1)
ARE ALL INDIVIDUAL AND FAMILY POLICIES THE SAME?
Absolutely
not! Policies and rates vary widely. It’s possible to pay a higher
rate for a policy that offers less benefits if you don’t do your homework.
2) DO I
REALLY NEED A LOT OF COVERAGE IF I’M HEALTHY?
Yes.
The principle of insurance is to provide protection in case of a major
event. Most people can handle small bills. Very few people
can handle the thousands upon thousands in bills if you have a major event.
3) WHAT
IF I’M ON A LIMITED BUDGET?
If you’re
on a limited budget than you really need good insurance! You should
choose a major medical plan with a high deductible. You could also pick a
higher copay or a lower coinsurance plan. This will keep
your premium low while not exposing you to untold thousands of dollars
in claims. Also, look into a health savings account plan for an excellent
way to lower premiums and have tax savings as well.
Contact me for more details about these plans.
4) I SAW
AN AD THAT SAYS MY ENTIRE FAMILY COULD BE COVERED FOR $99, COULD
THAT BE TRUE?
Ads like that
are for discount plans. They are not insurance. They offer discounts
“up to” certain percentages. In reality they offer few savings and
finding doctors to see you is difficult at best. A major event could
cause extreme financial hardship. These discount plans are not recommended.
5) I DON’T
HAVE THE TIME TO SHOP. CAN’T I JUST BUY A CHEAP PLAN AND DROP IT
IF IT DOESN’T WORK?
Not necessarily.
Maryland and Pennsylvania are not guaranteed issue states. That simply means insurance
companies can decline you due to health reasons. If you develop a
condition you may not be able to switch insurance companies. Therefore
it’s very important that you choose a good plan initially.
6) IS THERE
ANY WAY AROUND SPENDING MONEY WHEN I ONLY USE 10% OF MY PLAN?
All insurance
is designed to be there for unforeseen events. Your house burning
down or car being stolen would be rare events. But you have fire
and theft protection in case those events happen. The chances or
your house burning down is extremely remote. But just imagine what
financial position you’d be in if it did and you didn’t have coverage. Health
insurance is the same way. You never know what life
will deal you in the future. A bad car accident or a
severe illness could result in hundreds of thousands of
dollars in medical expenses. This is when you need
protection the most. People tend to put too much
emphasis on coverages for routine doctor visits than on
coverages for catastrophic medical events.
7) WHAT
IS A HEALTH SAVINGS ACCOUNT (HSA)?
This is a
self-funded tax-free account that is used with a high-deductible plan.
It works just like an IRA, but better. You use the money for a wide variety
of medical expenses, even over-the-counter type medical items. The HSA
account is used for medical expenses up to the plan
deductible. Once the deductible is reached, then most
plans offer 100% coverage after that. Typically high
deductible insurance plans with an HSA are much lower in
premium than copay type plans.
For details on Health Savings Accounts please
contact me. If you want more official information on HSA's and the tax
advantages, click on the following U.S. Treasury government
link:
http://www.ustreas.gov/offices/public-affairs/hsa/
8) WHAT
ABOUT RATE INCREASES AND CANCELLATION?
No one can
be singled out for rate increases or cancellation due to claims or a change
in health. Here is the section directly from the Maryland Department
of Insurance that applies to this:
Premium
rates on individual health insurance policies can be increased. State-regulated
policies contain clauses that prohibit an insurer from raising the premiums
for an individual unless it does so for all policy owners with that particular
type of class of policy. In other words, the individual cannot be singled
out for an increase in premium because of claims; the company must raise
the premium for all insureds for that specific policy form number.
The Office of Insurance Regulation must approve rate increases prior to
their use.
PLEASE NOTE:
This does not apply to out-of-state association groups or trust certificates.
9) WHAT
IS A DEDUCTIBLE?
A deductible
is a set amount of money that you’re responsible for before the plan pays.
For example, if you had a $500 deductible on outpatient lab work and had
a $3,000 MRI, you would be responsible for the first $500. It is
important to find out what the deductibles are and what parts of the policy
they apply to.
10) WHAT
IS COINSURANCE?
Coinsurance
is the percentage of money that you’re responsible for. Typically
it’s either 80/20, 70/30 or 50/50. If you had an $8,000 outpatient procedure
and your coinsurance was 80/20, you would be responsible for 20%.
Most plans have an out-of-pocket max that is used in conjunction with coinsurance.
11) WHAT
IS AN OUT-OF-POCKET MAX?
This is a
stop-loss for insurance policies. It’s the maximum amount you pay. We can use this example: $50,000 surgical procedure with a $1,000
deductible, 80/20 co-insurance and an out-of-pocket max of $2,000.
In this case you would owe $3,000 ($1,000 deductible plus your out-of-pocket
max of $2,000). The insurance pays 100% after you reach the out-of-pocket
max.
Another example
would be an inexpensive outpatient surgery of $3,000. In this case
you would owe $1,400 ($1,000 deductible plus 20% of $2,000.) Make
sure your plan has an out-of-pocket max. Also make sure it applies
to the entire policy and not just surgery.
12) WHAT
IS A NETWORK?
A network
is a group of doctors and hospitals that have agreed to do business with
a particular insurance company. For example, a popular network in
Maryland and Pennsylvania is the Alliance network. If you stayed “in network” you would
be able to see any Alliance doctor. If you did not see an Alliance
doctor then you would be “out of network.” Always check your policy
to see how they handle out-of-network claims. All copay plans (HMO's, PPO's)
are network plans. If you want a non-network plan,
then you cannot have copays for doctors. For
non-network type plans (traditional plans), all medical
expenses are your responsibility until you reach a plan
deductible. Then the insurance company will pickup the
expenses based on your coinsurance selection.
13) WHAT
IS THE SINGLE MOST IMPORANT THING TO CONSIDER WHEN SHOPPING FOR INSURANCE?
If nothing
else, you need to make sure you’re protected in case of a major event.
Michael J. Fox could never have predicted that he’d contract Parkinson’s
disease. Christopher Reeve would have never imagined that he’d be
paralyzed. These are both tragic events. Make sure you’re protected
in case anything major happens to you. Also, you should pick a plan that
has at least a 2 million dollar lifetime maximum benefit.
14) WHERE
DO I GO TO FIND SPECIFIC INFORMATION ABOUT MARYLAND INSURANCE?
Go to the
Depart of Insurance website: http://www.mdinsurance.state.md.us/
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