Getting the right Health Insurance for my Family

I have sold health insurance for a number of years I describe it to my clients as asset protection. An extended stay in the hospital can cost you your home and even the estate you have built for your heirs. Health insurance is a business decision and you need to look each component of the policy in that manner. If you are use to having group insurance coverage then sit down and prepare for sticker shock.

Put your thinking cap on too because you will be hit with new terms like HMO, PPO, HAS, co pay exclusions and deductibles. Health insurance is expensive but, you get what you pay for. Study the product you are considering ask questions and don’t sign until you are comfortable with the plan. There are two things that are always true with your health insurance policy; it will do what the policy promises and the premium will go up.

 Health insurance rates are based on your age, your medical history and gender.  Plans are priced in age bands and risk pools as you move to the next band your premium will go up. As you would expect a young healthy person, however if they have a health problem such as high blood pressure an older healthy person may have a much lower premium. This is why you need to do an annual review of your policy. Unlike life insurance where you get the benefit of a premium for the term of the contract based on your entry age.

The nature of the health insurance contract encourages you to keep your eyes open for new and innovative plans that may serve you better. The one caveat to that is if you have a negative health change at that point you need to keep what you have for as long as you can. In this case your premium will stay at the rate class you entered the policy in. 

If you got a standard rate then you remain in that category as long as you keep the policy enforced. You will still experience the rate increase based on your age but your current health will not be an issue. There may be a rate increase by all policy holders but this must be approved by the state. You can not be singled out for a rate increase because of a health change or use of the policy.

My intention is to explain the body of the health insurance contract and some of the options that are offered. Remember it is a business arraignment based on risk.  You are paying the insurance company to assume the risk on your health.  The more of the risk you are willing to share the lower your premium.

Step One Know these terms

Deductable: All deductibles’ represent what you will pay; there are three basic sub categories you will see in your health insurance policy.  Maximum deductable: This is the maximum you will spend during a contract period once met the insurance company will cover 100% of most charges. This may reset annually or it may be based on the current claim. Co pay: This is what you pay for any service you receive that goes towards your deductable. Doctor’s visits co pay:  You can choose a set amount that you pay for regular doctor’s visits.  This is paid until you meet your maximum deductable. HMO and PPO:  These two are not exactly alike but, for this writing they are close enough.  What they mean when associated with your health plan they mean the same thing.  If you go to a provider that is with in the network you receive your full benefits.  If you go outside the network you may face extra charges or even have your claim denied. Qualified Plan and HSA accounts:  Qualified Plans are usually high deductable plans where you pay 100% of your medical cost until your deductable is met. These plans allow you to open a Health Savings Account (HAS) where you can deposit pre tax money and withdraw it penalty free for use to pay for medical expenses.  In Network Providers:  These are providers that the insurance company has worked out a agreement on what they charge for services. Rate Up: Insurance companies will increase your premium if you present a higher health risk.  If you are over weight, smoke, take certain medications or have pre existing health issues. Pre existing condition: If you have been diagnosed with a health problem may rate up your premium or rider it out. Rider: This is an   amendment to the health contract.  It may exclude coverage for your pre existing condition it can also add coverage to your policy such as life insurance or accident disability coverage. Medical Information Bureau (MIB): All your medical records are reported to MIB most health    80/20: You will see this format on your policy the numbers may be different 70/30 it represents the percentage of the bill you will pay until the deductable is met. HSA (Health Savings Account) this is a before tax account that can be used for out of pocket health related cost.  Money can be withdrawn or reimbursed by submitting receipts of monies spent.  These accounts can be funded through payroll deduction or other periodic payments.  There is a cap on the amount you can deposit check with your agent for current regulations.

This is a short list but will give you a basic understanding when you speak with the insurance agent.

Step two Interview more than one carrier

There are a lot of carriers out there Blue Cross Blue Shield, Humana, Coventry, Assurance to name a few.  All insurance plans must be approved by the state so if a company fails to live up to its promise you have recourse with the insurance commission.  Often the well known companies carry a higher premium you know who they are because of advertising.  Many less known companies offer lower cost for the same or similar service.  It is often good to select an agent that represents multiple companies, this way you can see a variety of options. Insurance is a competitive business the agent makes a commission he earns it by spending the time the necessary time to meet your needs.  I suggest you use a local agent that will be there to answer your questions.  Shop go to web sites and talk to friends and family this is an important decision. Policies are different from state to state even with the same carrier.  There may even be regional differences especially with PPO’s BPO’s and HMO’s confirm that providers you are comfortable with are members.  This can be done on the carriers website or call your doctor. 

Step three How much risk or premium can you handle

Remember this is a business arrangement.  The insurance company will assume all the risk if you are willing to pay the cost.  You build your health contract each benefit you add cost you.  We have gotten use to group insurance with their one size fits all concepts.  Your employer built the policy and decided what benefits you get and what you don’t paying part of the bill gives them that right.  Now it is your turn and things you took for granted like 20 dollar co pay for doctor visits may not be worth the monthly cost of the benefit if you seldom go to the doctor.  Look closely at your insurance basic policy the cost of each benefit is clearly listed. Have your agent to break down each benefits cost then decide if it is worth it.  It is your decision how much of the risk do you want to assume.  Do you feel comfortable paying for a few doctor visits and handling the colds and sore throats?  Your policy gives you the right to pay the negotiated prices for services.  For example the insurances company’s cost for a doctors visit may be $50.00 of that your co pay may be $25.00 if you chose not to take the office visit benefit you will still only have to pay the $50.00 not the $80.00 or $90.00 the doctor would normally charge.   What you spend out of pocket will apply towards your deductable. You can let the insurance company handle the major health issues.  Remember your deductable is capped at what you decide.  You can reduce your premium by quite a bit if you are willing to assume $3500.00 instead $500.00 of the risk and let the insurance company take care of the rest. I have clients that take $5000 to $7000 deductable then open a HSA to cover the small stuff and get the tax break. You have to be creative.

  As I said in the beginning Health insurance is asset protection a major illness can cost tens of thousands of dollars in no time.  Medical bills are the leading cause of bankruptcy.  It is not a get out of jail free card, the trustee will make you liquidate your assets you could lose your home, cars even the kids college fund.  With some planning you can protect your family and sleep well at night.