of independent health insurance sales agents. Search by state or zip code.
National Association of Insurance Commissioners (NAIC)
Find your State Insurance Department at this Web site and carefully check out any company. Dept. of Labor - Pensions and Welfare Benefits: 800-998-7542. Information about HIPAA.
Finding and Keeping Health Insurance, Free. AARP Publication D17319. Order from AARP, 601 E St., NW, Washington, DC 20049.
Medical Savings and Health Savings Accounts, IRS Publication 969. IRS.
Federal high-risk pool information.