How do you pick personal health insurance?
Gambling for your health..
If I manage to do a credible job on this answer, I plan to try an easy one next, perhaps a plan for world peace in six days?
Health insurance, like most insurance products, is a bewildering, seemingly endlessly complex subject I find incredibly difficult to buy, never mind properly evaluate.However, having recently had friend do just that, I'll try and share the lessons learned.
Most of the time when you make a mistake buying insurance, you don't find this out until it's time to settle a claim, and you are trying to get it paid, and the adjuster is busy telling you why you're not covered and what you should have purchased instead. Oh, and in addition, he, she, or they, will also show you the microscopic print wherein you find you have in fact been told you would regret your purchase, and you still owe them a small child.
Health, like any other insurance is a legal form of gambling. You lay out a relatively small amount of money each month, in the hope you never find out if they will actually pay out a huge amount of money on your behalf, should the need arise.
Sometime the stakes are clear. Most of the time, if you live in a desert area, you probably don't need to carry flood insurance, if you don't own a car, you don't need car insurance.
Health insurance is not so clear cut. In very broad strokes, there are a couple of basic approaches to health insurance.
- HMOs (Health Maintenance Organization) like to advertise that they are active participants in your good health. They frequently have incentives to encourage you to maintain good health like discounted gym membership, and they pretend to encourage your relationship with your Primary Care Physician (PCP) as a way to intercept any problems early. There is usually a co-pay to at an office visit and at the drugstore. Usually, lower the monthly rate for insurance, the higher the individual co-pays are for office visits and medicines at the pharmacies. You usually have to go through yourPCP in order to get a "referral" to any kind of specialist, and they usually dictate which specialists you can see, and which hospitals you go to. In some instances they even dictate what hospital you are supposed to go to in an emergency.
- PPOs, "Preferred Provider Organizations" can be a little easier to deal with. Again, in very general terms, you are more or less free to see doctors you choose, as long as they are part of the Provider Organization. In both the cases, the HMO or the PPO, you probably want to check and make sure your doctor is a registered member of the organization before you write any checks.
- A third approach to health insurance is the "original", or older, what used to be the standard, 80/20, in which you would have a basic deductible, of say, $1,000.00 (One Thousand dollars). You would be obligated to pay 100% of the first $1,000.00 you spent in a given year, and after that, the plan would pay 80% of the costs and you would pay the remaining 20%. Some plans had a cap, so that if your costs went above a predetermined number, say $5,000.00, the plan would then pick up 100% of the costs. Generally, you can see who you want, when you want to.
Which is the right one for you? If you are in your twenties or early thirties and have to hunt for half an hour to find your doctors phone number any time you need it, you probably don't need a plan which has all the bells and whistles. The difference between a $10.00 co-pay for medicine and a $30.00 co-pay won't mean much to you, because you never need prescription medicines.
In this situation you can comfortably enroll in a plan which has a fairly high deductible, you really only need the coverage for a major medical catastrophe, such as an attack of appendicitis or falling off a ladder while working on your house.
On the other hand I have a friend who has chronic asthma as well as a chronic pain problem as a result of car accident 15 years ago. He takes between 10 and 12 different prescription medicines each and every day. Without insurance his medicine alone would cost him $1,600.00 per month, and this is just for maintenance medications.
He lost his job and found it difficult to get another and while that was going on the insurance he was getting through his old employer, on the COBRA plan, expired.
When he went shopping for insurance last year, he found:
- In one case, a difference of $50.00 per month, made the difference between $10.00 co-pays, and $25.00 copay for medicine. Multiply that times 10 meds a month, he saves $100.00 per month with the higher premium
- Most plans have an option to get maintenance medications by mail. Often you pay for two monthly co-pays, and you get three refills. By shopping, he found one plan that gave three refills for one co-pay, thus saving $30.00 per medication. Multiply that by 10 meds, four time per year, and it starts to add up.
- Another friend, has a Major Medical policy, only. She is covered only for the major problems, the kind that can bankrupt you with a hospital stay, such as the aforementioned appendix, heart attack or other major problem. This is not an option for the faint of heart. No pun intended.
Again, like all insurance, it is a gamble. You can avoid most of the unknown, by buying a plan with the bells and whistles, In this case the bells look like low co-pays. You pay most of your costs up front and in exchange you get low copays. The less you pay to the insurance company up front the more you have "at risk", or have the potential to pay, usually at an unexpected and of course, inopportune, time. One emergency room visit for a sprained wrist can wind up costing $900 to $1,100.00 dollars.
If you self employed, it may well pay to join a group to partake of a group rate. For instance a friend of mine who is a Social Worker and does counseling as an independent, has access to a group plan through the National Association of Social Workers, another buys his through his membership in the local Chamber of Commerce.
This is hardly a comprehensive buying guide foir health insurance, but hopefully it will provide a few thoughts and questions to ask as you go about making your decision.
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