How to Find and Understand Health Insurance
After reading this article you will become health insurance expert. You will be able to teach your broker about health insurance. Health insurance is simpler to understand than you think. There are only about three most important things to know about health insurance. The most important thing is the one that is over looked the most.
Let’s think about it for a minute what could be the most important thing when it comes to Health Insurance. When I asked someone that question I usually get responses like deductible or co-pay to go to a doctor. Well not quite… there is one thing its the reason you have health insurance in the first place. Ask your self this question. Why do you really have health insurance?… Let’s take a look at some facts. Based on IRS Census number one reason for bankruptcy in the United States is medical bills, specifically the ones over seventeen thousand. Then number one reason to have health insurance is to protect your self from medical bills that are over seventeen thousand. We do not have to be that extreme. We can just say to protect you from anything that is out of your budget. There fore health insurance is designed to protect our self’s from large unexpected medical bills. In fact about twenty to thirty years ago all the health plans only really were designed to protect us from large medical bills. Most plans did not cover things like doctor visits, physicals, lab work and etc… No one ever went bankrupt because they could not pay their doctor visit bill.
Here is why we have health insurance plans that cover doctor visits and other small things. Back then insurance companies were competing for business from large companies and they wanted to offer benefits that would appeal to large companies and their employees. There fore they started adding things like coverage for doctor visits. It would be the same as having car insurance and having car insurance pay for things like oil changes, break downs, anytime you need a part for your car the insurance company would just pay for it. It doesn’t make any sense does it? The car insurance companies will just charge you a lot more money for coverage like that. That is exactly what is going on with health insurance. We are used to corporate plans where plan covers everything and all we would pay for is a small co-pay of like $10. Now these same plans are bankrupting the large companies as they are getting huge rate increases. I recently heard that part of every GM car there is about $1500 worth of health insurance expenses, in every car.
The point that I am making is that health insurance itself is actually really cheap, if you understand how it works. There fore what you should be really concerned with is large medical bills since they are the major cause of bankruptcies in the
United States. One more thing, since October, 2005 you cannot file bankruptcy on medical bills.
Number one thing you should be looking for in the health plan is a phrase “Maximum out of Pocket”, it could also be something like “Maximum Yearly out of Pocket”, and both mean exactly the same. What that means is that is the maximum you can be out of pocket in any given year. Usually that includes all the medical expenses; most plans do have exclusions for prescription drugs. With prescription drugs you are still going to be responsible for co-pay. That is the number one things you should look for.
Second thing you should look for is your deductible. There are a lot of plans that I see that say they have no deductible. Be extremely careful and read exactly how those plans work. First of understand one thing. THERE IS NO SOMETHING FOR NOTHING. I get a lot of people tell me “Oh yeh I got thins great plans with no deductible and I am paying $50 a month.” Yeh Ok… Then I take a look at their plan and explain how it works to them. Let me repeat it again THERE IS NO SOMETHING FOR NOTHING. There is one thing to keep in mind then looking at big name insurance company. The cost of health insurance no matter where you look is pretty much the same. The only reason there are soooo many plans is because insurance companies trying to come up with all kinds of creative way to have you to apply for coverage with them. Here is how plans with no deductible work (there are exceptions). There is no deductible but there is what’s called co-insurance. What that means is you will be responsible for a percentage of everything until you reach your Maximum out of Pocket. Usually plans with no deductible have a very high Maximum out Of Pocket limit, somewhere around $7500. For example most of the time co-insurance on plans with no deductible is 60/40 or 50/50. What that means is you is you are going to be responsible of 50% of everything that you use your health insurance for until you reach your maximum out of pocket, witch could be $7500. Most plans that do have deductible still have co-insurance after the deductible. Co-insurance with plans that do have a deductible is usually somewhere around 20/80 or 30/70 (first digit is the percentage that you are responsible for). That means that you are still responsible for 20 or 30 percent of the bill until your maximum out of pocket is reached. Plans with deductibles usually have lower maximum out of pocket somewhere around $4000 to $6000.
Third what you should look for is your co-pays that includes your doctor visit, your physicals, your prescriptions drugs. Everything else most of the time would apply towards your deductible. When something applies toward the deductible, what that means is as you use you health plan and you pay $30 for your doctors visit co-pay that $30 gets applied towards your deductible. There fore as you use your plan your deductible keeps decreasing.
My personal recommendation for anyone will be to pick a plan with higher deductibles. Remember that most people filled for bankruptcy because of $17000. Pick plans with deductibles higher that $2500. Unless you are just paranoid and planning on going to the hospital often, or maybe you hurt your self on purpose and get hospitalized so you can see your favorite doctor. I do not know what your reasons are, just keep in mind that you do not have to support insurance. Insurance companies are betting that you are not going to be hospitalized and statistically they are right that is why they are making money. Follow statistics and realize that chances of you being hospitalized are really small. If you pick a plan with a high deductible you will save your self thousands of dollars a years. If you do get hospitalized just remember that hospitals will be happy to work with you and set up a payment program to pay of any balance you might owe them. You can set up a plan to pay of that balance in five years buy making payment with no interest. Save that money and invested it, you will get farther that way. If you like supporting insurance companies by paying high premiums then, Thank you for your support!!!
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Dennis Alexander | GuideToHealthInsurance.org
About the author
Dennis Alexander – leading consultant for employer group and individual/family health insurance. Marketing consultant for major health insurance resource websites and brokerage firms online.