12 Steps to a Good Deal on Health Insurance
Want to buy health insurance, but don't know how to get a good deal, or even where to start? This article will get you started buying your health insurance, and help you from start to finish through a process designed to ensure that you know all your options and can get the best deal.
You'll need to work with an agent - who is ultimately responsible for helping you to buy the best health insurance policy. You should check with professionals such as lawyers, accountants, and of course your health insurance agent when buying health insurance. You can find a reputable agent through national organizations and check the status of the agent with your state using the links at www.BestHealthInsuranceBook.com/Resources/Find-a-Health-Insurance-Agent.html.
1. Learn and understand health insurance basics.
There are plenty of health insurance terms, but only a few are essential when
you are buying health insurance. Know the following essential terms, and you’ll
know what to tell the agent when you are asked "What kind of deductible
are you comfortable with?"
Deductible - The deductible is a dollar amount that you are responsible for paying before the insurance pays. Copayments are exceptions to this, as well as wellness or other care included in a health insurance plan. Deductibles can range from a low deductible of $250, to a high deductible of $10,000 and sometimes more. Your deductible should correlate with how much savings you have available in case of a medical event.
Coinsurance - This is a way to bring down the deductible, where you pay a percent of a dollar amount after the deductible is met, and the insurer pays the other percent. For example a 50% copay on the next $10,000 means that after you've paid the deductible, you're responsible for $0.50 of each dollar for the next $10,000. This translates into another $5,000 that you'll pay for a medical event.
Copay / Copayment - These are very popular with managed care (HMO, PPO) plans that have a network. You pay anywhere from $10-$40 to see a doctor in the network. You'll pay a higher premium for a copay option. But doctor and laboratory fees may be significantly discounted if you use the network, and not much more than the copay. The network cost for a doctor is in my area is typically around $55, which may be lower than other parts of the country. If you don't go to the doctor often, you may save money by skipping the copay.
2. Determine options on where to get health insurance - at work,
on your own, through an association, and so on.
In the last century, health insurance became a staple benefit of the american
workplace. But that is changing as companies are finding that people want
to choose their benefits separately from their workplace. And smaller companies
have never been big on offering health insurance.
You can get health insurance at work, through a spouse, buy it directly from an insurer through an agent, or get it from an association. If you are buying it and you have a small business, there are options for covering yourself, your family, and your employees through a small business plan. I've found that the small business plans tend to offer more features at a higher rate than individual insurance. It is important to note that small business plans are guaranteed to be issued in most places, which is a tremendously important if you, a family member, or an employee has a medical condition.
You'll find the most affordable option by comparing the costs of insurance from the options available to you. Not everyone has the same options available, nor the same medical status. If you or a family member has a medical condition, you may wish to cover family members separately, or in combination of the various choices available. You'll want to get the best rates and coverage for each family member, yet at the same time ensure coverage for anyone with a medical condition.
3. Determine features important to you.
Everyone has a different expectation from health insurance in terms of the
features and how much they cost. You'll need to look at features available
from health insurers in your state and determine which ones are important
to you. If you buy additional features, such as maternity coverage, chiropractic,
or international coverage, and there is no chance of using the feature, you'll
be paying for it and someone else will benefit from it. Just get the features
important to you.
4. Estimate your anticipated annual expenses.
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. You can look through your explanation of benefits statements for the
last year, and tally up the expenses, the discounts, and the amount that you
paid. You can use this information to figure out how well each of the plans
that you are choosing from would have covered you in the previous year. You
can also guess as to whether you'll have fewer or more medical expenses in
the coming year, and adjust your estimates upwards for that.
5. Decide if you should pursue group health insurance or individual
health insurance.
Group insurance is sold to groups, individual insurance is sold to individuals.
If you get individual insurance, you are issued a policy and "own"
the insurance. If you get coverage as part of a group, the group "owns"
the policy, and issues you a certificate of coverage. If you are ever unable
to continue as part of the group, or the group disbands, you'll be left without
coverage. People in this situation with a significant medical condition may
be unable to find health insurance coverage, or be able to afford it if they
can find coverage.
Individual insurance, with medical underwriting, will be most affordable for people who are generally healthy. Group insurance, where you are guaranteed issue and not medically underwritten, is most likely more affordable if you have a serious medical condition. Talk to an agent before you buy to find out which medical conditions are problematic with each insurer.
6. Obtain a list of health insurers for your state.
Each health insurer must be licensed by the state to sell health insurance
in the state. The licensing of the company may be in small group, large group,
and individual sales. Depending on the type of insurance that you are interested
in buying, individual or small group, you'll get a different list from the
state. This can be a great starting point for shopping allowing you to assemble
quotes from all the insurers in your state. You can also get information on
the number of complaints from your state department of insurance to help you
narrow your list. Find your state department of insurance contact information
and links to lists of insurers at www.BestHealthInsuranceBook.com/State-Health-Insurance-Resources/.
7. Edit your list of insurers.
Check with your state or the National Association of Insurance Commissioners
(www.NAIC.org) for information about the
complaint ratios for each insurer. Look at A.M. Best (www.AMBest.com)
for financial ratings. Read the news, Consumer Reports magazine (www.ConsumerReports.org),
and find out how many people are insured by each company from the state. Narrow
your list of insurers to the best ones.
8. Get quotes from each insurer or source of health insurance.
Once you have the short list of insurers that meet your criteria, you can
proceed to accumulate quotes and options from these insurers. This is where
the most legwork is involved, as you gather information from each company,
either directly from an insurer or through an agent. You can also get quotes
on the internet. Go to www.besthealthinsurancebook.com/Resources/Health-Insurance-Quotes.html
for quote resources.
9. Compare quotes.
Except for a few states where they have strict model plans, you'll be comparing
health insurance plans that have different options. You can use a spreadsheet
to make the work easier, and plug in all the quotes that you've received to
determine how your health spending will work with each plan, and what your
total cost will be in a year for the insurance and any medical expenses. A
spreadsheet for this is available for downloading from www.besthealthinsurancebook.com/Downloads/Downloads.html.
10. Choose your best deal.
You'll want to determine which are your best choices, and look at a combination
of how much you'll spend on insurance and medical expenses in both a good
year like you've estimated, and also in a year where something really big
happens. If you're insuring a family, you'll want to do the comparison for
the entire family, too. Your best deal is where the costs are at the lower
end in the best year, and also lower in a bad year. Make sure that you'll
be able to sleep at night with the choices you make for deductible, coinsurance,
and the quality information about the insurer.
11. Apply for insurance.
If you've decided to get your health insurance at work, you may have only
a few questions to answer. If you buy your own insurance then you may have
several pages to fill out. Take your time, note any questions that you have
about the application, and get answers to the questions before you send in
the form.
If you can, get an agent to review your answers before submitting the form. This can save you from rejection by a carrier, which will result in a "black marl" on your file at the Medical Information Bureau, a credit reporting agency. A rejection will also mean that any future insurance application will be more complicated as you must explain any rejection to most insurers.
Once your paperwork is in, you may be contacted for a paramedical exam consisting of height, weight, a urine sample, a blood sample, and possibly other tests. In some cases a doctor may need to examine you.
If you included any payment with the insurance, it should be made to the insurer and not the agent. This ensures that funds go to the right place on-time and avoids financial issues getting health insurance. If your agent charges any type of application or service fee, that will be due to the agent separately.
12. Cancel existing insurance.
Make sure that you don't cancel your insurance too soon. If there is any problem
with your policy, you may not be able to get your existing insurance back.
This would leave you uninsured. Try to plan your application about a month
in advance of when you need coverage, because it'll take a few weeks to underwrite.
Summary
These twelve steps are easy enough to follow and are comprehensive. You'll
know that you've exhausted your options by following this process. You'll
also know that your choice is the best deal for you. More detailed information
on these steps along with how to avoid ripoffs is available in the book Get
a Good Deal on Your Health Insurance Without Getting Ripped-Off that can be
ordered from your favorite book retailer, website, or www.BestHealthInsuranceBook.com.
Get answers to your questions about buying health insurance at www.BestHealthInsuranceBook.com/Answers/.
Jonathan Pletzke is a writer and entrepreneur in Chapel Hill, NC. He authored Get a Good Deal on Your Health Insurance Without Getting Ripped-Off (ISBN: 978-0-9794781-0-9) as a result of his own experience buying health insurance. He found that it was hard to find comprehensive advice about buying something as important as health insurance and wanted to help people to get the most from their health insurance and feel that they are in control of the buying process. Please contact him via his website.