1. What Can You Afford – Determine what you are spending on health coverage now. If you have recently left a group plan with an employer, ask your HR department what the cost of coverage would be through COBRA. Typically, COBRA is the full policy premium plus 1.5% for administration costs. For most individuals, continuing a policy with COBRA would increase the amount of money they spend on health care by as much as 80%. This option would make sense if you have a pre-existing condition or if you are pregnant or may become pregnant within the next year. Once you determine what you are currently spending you have a baseline to compare with other options.
2. See What’s Out There – Insurance companies are “for profit” companies. So their main focus is to increase revenue. Since the profit margin on insurance products is relatively low compared to other industries (as low as 2%), insurance carriers are always trying to add to their membership rolls. They are always adding new products and trying to gain market share. It’s important for consumers to be informed about what products are available and how those different products can work to their advantage. There are thousands of options available so it makes sense to consult with an insurance agent or broker that specializes in health products. Surprisingly, very few insurance agents focus on health policies. Most captive agents focus, instead, on life insurance. This is due to the fact that commissions on life policies are 10 to 20 times higher than they are for health policies.
3. Compare Rates – Just like in any other competitive industry, insurance prices vary widely from company to company. Some carriers have a stronger presence in some states and almost none in others. They also tend to form different “niches” in the marketplace. For instance; some carriers have great rates for an HMO policy but their rates for a PPO are not competitive. Also, some carriers focus on temporary policies lasting only a few months. It is important for a consumer to understand what “niche” they fall into. That way, they can find the carrier that specializes in that “niche” and look closely at the products they offer.
4. Compare Networks – Doctors and hospitals contract with insurance carriers to negotiate fees for service. Each carrier has their own group of doctors and hospitals. These groups are called “networks”. Some carrier networks are larger than others. Some networks are more diverse than others, offering more doctors in more areas of medicine than others. It is important for individual consumers, when they have decided on a policy, to check the carrier networks to make sure that the doctors they see on a regular basis are contracted with that carrier before they apply for a policy.
5. Get Good Advice – The single best thing a consumer can do to choose the right policy is to consult with a licensed agent. Most consumers don’t spend their free time keeping up with industry trends and attending continuing education classes and conferences. Insurance agents do. They are checking rates on a daily basis and have the “pulse” of the industry. A good agent will ask a multitude of questions. Most questions will be personal; including height, weight, family health history and current and past health issues. It’s important to be honest and through. This will help the agent show you the best options and could end up saving you money on your policy. Stay away from large online agencies that handle all 50 states. They tend to treat their customers like a number and not a client.
6. Get a quote – Use an online health insurance broker site to obtain a policy. These sites can be a great resource for purchasing insurance. You can submit some personal information and obtain a free quote in a matter of seconds. You are under no obligation to purchase a policy, however if you are looking to get into a policy quickly without talking to anyone, this is a great way to do it. You can shop your own features and deductibles. You can even sort by monthly premium amount. There are no hidden charges and agents who have this type of website are linked directly to the insurance company websites. That way, you are able to have a licensed agent assigned to you without them contacting you.