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Surviving the Health Insurance Crisis What you'll discover in this report:
There are several ways you can purchase health insurance. You can buy it over the Internet at hundreds of different web sites. You can call an 800 number and buy it over the phone directly from a health insurance company. You can call an insurance agent. In some cases, you can buy it through an association or even a bank or credit union. It’s not surprising you can buy it so many ways. After all, there are hundreds of insurance companies that sell health protection in your area. How do these companies differentiate themselves? Some brag about their superior service when you have a claim. Some tout how easy it is to buy from them. But, often, health insurance companies try to compete on price. Just as if you were buying a plane ticket, a radio or soda pop. * Tip. Some people believe health insurance is just a commodity. It’s not. You’re not buying a soda. You’re protecting your financial well being...and the choices you make could affect you for the rest of your life. But before explaining how complex health insurance products are, let’s talk about price. It’s pretty complex, too. What’s going on out there? Why are the prices going up so fast? * Note. While there are a number of different answers to this question, please keep in mind that some of the different variables effect prices more than others for example your age and health to name just a few, and different states and regions in the country will experience slightly different trends in healthcare increases. * Mandates. A politician’s favorite, they attempt to legislate "body part by body part". While not individually expensive, can add up to substantial increases in premium. They vary from mandates of conditions that many insurers already cover like chiropractic care and often require coverage without limitations, to mandates that have limitations on the riders that Insurance companies can place on existing health conditions. * Patient Protections. Many new "patient protection" provisions are expected to receive attention this year. For example the right to sue an HMO or the right to an independent external review of claims for any grievance by a dissatisfied customer. * Managed care. Many states are reviewing laws related to managed care plans and creating new rules to address network adequacy, doctor qualifications, and specialist availability. These bills lump PPO, POS and HMO carriers together as managed care. Additionally, doctor groups are promoting anti-trust bills that will allow them to "unionize" and collectively bargain their contracts. * Prescription Drug Costs. The costs for prescription drugs have been escalating faster than a rocket shooting to the moon. Part of it is greed by the pharmaceutical companies. Everywhere you go you’ll see an advertisement for the newest, latest and greatest drug. This certainly contributes a great majority to the cost. To the drug companies’ credit, R&D adds a great amount to the cost of medicine. A lot of medicines never make it to market. * Increased Demand & Utilization. We are increasingly becoming a society of little or no patience. If little Johnny has a nose sniffle, many people will run to the Emergency room with little Johnny. Also the nations appetite for better more costly procedures is increasing rapidly. If little Johnny has a dire disease and there is a newer and better treatment, albeit probably much more expensive, we certainly want the best for our little Johnny. * Too Many uninsured. Today there are close to 45 million uninsured people in this country. Many medical providers today including but not limited to hospitals and medical clinics today will treat people that don’t have insurance. When the medical providers don’t receive money for their services they have to pay for it somehow. They raise overall prices for everyone thereby shifting healthcare costs disproportionately onto the folks that actually pay their bills. Somehow the 45 million uninsured need to get into the system. No Insurance Company Has the Lowest Price for Everyone * Note. No health insurance company – no matter what it says in its ads – offers the lowest price for every person in every location. There are companies that are often among the lowest. And there are companies that are usually among the highest. But no company is the lowest for everybody. * Warning. Be aware that many Health Insurers start new policies for lower prices to attract new customers. Then when the existing policies start receiving major rate increases because of health claims, then the healthy people leave to find newer more competitively priced health insurance with another Health Insurer or they reapply with the existing carrier for the newer more competitively priced policy. This creates a major dilemma! The customers that are still left on the books with the old policy will start seeing their rate go up even more than before. Generally the more unhealthy a person is the more stuck they are in this old policy. It’s a vicious cycle. One that has no end for unhealthy policyholders. Sometimes companies "buy the market" with low prices to gain new consumers...then their prices gradually – or not so gradually – sneak up. They also have to change prices based on their profitability, losses and other factors. Every company has a slightly different appetite for the risks it wants to take on. Some insurers want only very healthy people who have no health problems. Some companies target people who live in certain areas. There are insurers that really like to do business in big cities where there are networks, and there are others that would prefer to stay away from highly populated areas. * Tip. Remember that sometimes "you get what you pay for." The cheapest option may not provide you or your family with the best protection. he saying goes, "you don’t need insurance until you have a claim." When you do have a claim – something that goes wrong – that’s a terrible time to discover you don’t have adequate protection! If you think health insurance is a commodity, consider this: A person with good health record will pay two to three times less than a person with a lot of health problems. A person who lives in a major city – say Los Angeles, Chicago, Houston or Denver – will pay three, four, even five times more than someone who lives in a rural area or small town, even though they may both be of the same age and health. * Example. The last two paragraphs are average differences. Health insurers are all over the map on prices in a given area. Say you live in Everywhere, U.S.A. (don’t we all). Say you are in good health. One insurance company might charge you $750 a year for a policy that provides almost every coverage available. Another insurer might charge you $3,000. As you can see, it can pay to shop around. Just be sure:
What kind of policy should I buy? * Tip. Keep into mind that there are a number of different policies out there that can be purchased. First and foremost, it’s important to at least get started with some coverage. So we’ll try to outline many of the more common policies. Most policies will generally fall into three different types. Major Medical, Hospital & Surgical and supplemental coverage. * Major Medical. This is the most common type of individual policy being offered today as well as the best overall protection for you and/or your families’ financial protection. Most major medical policies today have a high limit like say 2-5 million per person and cover hospital costs, doctor and surgical costs just to name a few. Most medically necessary items are generally covered in these policies unless otherwise excluded. Just be sure
here are also a number of different types of major medical policies that you can choose from. We’ll start with naming just a few: Traditional indemnity, PPO major medical, Medical savings accounts (MSA). The traditional indemnity policy is the granddaddy of all major medical policies. Usually you have a deductible ($250 or $500) that’s applied first to the medical expenses then there’s a coinsurance percentage of 80/20 for the first 5,000 then 100% up to the policy limit. This is where the insurance company shares the expenses with you up to the expense limit that they have listed. Then they’ll pay everything after the coinsurance. Keep into mind that insurance companies pay based on reasonable and customary expenses in your area and based on what’s considered medically necessary. This type of policy is also the most expensive type of major medical policy. The next kind of major medical has been popular since the nineteen eighties and has helped to somewhat control medical costs. The PPO or Preferred provider organization is an intermediary that negotiates the prices on all medical procedures (for example a knee operation) between the providers like the doctors and the hospitals with the insurance companies. This has helped to contain the rising costs somewhat. Generally a PPO policy will offer co-pay for doctor office visits and a co-pay for prescription drugs. For hospital stays and outpatient procedures there would still be a deductible and coinsurance to satisfy before the insurance company would pay 100%. Many PPO’s also offer a wellness feature on the policy for annual exams. A relative newcomer to the market has been the MSA or Medical Savings Account as they’re called. The MSA has a high deductible like $2,250 for an individual and $4,500 for a family. This is coupled with an IRA type savings account where you deposit money into a savings account. The money that’s deposited into this account is tax-deductible. The amount you can contribute is subject to certain limits based on which deductible you choose. You are then able to withdraw this money on a tax-free basis to pay for medical expenses, like prescription drugs and doctor office visits. Also you use your medical savings account to pay for things that your normal health insurance policies don’t pay for like vision needs and dental expenses. If you select this kind of policy, be sure to keep all the receipts for your expenses in case the IRS decides they want to audit you. Hospital-surgical type policies have been around for a while but aren’t as popular as the major medical types. In that they’re much more limited in what they cover. As the name implies, generally the only thing that is covered is a hospital stay bases on a per day limit and some of the more common surgical procedures based on a surgical schedule in the policy. Usually the amount on the surgical schedule is only a fraction of the total surgical cost incurred. These policies can be less expensive than major medical policies depending on the area in which you live. The last kind that we’ll cover here is supplemental health insurance coverage, These policies come in all different flavors and generally is a policy that pays for things like your deductible or it might pay you a daily income while you’re in the hospital as an inpatient. I’ve actually seen policies that will pay certain amount for doctors’ office visits and a limited amount for ambulance needs. Once again be sure that
What is a pre-existing condition anyway? Unless varied by state law, a pre-existing condition is any sickness, injury, disease, disorder, impairment or pregnancy for which medical or surgical care, advice, consultation, equipment, devices, diagnosis, drugs, (prescribed or non-prescribed), examination, observation, services, supplies or testing were received from but not limited to any medical services provider or supplier of medicines and etc. When it comes to existing medical conditions, it’s very important to fully disclose everything. At claim time nobody wants any surprises. Please discuss all medical conditions with your agent so that he or she can assist you with the appropriate company and policy choice that suits your needs. Every company has a different appetite for risks. So a person that has had some back problems for example might be accepted at one company but not another. A knowledgeable agent will know the marketplace in your area. How to get the most bang for your health insurance dollar
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