Choosing among Health Insurance Plans

An individual policy is one purchased by an individual who is usually self-employed and does not have access to a group policy through an employer. People buy insurance policies out of need, but tend to trust their agent to tell them that they are buying the right policy for them.

For example a young couple will tell their agent they are planning to have a baby in the next year and would like a policy with maternity coverage. The agent may tell the couple that the policy has maternity coverage but it does not. Later the couple finds out after they are pregnant that there is no coverage for maternity unless it is a complication of pregnancy. They are now stuck; they cannot get a new policy because the pregnancy is now pre-existing.

The best thing to do is read your policy; most companies allow a free 10-day grace period. Be sure to check the exclusion list, some companies do not pay for well care for the first year, or they pay for immunizations up to a certain age. Nobody wants to read the policies, including the agent, so do not count on your agent selling you the best policy for your situation. Remember that your agent is on commission and he wants to sell you a product but may not have your best interest at heart.

Find out how long your agent has been in the business; do not work with a new or young agent. You also do not have to go through an agent if you do not want to work with one. You can go directly to many companies and work with their sales office, who are not on commission.

Some policies have a 6-month waiting period for conditions, like gallbladder surgery, kidney stones, tonsils and adenoid surgery and foot surgeries. Why is that? The reason is that many people buy policies after they are sick, not before, and then immediately go in for surgery. They will have insurance coverage so the doctors will accept them for surgery only to find out a few months later that that condition was excluded from payment for the first 6 months or that that condition is excluded because it is a pre-existing condition.

Insurance companies are in the business of making money. In a perfect world insurance is supposed to work in this way. Three hundred people all buy insurance, and the money goes into a fund. Everyone pays $250 a month for individual coverage. John Smith falls and breaks a leg. The fund then pays for his medical expenses of $1200. But the fund still continues to grow because everyone is contributing to the fund and no one is abusing the system.

Each of these 300 people is paying out money for a service that they may or may not use. You are paying so that you have coverage if you get sick, and the insurance company is hoping that you won’t get sick and they get to keep your money. Thus the fund grows.

Then along comes Suzie Jones, who has never had any insurance, but is suddenly sick and needs a hysterectomy. She buys into the group of 300 people, pays her premium for 2 months, and has her surgery at a cost of 25,000 dollars. She then drops her policy after the surgery is completed and has contributed a total of $500.00 to your fund. She is gone, her surgery has been paid for, and now you continue to pay $250 a month to replenish the fund that she has just depleted.

Most insurance companies have a medical review department to investigate a situation like this. They would request Suzie’s medical records to determine if she had a pre-existing condition. Once they had the records and saw that she was seeking treatment for this condition before she scheduled the surgery, then the insurance company would deny her claims.

People tend to choose coverage based on what they think they can afford, but you also need to think of what the consequences are with a given insurance plan. If you choose an 80/20 plan with a $5000 deductible, can you afford to pay 20% of the bill up to the $5000 deductible? Sometimes it just depends on where you are in life. Are you relatively healthy? Are you over the age of 50?

In the end it is important to be your own advocate in choosing the right policy for your family and yourself. The best advice is to read the policy in the first ten days, and if it is not what you want, then ask for a refund, and choose another policy.