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Breaking the Code on Buying Health Insurance

 


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So, you've decided you need a new health insurance policy. Maybe your rates have gone up again, or they denied another claim. Either way, you have just embarked on one of the most overwhelming tasks imaginable. And you may not even know it yet. You're about to find out the hard way. The homework you will now have to undergo will certainly, confuse you, wear you down, and you will probably, like most people, just give up and choose a plan that seems the best or has the lowest rate. It's OK, because you'll be shopping again in another year or two when this new company does it to you again. Sometimes I think that they design their marketing brochures to be confusing on purpose. There are so many health insurance carriers offering so many different types of coverage. No two carriers offer their plan comparisons in the same format, so how can you really do an apples to apples comparison? All you ever get is a nice color brochure with pictures of happy people with all this insurance language outlining the provisions. How do you know you're getting the whole truth? What important exclusions are they leaving out for you to find after the claim has been made? They know it's too late then. What do you do? How do you choose the right policy? It seems that there are more questions than answers when it comes to searching for a new health insurance policy. Maybe I can help.

First let's start with the type of insurance that you need. Notice that I didn't say the type that you want. Most people just buy the same type of insurance that they have always had just because it is familiar, and they know how it works, or that is the only type of policy that they know is out there. They don't know what they need; just what they think they want. Many insurance agents and brokers will gladly just sell you what you ask for instead of finding out what you really need.

There are two types of insured's coverage: group and individual. If you have ever have been employed by a large or small company you are probably familiar with group coverage. They have to take you regardless of any of your pre-existing health conditions. It will also normally give you low copays for Doctor visits and Prescriptions. This gives you the warm fuzzy feeling you have always wanted when you look for health insurance. The employer will normally pay 50% or more of the monthly premium for you, but this still leaves you with a sizable monthly rate that you never see because they take it automatically every other week out of your paycheck. It's just like they do with your taxes, but there isn't a refund. Group plans can also be purchased for small groups all the way down to one sole proprietor business owner. So, if you have owned a small business in your state for at least one year you may be eligible for what they call a business group of one plan. All group plans tend to run about twice the price of individual coverage. So why would you want one? Because they offer more coverage and are available guaranteed issue no matter what you health is like. For people who have major illnesses, they may be the only coverage they can get. Since the insurance company MUST insure them, they are going to charge much more to do so. The insurance companies have a high risk pool, much like they do in auto insurance, that offers state Basic and State Standard coverages. These coverages are (you guessed it) set up by your state, so no matter which company you choose; they must all be exactly the same. There are limitations (open enrollment periods) to when you can enroll in one of these plans as well.

Individual insurance policies are purchased under the individual's name. They are underwritten according to their past and current health, and their proposed future health needs. This seems a bit unfair, but if you think of it from a business point of view it makes sense. The insurance company is in business just like any other company. They are trying to make the greatest profits that they can. They do this by eliminating having to pay for claims anywhere they can find. They do this by adding riders, exclusions, limitations, rate ups and declining coverage altogether. They only want to ensure the healthiest people who will not make any claims and quietly pay their monthly premiums year after year. It makes financial sense to them, but doesn't seem fair to us. Most people buy insurance thinking it will help them with unknown future health expenses AND for those current expenses that they may have. It is not uncommon for an insurance company to rider a condition (to exclude that condition from coverage, and not pay any claims relating to it) for a period of 2 years or indefinitely. Sometimes they will even decline the coverage to that person completely, but still want to insure the rest of their family.

If you have been denied coverage from an insurance carrier, don't give up. You may still have a chance. You could either appeal their decision with additional information on the denied condition, or you could apply with you state's insurance coverage. Yes, each state also has a state offered insurance coverage to people who have major medical conditions and have been denied by an insurance carrier. Shop online for the Division of Insurance in your state to get more information. It is normally only a major medical plan (one that only covers inpatient services, or has a large - $2500 deductible before it pays anything). Some will cover your doctor visits and prescriptions after the deductible. I warn you, they're not cheep either. Your best bet is to only insure the one person with the medical condition on the state plan and insure the rest of your family on a health qualifying coverage. You'll probably end up paying less overall that way and get better coverage too.

There is too much industry information to cover in just one short article. I discuss the benefits and drawbacks a few different types of insurance companies like; HMO, PPO, and EPO, and from the different coverages such as; Major Medical, Copay, and Health Savings Accounts in other articles that I have written.

Article written by Scott Rowen, a professional health insurance broker for 18 years in Colorado.

For more information on how to choose the insurance plan that is right for you. Contact Scott at: SDRowen@gmail.com

For more information on Errors and Omissions Insurance see his website at: http://www.EandOInsuranceofAmerica.com

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