The purpose of my article is to offer a consumer service with no strings attached, giving people a clearer picture of what can influence health insurance pricing. With this knowledge and education, I hope to help you lower your monthly premiums by being an informed consumer. When speaking to your agent, now you will be better prepared to get what you want, and at a better price.
My Mission is to be a consumer advocate and Protect, Help and Inform Consumers on How to Buy Health Insurance and how to get the best value for your dollars, and utlimately to save you money.
My background is in financial services and I used to be a Commodity Trading Advisor and member of the National Futures Association. I have a BBA with emphasis in Marketing. My motivation here is ethics and being a sincere advocate for consumers. I hope to make a difference and hope that this helps you in some way. My other hope is that other professionals will give more of their time to write articles that help the consumer.
Disclaimer: I cannot claim that this article covers everything there is to know about buying health insurance, but it does cover some of the main points that will make a difference in how much your monthly premiums will be.
Health Insurance Company Credibility
Before you even begin considering a health insurance plan, you have to do some simple due diligence on your own, about the insurance carrier (company) first. In other words, you really want to only work with carriers with at minimum, an A Rating. This has to do with the carrier’s financial rating, or financial strength. Going by Standard and Poor’s definition of A Rating, it is described as “An insurer rated ‘A’ has STRONG financial security characteristics, but is somewhat more likely to be affected by adverse business conditions than are insurers with higher ratings.” There are two higher ratings, which are AA and AAA, with AAA as the highest. If the insurance carrier has a rating of A, AA or AAA, you are reasonably assured that the carrier will not go bankrupt or have financial difficulties during the period of time you have your insurance policy. You can usually find out the carriers rating on its website, in the ‘About Us’ section.
Important: If the insurance carrier is A Rated or higher, doctors, hospitals and pharmacies will more readily accept your insurance because they know the insurance company will pay claims and pay on a timely basis.
Are There Markups in Insurance?
No. Buying insurance is not like buying a car. Cars and most products have markups. Insurance does not have markups. In other words, if you get a quote for a life insurance policy from a Farmers agent in Houston, Texas and then go to Dallas to another Farmers agent to get a quote on the same exact product with the same features, it will cost you the same. However, it is up to you to know what you are buying. One of those agents may not have your best interest at heart and may not show you alternatives or how to lower the premium. As a consumer, you should ask, “Is there an alternative or is there any way I can save money on this plan you are showing me?”
The difference is the agent. You have to recognize which agent cares enough about you personally so that you will want buy a policy through him or her. The agent that cares about you and that spends time with you will show you how to lower your premiums before you buy, yet retain a high amount of coverage. The agent that cares about you will inform you that he/she can try to save you money – before you have to ask.
Deductibles
One of the first things to consider when trying to customize a health insurance policy, is the deductible. Don’t let a higher deductible scare you. I am not saying really high, but like $2000 to $5000. My point is, the higher the deductible, the lower the premium. However, if money is not an issue and you want a low deductible like $500, then get what you want.
Doctor Office Co-Pay
Next, is Office Co-Pay. If you and your family go to the doctor many times per year, then it is wise to have an Office Co-Pay, because it is cost effective. However, if you are single or if you and your spouse do not have children, and if you are both in very good health, and if you do not go to the doctor more than 3 times per year, then it is not cost effective to add Office Co-Pay. The reason is because to add Office Co-Pay increases your monthly premiums. * However, there are plans that have unlimited Office Co-Pays, if you are willing to pay for them..
Lifetime Maximum – Catastrophic Loss Prevention
Major Medical Health Insurance is mainly to avoid a catastrophic financial loss in case of an accident or illness. The “Lifetime Maximum” is the amount of the total lifetime benefit of the policy. Many major medical policies offer from $3 million to $8 million total lifetime benefits. The higher the lifetime maximum, the higher your premium. Given this, if you have a family, then you may want a higher lifetime maximum. If it is you and your spouse and if you are in relatively good condition, $3 million may be enough. If you are single and in good health, or if you are single and around 60 years of age, $2 million or $3 million may also be enough, since you will not need a policy once you reach age 65. This will save you money. In other words, the higher the life-time maximum, the higher your premiums will be,
Co-Insurance Percentage
The Co-Insurance Percentage is the portion of covered health care costs for which the covered person has a financial responsibility, usually a fixed percentage. Coinsurance usually applies after the insured meets his/her deductible. For example, the common 80/20 plan. In my opinion, unless you can afford a plan that covers 100% after the deductible is met, the 80/20 is a good choice. However, if you want to save even more money and you and/or your family are in good health, a 75/25 plan can be considered, because the 75/25 plan has lower monthly premiums.
Co-Insurance Out-of-Pocket
The Co-Insurance Out-of-Pocket amount is the maximum out-of-pocket you will pay before the (for example) 80/20 kicks in. Because you have already made the decision for your deductible, this amount is usually set. However, it is important for you to ask your agent what your maximum out-of-pocket amount will be.
Critical Illness & Accident Coverage
There is also a rider (option) that you may get for your policy that pays for accidents and critical illness (separate), first dollar, either at a portion of or up to your deductible amount. First dollar means that the insurance company pays the chosen amount and not you. For example, if you were in an auto accident and had to be life-flighted to a hospital within your PPO network, if you chose the maximum amount for this, which is equal to what your deductible is (say $5000 for this example), the insurance company will pay first dollar up to $5000 thereby cancelling out your deductible (you paid nothing out of pocket), then your 80/20 or 100% plan will take effect.
Maternity Coverage
Maternity Coverage is usually an option. Sometimes it is not. However, make sure you tell your agent that either you “want maternity coverage” or you “do not want maternity coverage.” Because, you want to make sure you are not paying for something you may not need. Sometimes agents automatically add this, so always tell him/her what you want or do not want.
Life Insurance
Some health insurance policies have life insurance for an added amount. This does cost extra, but may be a convenient and all inclusive way to bundle your insurance. Personally, I like this feature to be inclusive and it is inexpensive. However, if you already have life insurance, do not have the agent add it.
The Works
There are some people who want all the bells and whistles no matter the cost and that is fine. Some people want unlimited Doctor Co-Pays, 100% paid by insurance after deductible, etc. When money is not an issue and you want a premium plan, then by all means, get what you want.
Complete Customer Transparency
When you are considering buying Health and Life Insurance online, make sure you are communicating with a real entity. The internet can be very dangerous when you are about to give up your personal information and credit card information. It is perfectly safe to give your personal and credit card information if it is with a source that clearly identiifes itself with its personal name, business/corporate name, licensing information, physical address as well as internet address. Also, make sure that any forms you complete online use SSL encryption technology, where you see a “lock” at the top of your monitor screen. Legitimate companies have Privacy Policies and other policies for the protection of the public. Review these policies before speaking to anyone. Lastly, for insurance, make sure the company is physically located in the United States.
This article is not to be considered as advice. Please see a trusted licensed professional for advice. It is to only offer basic guidance in hopes to help consumers so that they can make more informed decisions on health insurance; that can ultimately save them money.
I wish you the very best and hope that this article can be of some help to you.