Buying Health Insurance Tips

Read these 12 Buying Health Insurance Tips tips to make your life smarter, better, faster and wiser. Each tip is approved by our Editors and created by expert writers so great we call them Gurus. LifeTips is the place to go when you need to know about Health Insurance tips and hundreds of other topics.

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Buy Online

You may find the best deal of all at an online drugstore, particularly if you order more than one prescription at a time, take medicine on an on-going basis and place orders in advance. To make sure a site is legit, check to see that it carries the seal of the Verified Internet Pharmacy Practice Sites (VIPPS), a quality-control program sponsored by the National Association of Boards of Pharmacy, www.nabp.net. You can also consult with your physician to see if he/she knows of any good online pharmacies.

   

Exercise The “Free Look” Option

Most plans will offer the insurer a "free look" or review period which varies from 10 to 30 days. During this time, if you decide you do not want the policy, return it by certified mail within the required period of time and request a full refund of the premium paid. Most employer group plans do not have a "free look" period, but be sure to inquire if the clause is part of the contract you are considering, before signing.

   

Be Sure Your Insurance Plan Has Integrity

Unfortunately there are a lot of fraudulent health insurance companies out there. Usually, if it sounds too good to be true, it is. You will get what you pay for unless you do a thorough background search. If you do not do your research, you may find that your plan may be operated under an unlicensed insurer which means you can lose your coverage at anytime and be left with thousands of dollars of unpaid medical bills and scrambling to find new coverage. In order to avoid this, contact your state insurance department (www.insurance.naic.org/state_web_map.htm) through the National Association of Insurance Commissioners, www.naic.org. Be sure to ask for references of the insurance company you are inquiring about so that you can find out how quick they were on paying claims, if they honored claims at all. The NAIC has developed a website for consumers to find information about buying health insurance; www.insureu.org. Check with the Labor Department’s Office of Investigations to see if the insurance company is under investigation. You may also want to check the ratings on your insurance policy in the Standard & Poor's and A.M. Best, www.insbuyer.com/insurancenrating.htm. You can also find a partial list of insurance companies under investigation on the Coalition against Insurance Fraud, http://insurancefraud.org/Hall_of_Shame_05/hallofshame_set.html.

   

The Preexisting Condition Clause

You may find that a condition you are being treated for under your current plan, may not be covered under your new plan. This is called a preexisting condition. Pre-existing conditions can vary between plans from being excluded to being covered fully and sometimes somewhere in-between like being covered after a specific amount of time. The Health Insurance Portability and Accountability Act, www.cms.hhs.gov/HIPAAGenInfo, ensures coverage for pre-existing conditions if you are joining a new group plan from your employer and you were insured the previous twelve months. Some plans impose“preexisting condition exclusion.” This means that if you have a medical condition before coming to our plan, you might have to wait a certain period of time before the plan will provide coverage for that condition. Be sure to check with your state HIPAA rules and compare them to your insurance plan to be sure there are no discrepancies. Some states offer a “guaranteed issue” which means that individuals insurers must sell coverage to all residents, others limit the length of exclusion periods. Other states have “community ratings” which impose rules that premiums cannot vary based on health status. The preexisting condition exclusion does not apply to pregnancy nor to a child who is enrolled in the plan within 30 days after birth, adoption, or placement for adoption. Some people, if they have the flexibility, might choose to move to a different state based on rule such as “community ratings” because it may be more cost effective.
If you are receiving insurance through your employer, he/she can decide what the plan may cover as long as they cover certain benefits. The employer cannot deny you of health insurance or offer you different insurance based on you health, but they can implement a “pre-existing condition of exclusion” or pre-ex period of no longer than 12 months. This pre-existing condition of exclusion cannot apply to pregnancy or newborns.
On the other hand, one can reduce their pre-ex period by showing proof of coverage from a prior insurer (this would be a certificate of creditability that documents you past coverage, or old ID cards or statements) as well as no break in coverage of 63 consecutive days.

   

Evaluate Your Health Plan Every Year

Do not sign up for the same health plan year after year simply because it is convenient. Look into the new plans and changes. These days, the real differences lie in the plans' co-pays and deductibles, not the premiums.
To figure out which option is best for you, estimate what your total annual costs will be under each plan, depending on your family's situation and medical needs. Did you recently get married? Did you recently have children? Are you taking care of your parents? Did your doctor drop the plan you were in? Is your plan more difficult to deal with? Does you plan still cover screening procedures? Most importantly, are you just not satisfied with your current health plan? Often, you can lower your monthly health insurance premium by buying a policy with a higher yearly deductible amount. This is your opportunity to reevaluate the plan you are in and switch to a better plan. Keep in mind that plans that help to manage the care you receive tend to cost less and limit your choices in doctors and hospitals, so do not base your decision on co-payments and deductibles alone.
In addition, no matter how long you have had your policy, be sure you get a CURRENT list of providers that are available under your plan and double check that they are still considered “in-network.” If you are looking at a new plan, be sure that the doctors are still alive, practicing and accepting new patients. You may have to call the doctors on the list yourself, but you can do this during your “free look” period that is described as tip #10. Some plans offer updates online, so make sure to bookmark those websites on your computer.
If you are looking into a new health insurance policy, be weary of dread disease policies, which are policies that pay only for the costs for treatment of specific disease; supplemental policies or hospital indemnity plans, which cover your hospital expenses for each day you are in the hospital (usually there is a limit); accident-only policies, which covers care from an accident and not an illness; discount plans that are not consider health insurance plan because they do not cover “high medical expenses” and other limitations; and “stacked” policies, which look attractive because they combine several of these limited products mentioned. None of these policies are comprehensive by any means, which is why it is important to understand exactly what is being put in front of you by the insurer. Your regular plan probably already provides all the coverage you need.

   
What is a deductible?

Deductibles

A deductible is the amount you must pay each calendar year before your medical insurance plan begins paying benefits. Many, though not all, health insurance plans have deductibles. Deductibles can be as low as $250 and as high as $5,000. For example, if your plan has a $500 deductible, which means you will need to pay for $500 worth of medical care before your health plan will begin paying benefits according to the terms of your contract.

Even though you are paying the $500, you should still have your health provider bill your insurance company. Otherwise, your insurance company will have no way of knowing when you have met your deductible and when to begin paying benefits. While each plan is different in most cases, things such as office visits, lab tests, and prescriptions count toward the deductible. Things that might not count toward most deductibles include over-the-counter medications and cosmetic and other elective procedures that are not considered covered items under your insurance plan.

   
Where do people find health insurance?

Finding Health Insurance

There are two main ways to get health insurance coverage: individually or through a group. Many people receive health insurance through their employer or a spouse or parent's employer, which is known as group health insurance. It is called group health insurance because the employer contracts with the insurer to provide a standardized menu of coverage to a large group of people.

Employer-sponsored health insurance benefits, the premiums of which are almost always paid in large part by the employer, are one of the most valuable employment benefits offered today given the increasing cost of health care. People who are not covered by a group plan can purchase individual medical insurance from an insurance broker. For a list of brokers and companies approved to offer health insurance in your state, call your state's insurance commission or visit your state's insurance Web site.

   
What out-of-pocket expenses can I expect?

Out-of-Pocket Expense Maximums

There are many costs associated with buying health insurance plans. There are the premiums you pay for the coverage, the deductible you must pay before the plan will pay benefits, and there are the co-pays you must pay to cover your portion of the cost of goods and services received. Out-of-pocket expenses are those costs, such as the deductible and co-pays, that you must pay yourself and for which you will receive no reimbursement from your insurance company.

The maximum out-of-pocket expense is the maximum amount you will be responsible to pay out-of-pocket before your plan begins covering goods and services at 100 percent. Assuming your maximum out-of-pocket expense for the calendar year is $1,500 for a family plan that covers you, a spouse, and two children, a deductible of $250 per family member with a combined maximum deductible of $500 for all members, would have you paying a combined deductible of $500 before your plan would start paying any benefits.

Once benefits start being paid out, you would have to pay another combined (i.e. for all family members, not per family member) $1,000 in co-pays. At that point, you will have reached the plan's maximum out-of-pocket expense and all covered goods and services would be paid for in full by your plan until the end of the calendar year. As you might expect, premiums do not count toward your out-of-pocket maximum expense.

   
How do I choose a health insurance plan?

Choosing a Health Insurance Plan

Choosing a health insurance plan is an extremely important decision. If you are receiving your health insurance through an employer, you may have two or three plans to pick from. Do not let cost be your only guide in selecting which plan to go with. Compare such key factors as:

  • How much the deductibles are for each plan?
  • How much the co-pays are for each plan?
  • What specific services are covered or excluded by each plan?

If you are looking for the flexibility in choosing your own providers as well as when and where to receive services and cost is not an issue, a fee-for-service plan, or indemnity plan, is probably the best choice for you. If you are not concerned about giving up some flexibility in choosing providers and service delivery locations, a managed care plan such as an health maintenance organization will be better suited to your needs. If you would prefer to control your health care costs ad maintain some flexibility in terms of choosing your own doctor, a preferred provider organization will be a better place for you.

   
What is a fee-for-service health insurance plan?

Fee-For-Service Plans

Fee-for-service health insurance plans, also called indemnity plans, are what you think of when you think of medical insurance from the "good old days." They are the plans where you agree to pay your premiums in exchange for the freedom to choose your doctors. You are able to see service providers when, where, and as often as you like. You are able to see specialists without having to coordinate a referral from a primary care doctor. Fewer and fewer fee-for-service plans are being offered by employers these days as the premiums tend to be very high.

For those people who travel a lot or who have older children attending college out of state, buying health insurance with a fee-for-service plan can be a good match since managed care plans often limit the provider network from which you can receive services and will not pay any or reduced benefits to out-of-network providers.

   
What is a managed care health insurance plan?

Managed Care Plans

Managed care health insurance coverage are those plans that aim to control costs by negotiating agreed upon fees, with a network of medical service providers called participating providers. As a means of maintaining cost control, the insurer requires a high degree of service coordination on the part of both the service providers and the health care consumer--in other words, you! You will need to designate a primary care physician from among the insurers approved provider network. All your medical needs must be coordinated through that provider.

For example, if you need to see an ear, nose, and throat (ENT) specialist, your primary care provider will need to submit a referral to the specialist and your insurance company. If you go to the ENT doctor without first receiving the referral, your insurance company will most likely deny your claim and you will have to pay for the treatment.

If you expect to receive the bulk of your health care in your own community and you would not mind some loss of flexibility and the extra coordination required, a managed care health insurance plan can save you a considerable amount on your insurance premiums. Most managed care plans make exceptions for emergency care provided outside of the network when you are traveling.

   
What are the different types of health insurance available?

Types of Health Insurance

Health insurance comes in all shapes and sizes, and the best plan depends on what your specific needs, which should be kept in mind when buying health insurance. There are:

  • Fee-for-service plans
  • Health maintenance organizations (HMOs)
  • Preferred provider organizations (PPO)
  • Traditional indemnity plans HMOs and PPOs tend to have lower premiums.

In exchange for the lower premiums, it must be agreed upon to seek service from a defined group of providers and only see specialists upon receiving a referral from your primary care physician. Fee-for-service and indemnity plans offer you the freedom to see who you want, when you want, without having to obtain referrals. But this flexibility generally comes at the expense of higher premiums.

   
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Heidi Splete