Health Insurance 5

How can I tell whether something is a true individual policy or small group insurance being sold to individuals?

"Make sure the person selling you the insurance leaves you literature about the insurance you are considering and read it carefully," suggests Zoller. "If the coverage is described as a policy, and you are described as the policyholder, chances are it is a true individual policy. If it is referred to as a plan or program, it is probably some type of group plan."
Pay particular attention to the legal-sounding descriptions in the policy literature, too. These descriptions should explain what the document is and what parties are involved. Says Zoller, "If there are more than two parties involved (the insurance company and you), it probably is not an individual policy but some sort of a group policy with the other parties being an administrator, association, trustee, et cetera." Still another giveaway that a policy is not a true individual policy is any statement requiring continuing employment or participation in an association for eligibility.

Is individual insurance the only kind of insurance I should consider?

It depends on circumstances. If you have employees you will cover, depending on your state, you may have to purchase group insurance to meet legal requirements for maternity coverage and underwriting. Group insurance may be preferable, too, if you can't get an individual policy due to previous health problems, or can get better maternity or other benefits under a group plan. Additionally, if you have more than a couple of employees, individual plans are likely to be impractical for providing coverage for all of them. In that case, you might want to consider group insurance to cover the employees and individual coverage for yourself and your dependents. No matter what your circumstances, however, differences in policies from different insurance companies and even differences in policies by state or region of the country make it imperative for you to understand exactly what kind of protection you are buying.

Do I need separate coverage for doctor bills, hospital stays, and/or surgery?

Those coverages are usually all rolled into one comprehensive major medical policy. Policies that offer only in-hospital and surgical coverage or daily indemnity policies and policies that over certain illnesses (such as cancer) are of questionable value. If you have a comprehensive policy, cancer and other "dread diseases" will be covered under the policy, making supplemental "dread disease" insurance superfluous.

What about policies that say they will pay back premiums minus any claims when you reach a certain age?

Read them carefully to make sure you know exactly what you are getting. One such plan covered only in-hospital care and had a very high deductible. Since it is quite easy to pile up thousands of dollars in medical bills without ever stepping foot inside a hospital, plans like this are not good substitutes for having comprehensive major medical coverage.

What benefits should I look for in a health insurance policy?

Make sure the policy protects you against burdensome out-of-pocket expenses for inpatient and outpatient care. Find out:

• What are the “covered expenses” under the plan.
  
• What expenses are “excluded” under the plan.
  
• Who is “eligible” for coverage under the plan.
  
• What provider “network” is used, and what are the non-network benefits, if any.
  
• What the deductible is on the policy (how much you have to pay per year out of your own money before the insurance company pays anything).
  
• What percentage of bills the insurance company pays after you reach the deductible.
  
• Whether the deductible is applied to each illness or injury or is figured on a calendar-year basis. A calendar-year basis is much better since you could be struck with two separate illnesses or injuries that are costly in one year.
  
• What the maximum out-of-pocket expense will be. (In other words, how much do you have to pay before the company will pick up all covered medical expenses instead of just a percentage of them?)

You also need to look at how the insurance company determines the amounts it will pay. Will they pay all usual and customary charges for your medical and hospital bills in the geographic region where you are treated, or do they pay according to a schedule of fees? If payments are according to a schedule of fees you might find that the schedule allows only $2,000 for a surgical procedure you need but that all the doctors in your area charge $5,000, If that were the case, you would have to pay the additional $3,000 out of your own pocket.

If the policy is a managed care plan (PPO, HMO, POS, etc), it is vital that the network have sufficient providers in your area (doctors, hospitals, ancillary services, etc).

Check for limitations and exclusions on coverage, too. For instance, some plans or policies limit intensive care to two or three times the regular room rate or pay only for a limited number of days. Find out what the policy says about preexisting conditions: Will it deny any claims for preexisting conditions? Will it pay claims if there is no recurrence within a set period of time? Warns Zoller, "Read the definition of a preexisting condition first, and then read when they will be covered. For example, under one policy, a preexisting condition might be a condition for which you have received treatment in the last 12 months. Under another, preexisting conditions might be defined as having symptoms (with no treatment). Usually preexisting conditions will be covered within 12 to 24 months, and in some states, unless excluded by a special rider, all preexisting conditions disclosed on the application are covered immediately."

Other things to look into include maternity benefits, if needed, requirements for second opinions or approvals prior to surgery or to hospital admission, and your own preferences or individual needs. Does the policy cover holistic or chiropractic care? Psychologist or psychiatrist fees? Alcohol and substance abuse? Are you likely to need these things? What about yearly checkups or routine preventive screening tests such as mammograms or bone density scans for osteoporosis?

If you choose some type of health maintenance organization or preferred provider group plan, find out if the plan pays for care that is performed outside of the organization's member doctors and hospitals and if so, under what circumstances. You don't want to find out after you get a bill for $10,000 or $20,000 in medical bills that the insurance company won't cover them because the hospital and/or doctor wasn't part of its network.

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