Quick Insurance Tips

When evaluating health insurance plans, the best way to do so is to look at the total price that you might pay when you add the monthly premiums with the costs that you might pay in deductibles, co-pays and other cost shares.  This means that often a low cost health insurance plan is often the most economical and provides the best coverage.

It can be a lot of work but the best way to evaluate health insurance plans is looking at what you would pay using three scenarios.

The first scenario should be one in which you have no medical expenses for the year.  In that scenario you would pay your monthly premium times twelve and nothing else.  Obviously in this scenario, the health insurance with the lowest monthly premium is going to be the best plan to have.

In the second scenario, you could look at how much you would pay if you had an accident or a disease that caused you to have very high expenses in your physicians office, pharmacy and hospital.  In this scenario, you would pay your monthly premiums, plus your full deductible, coinsurance, co-pays and or other cost shares.  The winner in this situation might surprise you.  Often the winner here is a moderate or a high deductible plan.

In the third scenario, you might look at what different insurance plans would cost you in a year where you had moderate expenses.  Again, add your monthly costs for the premium times twelve plus the costs of any money you would pay towards your co-pay and other cost shares.

Only after you have seen what your total cost would be in different scenarios should you decide on a health insurance policy to purchase.  The same plan is unlikely to win all of the “face offs,” however, this will give you a good idea of how much each plan really costs.

The above assumes that you have done your homework comparing companies and have excluded the “Dewy Cheatum and Howe” insurance companies.  Getting the best price will do you no good if the insurance company isn’t stable or doesn’t pay claims like it should.

Usually a low cost or moderately expensive policy is a better buy because the money you save in premiums will go a long way toward paying any medical bills that the insurance policy won’t cover.

The above strategy is the one that will help you find the best policy for your needs.  It does take more work, but you may save thousands of dollars each by doing the math to determine your overall costs in various scenarios.  The best policy may not be the one you thought it would be.

This may not technically be a secret, but it is not well known even among insurance agents.  I was an agent for almost 20 years before I discovered that the default way to insure a family wasn’t always the cheapest or best way.

My wife figured this out when she worked briefly as my assistant.  She was calculating rates for a family that needed maternity insurance and investigated some options that I would not have.

She was carrying our child and had some extra time on her hands, so she helped out in the agency.  I think that was the last time that she had extra time on her hands.  We have a very health and active child now.

What she discovered is that putting the entire family on the same policy isn’t always the lowest cost way to insure them.  The Blue Cross Blue Shield policy with maternity coverage had some extra benefits on it that the rest of the family didn’t need.  We were able to save the family $200 a month by insuring the husband and the other child on a different policy.

My wife’s discovery led me to look for other situations where a family would benefit from being on separate policies.

There is a negative that should be addressed first. In many cases if a family has separate health insurance policies, they will pay more of their medical expenses.  Typically a family can only pay two deductibles regardless of how many people have medical expenses if they are all on the same policy.  With separate policies this isn’t the case.

The main reason that buying separate policies is sometimes less expensive than purchasing one family policy is based on the way a given health insurance company calculates the rates for a particular policy series.

The rating calculation for many policies is based on the company calculating the rates for each family member as if they were to be on separate plans and then simply adding the rates together.  With those policies you will pay the same whether you insure everyone on one policy or on separate policies.  However many companies will have family rates based on the age of the younger or older spouse.  This can be an advantage for some families and a disadvantage for others.

We now help our clients take advantage of the different ways companies calculate rates.  For example Blue Cross Blue Shield in Connecticut will calculate the rates for most of their policies based on the age of the younger spouse and the number of insured family members.  This means that the 60 year old woman who marries the 29 year old man is paying the same rate that a 29 year old woman would pay if married to the same man.  This is of course to her advantage.

However since this company doesn’t have a separate rate calculation category for single parents, a 12 year old girl would also pay the same rate as the 60 year old if she were insured on a policy with her father and there are no other family members on the policy.

In most scenarios a family will get the best price by insuring everyone on the same policy. But people who meet the following criteria may find that their rates are very different with different companies:

• Families with more than two children
• Couples where the one spouse is more than 5 years older than the other
• Families needing to insure two people only where one is a child
• Families needing to insure only a child or children
• Families with children where a parent is over 50

Usually big differences in prices are a big clue that there is a corresponding difference in quality.  However that isn’t always true.  Sometimes the difference is in how the insurance company calculates the rates.  I hope that this “secret” that my wife discovered helps you save money.  It has taught me once again how smart my wife is and reminded me that there is always something new I can learn about insurance if I’m willing to listen to smart people even if they are involved in another profession.

Usually a family that wants to insure both parents and a child or both parents and children will find that the best deal for health/dental insurance for their kids is to put them on the family policy.  However, insurance companies have different rating procedures for children which can create confusing and often unreasonably high prices for kids.

In general cost for medical insurance for a new born should be less than the cost to insure an adult. Newborns tend to have more medical expenses on average than two year olds, but after we get past the first year or so of life, the cost of a medical care goes up at ever age.  What this means is that companies that charge the same for children as adults overcharge for kids.

Whether you are looking for Maine child insurance or low cost health insurance for kids in South Carolina, you want your child to be charged a child rate not an adult rate.  Some companies will charge adult rates if a child is insured by him or herself.  Other companies will charge an adult rate for the child if the child is insured with one parent as opposed to two.  This means that it is easy to pay much more than the average cost of child health insurance if you don’t shop around.

Often when we see wide variance in pricing we fear that there is also a wide variance in quality. This is no different when we are shopping for health insurance for a child.  Health insurance programs can, of course can be qualitatively different.  However, now that you understand that the pricing strategies can be very different, you know that this isn’t always the case.

Government Sponsored Child Medical Insurance Programs

There may be a state sponsored program that is better for children than a private health insurance in the state of Iowa or a private Colorado health insurance plan.  However, these plans are state specific and a discussion of the pros and cons of those programs is beyond the scope of this article.

I operate an agency Connecticut and am familiar with many of the programs offered here. In State of Connecticut, the state-sponsored health care programs have the advantage of accepting children who have medical conditions that private insurers will not accept.  However, the policies are more limited than most of the plans offered in the private market.  Since children tend to cost insurance companies so much less than adults, the prices for the government plans are often in the same ballpark, as the prices for the more robust plans offered by companies like Aetna and Blue Cross Blue Shield.

Misunderstanding how COBRA works often costs families hundreds of dollars in premiums and tens of thousands of dollars in uncovered medical expenses.

COBRA is usually not cheaper than a comparable individual health insurance plan.  Many people assume that since their COBRA plan is offered to them from their former employer any other plan would be higher than their COBRA cost.  Health insurance plans that are less expensive are often available from the same company that provides your COBRA plan.  You may find that a Blue Cross’ individual or family plan is half the price of your Blue Cross COBRA plan. Insurance plans are offered direct to consumers from many quality carriers.  Consider one of these plans for a COBRA insurance replacement. It pays to shop around instead of assuming that your COBRA plan is the best option.

You don’t have to keep your COBRA plan for the full 18 months.  You can cancel your COBRA plan at the end of any given month.  The mandated Cobra length of coverage is imposed on the carrier, not the consumer.  You can change your coverage at any time.  There is no reason to pay for a less desirable COBRA plan for the full eighteen months if there are better options available to you.

You may not be able to get a good health plan if you develop a pre-existing condition while covered by your COBRA plan.  The people who get hurt the worst by making the wrong decision about COBRA are those who are healthy when they leave their employer, but develop a serious medical condition while covered by COBRA.  This can mean that when cobra coverage expires their protection ends.  This can wipe out the savings of a lifetime.

It makes sense to switch to a permanent solution to your health insurance problem sooner rather than later.  An individual or family health insurance plan can typically be kept in force until you reach 65 if you need it.  You also have the option of cancelling your policy at any time should you get a job with insurance coverage or a better deal from another company.

Accepting COBRA without looking at the options available from your local Blue Cross Blue Shield, or other quality companies available in your area, can be a costly mistake.  Be sure to shop around and compare the different options available to you.  Most consumers will find that an individual non-group health insurance plan offers better protection at a lower price.

Not properly coordinating the cancellation of your old medical insurance policy with the effective date of your new policy can cost you a lot of money and heartache.  Failing to do this properly can lead to your holding the bag for an uncovered expense or paying longer than you should for an unnecessary second policy.

If your new policy goes into effect after your old policy has ended, you expose yourself to the potential of having a major expense uncovered.  Also you expose yourself to the possibility of acquiring a pre-existing condition that makes you uninsurable.  If your old policy overlaps with your new one, you are paying unnecessarily for the second policy.

Ideally your new policy should go into effect the minute your old policy is terminated, but not a minute sooner.  This is not as hard to do as it sounds.

Individual health insurance companies will typically allow you to apply as early as two months before you need coverage.  This is true for most other lines of insurance.  If you complete a Missouri individual health insurance application or apply in any other state, you will probably be asked for the first month’s payment in advance.  However, since you are merely paying in advance, you are not really double paying.  You can expect the subsequent billing to start the second month of your new policy.  You will make up for paying in advance by skipping a month of paying.

What you want to happen is to find out that your new policy is approved at least a week before it is effective.  This way you can contact your old company and cancel the old policy before you get billed for the next month.

An insurance policy cancellation letter is typically what is required to terminate a policy.  Most companies will allow you to fax a signed request.  Although many companies will have a form that you can use, they are also likely to handwrite your request so long as it is dated, signed and includes your policy number and the date you want your coverage to end.  Most companies prefer that your request be faxed, although all will take your request by mail.  A few companies will allow you to cancel by phone.

If you have a health condition that might make it hard to find coverage, applying as early as possible may allows you to explore more than one option and find coverage before your deadline.

To avoid having a lapse in coverage, apply as early as possible, but request that your policy start at a later date.  This can help reduce the chance that you will be exposed to unnecessary risks because the new policy can’t be approved in time.  It also makes it easier to make sure that you don’t pay two different insurance companies for coverage for the same day.

In many cases, there are no discounts for group health insurance, when compared to individual health insurance!  This is a very common misconception.  When you buy more of something, you usually get a better price.  This isn’t always true with medical insurance coverage.

A private medical insurance application is usually medically underwritten.  A medically underwritten application is one that is subject to screening by the insurance company. This can make the price lower because the insurance company has the right to deny applications for those who have medical conditions that they expect to generate more claims and cost them more money. 

If an insurance company in Maryland can’t eliminate less healthy applicants from consideration for a group policy, but they can do so for an individual plan a Maryland group health insurance plan will cost more than a similar individual policy.

Group insurance plans are less frequently medically underwritten.  This means that the insurance companies have higher expenses for these plans and therefore have to charge more because they are often insuring people who are less healthy. People who are less healthy file more claims and cost more money.

If you are self-employed and only have yourself and your family to be concerned with, you should look at individual health insurance as an option.  These policies are often more comprehensive than the plans that you will be offered through your business. 

You may not have the same tax benefits when you purchase a non-group or private health insurance policy.  However, the price savings may be more impactful than the tax savings would be. 

It always pays to crunch the numbers before making a final decision, but in many instances group health insurance discounts are more apparent than real.  The policy you purchase as individual as opposed to as a business owner will often be less expensive and provide better coverage.

More and more insurance companies are recognizing domestic partnerships and are allowing non married couples to be covered by the same insurance policy.  In some situations there are advantages of sharing the same health care policy in some situations there aren’t.

Domestic partners can be the same sex or opposite sex.  They must show evidence of having a committed relationship.  Typically the evidence requested is a legal document such as a will with the other partner named as a beneficiary or a deed in the names of both partners.  Different insurance companies will ask for different types of proof.

Advantages of Getting Health Insurance with Your Domestic Partner

Sometimes there are no advantages of purchasing health insurance with your domestic partner.  Some health insurance companies will price their policies for couples to equal the sum of the rate for the two individuals.  If there are only two people to be insured, there may be no difference aside from the benefit of being billed more conveniently.  Some companies will price your policy based on the age of the older spouse and this can make your policy cost more than the total cost of two separate policies.

Health insurance is sometimes priced based on the age of the younger spouse.  If that is the case, being on the same policy may lower your cost for health insurance.  In other cases an insurance company will give a discount for couples who are on the same policy.  Obviously if it is cheaper to be on the same policy than to be on separate policies, there is an advantage to buying from a company that will recognize your domestic partnership.

Another advantage may be the how your deductible is applied.  This may only affect you if there are more than two people to be insured.  Typically a health insurance company will charge no more than two deductibles per policy.  This can give a family an advantage if they are, for example, in the same car crash.

Health insurance for domestic partners may be available from a local carrier.  In Connecticut Anthem Blue Cross and Connecticare recognize domestic partnerships.

A carrier that recognizes domestic partnerships may or may not offer you the best price or coverage.  Look at all of your options before making a final decision.  You may get a better deal by buying separate policies.

Very few medical insurance policies will pay 100% of your medical expenses. Many people will ask their agent “what is my doctor’s office visit co-pay?” but will fail to inquire about the other charges they might have to pay. You will probably have to pay a deductible, a co-pay and/or coinsurance when presented with a healthcare expense.

How a Health Insurance Deductible Works

If a given expense is subject to your deductible, you will have to pay your deductible before the insurance company pays anything towards that expense. Deductibles only need to be met once per year. The year typically starts on January 1st, and not when your policy became effective.

Here is an example of a deductible on a plan from Blue Cross Blue Shield with a high deductible of $5,000: If the insured had a $2500 emergency room visit in January and another visit that cost the same in February, if both of those visits were subject to the deductible, the insured would pay for both of them. At that point the deductible would be met. Any similar expenses incurred for the rest of the year would be covered at least partially by Blue Cross Blue Shield.

Health Insurance Coinsurance

Coinsurance is based on a percentage of an expenses. This is different from a deductible or a co-pay which is based on a flat amount. If your coinsurance is 20%, you will probably be subject to 20% of your expenses after you have paid your deductible until you have met your maximum out-of-pocket amount.

For example if you have a $1,000 deductible on your policy, a 20% coinsurance and a $2,000 maximum-out-of-pocket amount: You will pay the first $1,000 of our medical expenses per year, then you will pay 20% of any other charges until you have paid an additional $2,000 or in some cases an additional $1,000. Some companies include the deductible in the maximum-out-of-pocket amount and some do not.

Health Insurance Co-pays (or copays).

Co-pays are paid per incident. You might pay $30 for each doctor’s visit or $20 for every one-month’s supply of a prescription. Some policies will ask you for a to pay your deductible and co-pays for the same expense. Some will waive the deductible for certain expenses such as prescriptions and physician visits.

Co-pays are not typically limited by the maximum-out-of-pocket amount.

Similar sounding insurance policies can very different. Make sure you understand how your policy works. A low deductible health insurance in North Carolina or a low cost no deductible health insurance in Georgia may have other cost shares, such as high coinsurance amounts or big copays. Be sure to ask plenty of questions or read the literature thoroughly before buying. You want to know what a policy will do before you buy it, not after you have an expense that you think will be covered.

Depending on your income and other factors, you may qualify for a low cost health insurance policy from a private company, the federal government, your state or a local agency. Children’s low cost insurance may be available through your state.

You may be able to find information about a plan in your area that provides coverage for children on the http://www.insurekidsnow.gov website. Your doctor may know about plans in your area that you can investigate. Your department of health may also be a source of information. Often a local insurance agent who focuses on medical insurance will be know about plans available in your area.

Often these plans are not only affordable, but will also accept people with pre-existing medical conditions that make them difficult or impossible to insure in the private market.

However, you may find that the best low cost health insurance plans are available through a private insurer. Often programs offered through government-sponsored programs have limitations that you won’t find in a policy that you might purchase from Blue Cross Blue Shield or another carrier.

The limitations often include:

• A small list of physicians on their provider list
• A small list of hospitals on their provider list
• A lower lifetime or annual dollar limit on covered services

Sometimes you will find that a government-sponsored program is less advantageous when compared to a plan that is available in the private market. Sometimes a government-sponsored program is your only options. Be sure to get quotes and information from both the plans offered through the government and from an insurance broker who serves your area.

There are a lot of things that you can do to get a better price for insurance coverage. One of the better ideas is to shop around. Using a good broker can often reduce the amount of time this takes. However, you should have a basic understanding of the policies. You should also know enough about the companies your broker recommends to make sure that you select one that is stable and has a good reputation.

Lower Your Price by Lowing Your Risk Factors

Prices are determined by factors that are both within your control and those that are not. Being aware of the factors that you have some influence on is the first step in reducing your costs.

Auto Insurance

The biggest issue here is your driving history. Those who drive more slowly and thoughtfully tend to have fewer tickets and accidents. They will often be rewarded with better auto insurance rates. The car you drive can have an impact on your rates. More expensive cars can cost more to insure. Buying a sports car can raise your rates as well. You may want to get an auto insurance quotation before committing to a new car. Your location also has an impact on your auto rates. If you are thinking about moving, see how it will affect your insurance rates.

House Insurance

Your history of claims is a big issue here. Making intelligent choices about combustible materials can reduce your chances of having a claim. Also being conscious of safety hazards can keep you from being sued and having a liability claim on your insurance. Owning certain breeds of dogs and other pets, certain types of pools and even trampolines can have impact on your insurability and rates. Have a discussion with your agent before you commit to something that might raise your rates.

Life and Health Insurance

How much your life or health insurance costs is largely determined by your health history and your height and weight. Doing what you can to be healthy will tend to keep your rates down. Sometimes a little thing can mean a lot; you can miss getting a preferred rate because you are one pound overweight. You can also be one pound too heavy to qualify for a policy at all. You may want to ask your agent for help here. If your weight close to a point that makes a difference in your rate, you should be aware of that and see if you can get your weight down before you apply.

Disability Insurance

Health history and body mass index (height and weight ratio) are big factors for disability insurance as well although your occupation plays a bigger role with disability insurance. If you are thinking about changing professions, you may want to see if you can get a better deal by buying disability insurance now or by buying it after you change jobs. As a general rule, the more physical a job is the more you will pay for disability insurance. If you are an office manager who wants to be a carpenter, you may want to lock your rate in before you change professions.