7 Key Questions to Ask when Buying Individual Health Insurance
Whether you are buying individual health insurance directly from an insurance company on the phone, online from an insurance consolidator or directly from a broker, answers to the next 7 questions can dramatically decrease your cost or unnecessarily increase your exposure to risk.
1) Are doctor's visits covered with a co-pay or only discounted?
Traditional low deductible insurance plans generally have co-pays for doctor's visits ranging from $10 to $40 dollars. The number of visits at this fixed co-pay amount may be limited. Additional visits may be charged at a higher rate. Before choosing a plan, assess the number of visits you would expect when calculating your costs. While predicting future visits may be difficult to do, looking back at previous years may give you a general idea.
When considering a plan that only offers a discount for doctor visits and no co-pay option, check with your physician to determine how much you will pay. Discounts typically run 30 to 50 percent off a doctors standard fee.
2) Are prescriptions covered with a co-pay or only discounted?
Health plans that offer prescription coverage generally break down their coverage into three categories: generic, formulary brand and nonformularly. Typical charges might be $10 for
generics, $20 for formulary brand and $30 for nonformulary. Check with your insurance company or look at their website to determine which works best for you.
If you decide not to purchase prescription coverage, there are a number of prescription discount
cards that offer small discounts on brand name prescriptions and large discounts off generics. Walmart and other supermarkets also have a number of prescriptions at highly discounted rates.
3) What is the Annual Deductible?
Your annual deductible is the amount have to pay for medical expenses before your insurance company starts paying for your claims. High deductible plans generally have you pay for all of your medical expenses up to a certain amount ($1000 to $10,000) before your insurers begins paying (often a 100%).
Low deductible plans have a lower threshold before your insurer begins paying for your medical expenses but may only pay at certain percentage of the cost (also known as co- insurance) leaving you to pay the remainder (typically 20 or 30%) It is important to note that doctor and prescription co-pays do not go toward meeting your annual deductible.
4) What is Maximum Annual Out of Pocket expense?
You maximum out of pocket is your coinsurance plus your deductible which is the maximum amount your insurer expects you to pay annually. While some high deductible plans do not have co-insurance obligations once you have reached your annual deductible, most traditional plans do. When budgeting for your annual health expenses, set aside money to cover this amount.
5) What is the premium?
Your premium is the amount of money you pay monthly or quarterly that you pay for your coverage. Many plans now require automatic payment set-up from your checking account.
6) What is the lifetime maximum coverage?
Lifetime maximum coverage is the maximum benefit your insurer will pay over the lifetime of your policy. Some states require policies to have a minimum amount of at least $5 million per person. Other states only require $1 million. While a million dollars may seem like a large sum of money, kidney dialysis could wipe that out in less than a decade. Current pending healthcare reform legislation may eliminate these lifetime limits.
7) Is it Health Savings Account Qualified?
Health Savings Accounts allow you to put away tax free money for your medical expenses. 2009 contribution limits are $3000 for an individual or $5,950 for a family. These funds can be used to pay medical expenses that meet federal qualifications. Unused money can be rolled over annually. High deductible insurance plans clearly marked as “HSA qualified) are required to participate.
While the questions above will help you better estimate your medical costs, choosing a health plan that is right for you can be a complicated process. In addition to cost, you will want to make sure that your medical providers are covered by your health plan. You will also need to decide whether you want a PPO plan that allows greater flexibility in choosing your specialists or an HMO that has a Primary Physician managing your care.
For specific advice, reach out to an insurance agent that specializes in healthcare coverage. A good resource to find an agent is the National Association of Healthcare Underwriters.