Get a Good Deal on Your Health Insurance Without Getting Ripped-Off

Middle-income families in community rating states, where the minimum premium for health insurance is higher than other states, cannot afford the premium. Older folks who are self employed or contract workers, and therefore not eligible for group health plans, cannot afford health insurance on their own and take the risk that their health will be okay until Medicare kicks in, or stay tied to the job that provides their health insurance.

There are many different stories of people who do not have health insurance and their reasons
why. Whether to purchase health insurance and the cost of it is a major topic of discussion
throughout the United States. Figure 1.2 lists the biggest risks of not having health insurance,
some less obvious than others.

Figure 1.2: Biggest Risks of Not Having Health Insurance

1. Illness could bring a fi nancial drain or fi nancial ruin to you. Personal bankruptcy is frequently a
consequence of a medical problem – and lack of insurance or lack of enough insurance can be
part of the problem.

2. If you change your mind, you may not even be able to get coverage.

3. According to the Institute of Medicine, by skipping care when a condition is more treatable you
have a statistically higher risk of dying when you don’t have health insurance.

4. Skipping preventative care because of cost fears may lead to serious and expensive problems.

Think about whether your parents, grandparents, or great-grandparents had health insurance.
I can’t remember my grandparents having health insurance. It wasn’t that they were too poor to have it, although they might have been.  It is more likely that health insurance was not
widely available. Yet they managed to live well and live long. They didn’t have any major health
episodes that broke the bank except at the end of their lives. I don’t know that they ran out
of money, as much as their bodies didn’t last. Medicine can’t cure everything, especially
when dealing with some less than optimal life habits that can reduce health, like smoking,
eating fatty/cholesterol laden foods, and not getting enough exercise.

As a parent with young children, I buy health insurance, as I might reasonably be expected to do. I have three children in school right now, and they are always in need of a little something here or there as strep throat, flu, and other maladies are passed from one child to the next. The wellness visits (annual checkups) are also important for everyone in the family – as we believe more in prevention than correction after the fact.

If you don’t have health insurance in this country and need medical attention, the doctor will expect you to pay a much higher rate than they’ve negotiated with the major insurers. While this is unfair for customers paying cash, it is due to the leverage that the insurers use to negotiate the rates down for their benefi t. Since the individual does not have much leverage and is less likely to pay the bill, you can see why doctors’ offices do this. If you want to negotiate the fees, you’ll have to do that with the offi ce manager in advance of the appointment – if they’ll even negotiate – and continue to negotiate with everyone in the healthcare chain, including labs, hospitals, pharmacies, and so on. If you try this route, you’ll want to keep track of all your negotiations in writing.
Would you expect to have a major operation if something went wrong, or have other extreme
measures to save your life? If so, then you will want some level of insurance. These heroic procedures that can save your life and prolong it can also bankrupt you if you don’t have some level of catastrophic insurance. But if you’re in reasonably good shape, lead a healthy life, and don’t have a family history of major disease that is not preventable, you might briefl y consider the possibility of doing without insurance, although I wouldn’t – I don’t like to live that dangerously. You may be
eligible for Medicare when you reach the current eligibility age of 65, and the hospitalization
(Medicare Part A) might not even cost you anything if you’ve worked the equivalent of ten full-time years, though you’ll need to pay for the doctors office and prescription portions of Medicare yourself, and get a Medigap policy to further reduce your risk. The fears of the cost of insurance is enough to keep many chained to their workplace until regular retirement age.

One health insurance agent told me that he thought because I kept the COBRA coverage from my previous employer (the option to keep health insurance from an employer where you pay the full amount that the employer pays) for so long was because we had health problems. Most folks only keep it for a few months until they fi nd something else, unless they have a medical condition that would prevent getting individual coverage.

One of the most diffi cult things to overcome when purchasing health insurance is a preexisting
medical condition. It also happens to be one of the most popular reasons why some people fear being unemployed, because they or a dependent have a pre-existing condition that would limit their available health insurance options. You’ll fi nd more information about pre-existing conditions and coverage for those with a medical condition in Chapters 2, 6, 9, and 10.

Annual Health Insurance Cost Increases
You’ve heard it in the news – health insurance costs are skyrocketing. However, health insurance costs are not the same in each part of the country, in each state, or even in each ZIP code. The most recent data shows that the sharp increases are gone, with a slower growth rate now. The increases also differ among insurers, and among types of plans offered by the insurer. Your age, always going up, is another factor in the increasing costs, one that is not refl ected in any survey on health insurance inflation. The chances of needing medical care drop drastically after the first few years of life, creep up once we near middle age, and fi nally shoot up in the last years of life.

To get an idea of how much the health insurance premiums go up each year, let’s look at
some statistics from organizations that study these markets. The Kaiser Family Foundation,
and the Health Research and Educational Trust, both independent non-profi t groups with
a mission to provide healthcare information, publish an annual survey entitled “Employer
Health Benefits.” This is an annual survey of the trends of purchasing group plans by employers.
This is not exactly the same as an individual buying insurance, but it gives some idea about the upward nature of rates for both types of insurance.

This study has shown double digit increases in the fi rst few years of the new century, as high
as 13.9% in 2003. However, the trend is currently downward, with a 7.7% increase in 2006. But this downward trend is still more than twice the overall infl ation rate, and the overall increase since 2000 for family coverage has been 87%.

With this in mind, it is important to monitor your health insurance coverage and consider new options as they become available to you. Once you’ve gone through the process presented in this
book, you can easily update your options with new insurers and new plans on an annual basis – and switch if something makes better sense for you.

Your Health Insurance Annual Checkup
Just like your body, your health plan also needs an annual checkup. You have to investigate
and manage your health plan on an ongoing basis – not just once. Particular times to
check:

• After you get a rate increase.
• After you change age (usually in 5 year bracket – 40, 45, 50, etc.).
• When you add or remove dependents.
• When your health changes (for the better or worse).
  

Although managing your own health plan may seem like a lot of work, it does allow you
the fl exibility to buy and pay for only what you need. It ultimately gives you control over
how you spend your money with regards to your health. For example, you can change plans
when you need to, you can cover family members individually, and you can take advantage
of the constantly changing health insurance plans available to cut your costs.

Unlike an employer’s group plan, in many cases as an individual you can change coverage
or insurers anytime in a year. This means you have control over how you are covered – and
as new products come out on the health insurance market, you can be fi rst in line to buy
them.

You can insure different people in your household on different policies for different coverage
or rates. Sometimes it doesn’t make sense to put everyone on the same plan such as when one family member’s health is poor, but the rest of the household is healthy. Instead of lumping
everyone into a higher-premium plan, shopping around for coverage separately in addition to investigating health insurance for the entire household may save you significant money over the course of a year.

New companies, products, and approaches are appearing to satisfy the new needs and desires of those buying health insurance. If you aren’t thrilled with the options available, keep shopping and new options will open up. For example, when I fi rst left my job I went with the COBRA option, and checked with that insurer for any individual policies. There weren’t any. But as I am doing this research, well over a year later, it is possible to obtain insurance through this company – as
part of an association. This makes it a very appealing option, since the network, doctors, and
policies appear to be very similar between the plan available through COBRA and through
the association plan. You’ll want to read Chapter 6 about association insurance and whether
it’s the right choice for you.

If you find yourself traveling to different locations, whether frequently or for short or long
periods of time, make sure that you investigate plans that provide you and your dependents
with coverage where you go. Some HMO/PPO plans have nationwide networks, some have
only local networks. With some it doesn’t matter who you see (traditional indemnity insurance),
and coverage outside of the U.S. varies, with a majority of plans not covering anything but an emergency. Additional international policies may be found, you could selfinsure
for trips, or you could look into short-term health coverage at your destination when
traveling outside your main plan area.

Check into the available healthcare in the places that you will frequent. If you spend most
of your time at home, but have a national network in a PPO, you’ll be able to get covered
healthcare when you are away from home on travel. If you travel internationally, you can either
use a plan with built-in international coverage, or get a short term international policy.

If you move to a different part of the state, or to a different state, then you may not be able to
keep your current health insurance coverage. If you have any signifi cant medical condition,
it may make sense to reconsider a move, or at least maintain residency in the location of your
current health plan to avoid major increases in premiums when shopping for a new plan, or
outright denial of coverage. The place to start for your annual health insurance checkup is
with your agent, web sites in this book, and www.BestHealthInsuranceBook.com.

Steps to Get the Best Deal

In this chapter, you have read about the basis of a good deal, why you need health insurance,
the annual cost increases of health insurance premiums, and why you need an annual
checkup on your health insurance. The rest of the book consists of the process to follow in
order to get a good deal on health insurance, along with resources and tips on avoiding
rip-offs.

The steps to get the best deal are presented in Figure 1.3. Read through the overview of the
steps to get an idea of what is involved. Each of the chapters that follows includes one or
more of these steps, as well as tips, diagrams, and other resources. There are also more resources
available at our website, www.BestHealthInsuranceBook.com.

Figure 1.3: Steps to Get the Best Deal

Steps to Get the Best Deal
1. Learn and understand health insurance. (Chapter 2)
2. Determine options on where to get it – at work, etc. (Chapter 3)
3. Determine features important to you. (Chapter 4)
4. Estimate your anticipated annual expenses. (Chapter 5)
5. Decide if you should pursue group or individual. (Chapter 6)
6. Obtain a list of insurers for your state. (Chapter 7)
7. Edit your list of insurers. (Chapter 7)
8. Get quotes from each insurer or source. (Chapter 8)
9. Compare q uotes. (Chapter 8)
10. Choose your best deal. (Chapter 9)
11. Apply for insurance. (Chapter 9)
12. Cancel existing insurance. (Chapter 9)
13. Avoid Rip-Offs! (Chapter 10)

Overview of Chapters

Predicting your health expenditures is not an exact science, but it can be helpful to get an idea of what you’ve spent and then project that into the future, as explained in Chapter 5. Chapter 6 helps you to understand different types of health insurance – including individual or group, with comparisons between the various types.

Chapter 7 helps you to obtain the list of authorized insurers from your state and leads you
through the process of narrowing down these insurers. Once you have the short list of insurers
that meet your criteria, you can proceed to accumulate quotes and options from these
insurers, as detailed in Chapter 8. This is where the most legwork is involved, as you gather
information from each company, either directly from an insurer or through an agent. This
chapter also shows a mathematical way to compare all the numbers provided – and a way
for you to determine which company and plans to pursue further. After helping you to make
a decision, Chapter 9 explains the process of applying for new insurance, and the steps that
follow.

Chapter 10 provides tips to keep you from becoming the victim of the many rip-offs that exist
in the health insurance marketplace. The appendices provide contact information and internet
addresses for resources that you’ll need as you work through the steps in this book. You’ll also want to keep up-to-date with additional information along with downloads and online tools from the website, www.BestHealthInsuranceBook.com.