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What are your Insurance
options once COBRA has expired
or instead of COBRA?
As of February 26th, 2010
the U.S. House of Representatives approved
extension of the
Cobra “Stimulus” reduction. That
extension has now
The question that everyone
is asking now is, "If I can't
afford my Cobra premium once
the Stimulus expires what are my
options?" Kimberly Langford at
Kiplinger's Personal Finance
Excellent Advice on what to do after
your Cobra subsidy ends
from Kimberly Lankford
at Kiplinger's Personal
Finance on CNBC May
there are several lower
cost alternatives to
paying high priced COBRA
Depending on what State you live
in, there may be other health
insurance options that you can
select when you first lose your
job, when your 9 month subsidy
expires or when COBRA finally
runs out at the end of 18
months. They are as follows:
first option is
"State Continuation of Coverage." This
option can only be elected when you first lose your employment. State
Continuation of Coverage does not follow Cobra continuation laws, it
does however allow you to continue your employer sponsored group
coverage for up to 9 months even if your former employer employed less
than 20 employees and is not obligated to offer COBRA continuation
coverage. This law does not apply to self-funded plans, so make sure to
check with your State Department of Insurance to see if your State
2. The second option, an
"Individual Health Insurance Policy"
is typically the best and
most affordable alternative for relatively healthy individuals.
An individual health plan can be purchased at
any time and is a great way to maintain many of the same
kinds of benefits that you had through your former employer sponsored
group health plan.
However, an Individual
Health Insurance policy has to be "underwritten" before it is
issued. During the "underwriting" process, the insurance company
scrutinizes the applicant's health history to determine if it will
extend an offer for insurance coverage. This process allows the
insurance company to "decline" coverage to applicants with serious
pre-existing or chronic medical conditions or to modify the coverage
it extends to the applicant.
"Individual" health insurance market has become
quite competitive; therefore, many insurance carriers are willing to
offer health insurance coverage to individuals with certain
controlled pre-existing medical conditions, like high blood pressure
or high cholesterol.
Other times, the insurance
company will offer the applicant coverage, but will refuse to cover
a specific body part or pre-existing condition. In these cases, the
insurance company issues what is known as an "exclusion
rider." An exclusion rider
is a way for the insurance company to
exclude coverage for a
specific body part or a specific medical condition (e.g.
right knee, uterine fibroids). Exclusion riders can be permanent
(body part or condition excluded from coverage for the life of
the policy) or
temporary, (body part or condition excluded from coverage for a specific
period of time.)
Often, if an exclusion
rider is placed on a body part and the insured receives no further
treatment on that body part or if the rider is in place to exclude a
pre-existing medical condition and the insured's condition
completely resolves, the policyholder can request that the insurance
company remove the exclusion rider from the policy. Typically,
requests to remove a rider can be made after one or two years.
Ultimately, the insurance company will make the final decision on
whether the exclusion rider will be removed.
qualified HDHP (Health
Savings Account qualified High Deductible Health Plan) may offer a
more affordable consumer-driven healthcare option to individuals
that are searching for a health plan with very low monthly premiums.
Typically, these plans offer policyholders greater flexibility and
control in where their health care dollars are spent. Plans often
come with a fixed aggregate family deductible, which mean that a
separate deductible does not have to be met for each family member
on the plan.
In addition to the
significant cost savings, policyholders can fund their Health
Savings Account (HSA) to pay for routine medical expenses or
alternative medical therapies, like acupuncture. Any money in
the HSA that is not used for medical expenses can be rolled over to
the next year and excess funds can be transferred to a tax
deductible, tax deferred, interest bearing account, commonly
referred to as a "Medical IRA." These types of health plans can
offer tremendous tax advantages to policyholders. Not only can
policyholders save money on their health insurance premiums, but
they also can use these savings to build a nest egg for retirement.
Many HSA administrators now offer thousands of no load mutual funds
to transfer your HSA funds into so you can potentially earn an even
higher rate of interest.
For more information on HSA
qualified HDHPs, click here.
3. The third option is a
"Small Group Health Insurance Plan." This
type of plan can be purchased immediately and might just be the answer for those individuals that that have been "declined" coverage
for an "Individual" health plan. It might also be another option for
individuals who are looking for coverage without an "exclusion rider" on
a pre-existing medical condition. This is so because group health insurance provides
which means that all applicants and their families will receive
health insurance coverage for all pre-existing medical conditions.
However, the price can be exorbitant. Most States allow the insurance
company to place an "underwriting premium load" as high as 67% on to a
Small Group Health Insurance plan specifically because they can not
exclude coverage for pre-existing conditions. In Indiana that load can
be as high as 108% and in Michigan as high as 300%. Make sure to ask
your Broker or Agent what the maximum underwriting load allowance is in
your State BEFORE you apply for a Group Health Insurance Plan. In most
States you must have a corporate Tax I.D. number and one other person
(employee, Business Partner or Spouse) to enroll in the Group Health
Insurance Plan with you. There are States such as Colorado that have
"Self Employed Groups of One". Check with your Broker or Agent for more
information on what is available on a Guaranteed Issue basis in your
State. Or call your State's Department of Insurance.
On a Small Group Health
Insurance plan, a large portion of the monthly premiums are
determined by the health status of those individuals participating
in the plan. This is important to remember as your company grows.
Even if only one individual has a serious medical condition, that
individual's condition is likely to adversely affect everyone's
health insurance premiums. This means that even healthy group
participants will pay a higher monthly premium. It may also mean
that premiums can increase dramatically (up to the aforementioned
67% or higher) if someone covered on the group plan
develops a serious condition or if an individual with a serious
medical condition is hired at a later date.
The main advantage of a
Small Group Health Insurance Plan is that it provides seamless
continuation of coverage for those individuals who have pre-existing
conditions such as Diabetes or Cancer providing that they have a
minimum of 18 months of
prior continuous health insurance coverage with no lapse in coverage
of more than 63 days.
4. The fourth option is a
"State Insurance Risk Pool." This option
is primarily for individuals who have serious medical conditions and who
have been "declined" individual health insurance coverage. Many states,
but not all, provide individuals with pre-existing conditions the
opportunity to obtain seamless continuation of health insurance coverage
after their COBRA continuation expires, or if they lost their employer
sponsored group coverage due to a policy cancellation and they were
unable to obtain an individual health insurance policy on the open
market because of their pre-existing conditions.
State Insurance Risk Pools
often offer immediate coverage to individuals with pre-existing
conditions that would normally render them "uninsurable"
on the individual health insurance market. To qualify for a State
Insurance Risk Pool, applicants must have elected Cobra continuation
coverage and exhausted that Cobra continuation coverage for the full
18 months. Or, they must have lost their former employer sponsored
group health insurance coverage through NO FAULT OF THEIR OWN.
Meaning, that the employer cancelled the group health insurance
policy altogether, thereby leaving the former employee with no Cobra
(or State) continuation options. Although Risk Pool coverage is also available to those who have been
"declined" coverage on an Individual Health Insurance policy, there
is usually a 6 or 12 month waiting period before pre-existing
conditions will be covered. There can also be waiting lists for this
second type of State Risk Pool Coverage. To find if your State has a State
High Risk Insurance Pool, click
Health Insurance Tips & Advice
For The Self Employed & Small
I have been a health insurance
broker for 15 years now and every
day I read more and more "horror"
stories that are posted on the
Internet regarding health insurance
companies not paying claims,
refusing to cover specific illnesses
and physicians not getting
reimbursed for medical services.
Unfortunately, insurance companies
are driven by profits, not people
(albeit they need people to make
profits). If the insurance company
can find a legal reason not to pay a
claim, chances are they will find
it, and you the consumer will
However, what most people fail to realize is that there are very few
"loopholes" in an insurance policy that give the insurance company an unfair
advantage over the consumer. In fact, insurance companies go to great
lengths to detail the limitations of their coverage by giving the policy
holders 10-days (a 10-day free look period) to review their policy.
Unfortunately, most people put their insurance cards in their wallet and
place their policy in a drawer or filing cabinet during their 10-day free
look and it usually isn't until they receive a "denial" letter from the
insurance company that they take their policy out to really read through
it. The majority of people, who buy their own health insurance, rely heavily
on the insurance agent selling the policy to explain the plan's coverage and
benefits. This being the case, many individuals who purchase their own
health insurance plan can tell you very little about their plan, other than,
what they pay in premiums and how much they have to pay to satisfy their
Excellent Health Insurance Advice from Dateline NBC
Excellent Health Insurance Advice from Doctor Jennifer Ashton on the
CBS Morning Show 4/9/09
For many consumers, purchasing a health insurance policy on their own can be
an enormous undertaking. Purchasing a health insurance policy is not like
buying a car, in that, the buyer knows that the engine and transmission are
standard, and that power windows are optional. A health insurance plan is
much more ambiguous, and it is often very difficult for the consumer to
determine what type of coverage is standard and what other benefits are
optional. In my opinion, this is the primary reason that most policy holders
don't realize that they do not have coverage for a specific medical
treatment until they receive a large bill from the hospital stating that
"benefits were denied." Sure, we all complain about insurance companies, but
we do know that they serve a "necessary evil."
are so many variables that consumers
have to be aware of when it comes to
buying health insurance. These
variables, and confusing insurance
terminology, are often difficult for
the average consumer to understand
which is why many small business
owners actually put off looking for
a new health plan until their rates
have skyrocketed to the point that
they can no longer afford the
monthly premiums. Business owners,
who find themselves in this
position, often place a greater
emphasis on how much the new plan
will cost, rather than placing an
emphasis on what benefits the new
plan will actually offer.
Quite often, consumers that base
their purchasing decision entirely on price, don't even realize that their
new plan may not provide coverage for specific medical conditions or that
the amount allotted for certain treatments may be extremely limited. And, it
usually isn't until they receive a large bill from a medical provider which
states that "claims were denied" that they realize thatthey made a critical mistake in plan selection.
As a small business owner, myself,
who primarily deals with other small business owners, I have come to the
realization that part of the problem is that it is extremely difficult for
individuals purchasing their health plan on the open market to distinguish
the difference among health plans. It is also equally difficult for
consumers to determine what type of health insurance coverage they actually
need for their particular situation.
Remember, there is a big difference
between the type of health plan consumers actually "need" and the type of
health plan consumers actually "want." Let me explain.
Recently, I have read many blog
articles that seem to stress that consumers should purchase health plans
that offer 100% coverage with a very low deductible. 100% coverage means
that after the deductible is met, usually $250, the plan will pay 100% of
all covered medical expenses.
Although I agree that these types
of health plans have a great "curb appeal." I can
tell you from personal experience that these plans are not for everyone, nor
are they affordable.
Will a low deductible plan that
offers 100% coverage offer the policy holder greater peace of mind?
Probably. But is a low deductible health plan that offers 100% health
insurance coverage something that most consumers really need? Probably not.
In my professional opinion,
consumers must achieve a balance between four important variables;
wants, needs, risk
and cost when they purchase a health plan. Just like the
car analogy, it is important for healthcare consumers to understand what
type of health insurance benefits are automatically included or standard and
which health insurance benefits are optional. For example, on most health
plans, maternity and prescription drug coverage is optional.
With this in mind, if one is
healthy, takes no medications and rarely goes to the doctor, do they really
need a 100% plan with a $5 co-payment for prescription drugs if it costs
them $300 dollars more a month?
Would it benefit a person to pay
$200 more a month to have a 90/10 plan with a $250 deductible, or should
they purchase an 80/20 plan with a $2,500 deductible which allows them to
save $200 a month? Wouldn't the 80/20 plan still offer you adequate
coverage? Isn't it more cost effective to put that extra $200 that would be
spent on insurance premiums, totaling $2,400 per year in their bank account,
"just in case" they may get sick or injured and might need to
pay their $2,000 deductible?
Isn't it smarterto keep your hard-earned money
yourself, rather than pay higher monthly premiums to an insurance company
for an illness or injury that may never happen?
This is just one example of
consumer-driven health care. Another example is an HSA
(Health Savings Account qualified High Deductible Health Plan) may offer a
more affordable healthcare option to individuals that are searching for a
health plan with very low monthly premiums. Typically, these plans offer
policyholders greater flexibility and control in where their health care
dollars are spent. Plans often come with a fixed aggregate family
deductible, which mean that a separate deductible does not have to be met
for each family member on the plan.
In addition to the significant cost
savings, policyholders can fund their Health Savings Account (HSA) to pay
for routine medical expenses or alternative medical therapies, like
acupuncture. Any money in the HSA that is not used for medical
expenses can be rolled over to the next year and excess funds can be
transferred to a tax deductible, tax deferred, interest bearing account,
commonly referred to as a "Medical IRA." These types of health plans can
offer tremendous tax advantages to policyholders. Not only can policyholders
save money on their health insurance premiums, but they also can use this
savings to build a nest egg for retirement. Many HSA administrators now
offer thousands of no load mutual funds to transfer your HSA funds into so
you can potentially earn an even higher rate of interest.
For more information on HSA
qualified HDHPs, click
In my experience, I believe
that individuals who purchase their health plan based on "wants" rather than
"needs" feel the most defrauded or "ripped-off" by their insurance company
and/or insurance agent.
In fact, I hear almost identical
almost every business owner
that I speak to about health insurance.
Comments, such as:
"I have to run my
business; I don't have time to be sick!"
"I think I have gone to
the doctor 2 times in the last 5 years" .......and
"My insurance company
keeps raising my rates and I don't even use my insurance!"
Again, as a small business owner
myself, I can understand the frustration that many small business owners
express. So, here is the $64,000 question:
Q. Is there a simple
formula that everyone can follow to make health insurance buying easier?
A. YES. Become an INFORMED
If you are wondering what I mean by
this, let me explain:
Every time I contact a prospective
client or call one of my client referrals, I ask that person a list of
questions about their current health insurance policy. You know, that policy
that is in their dresser drawer or filing cabinet.
That same policy that they bought
to protect themselves and their family from that "worse case
so they wouldn't have to file bankruptcy or lose their home due to unpaid
That policy that they thought
promised coverage for that $500,000 life-saving organ transplant, for the 40
chemotherapy treatments that they may have to undergo if they were diagnosed
with cancer or the many months of physical and/or speech therapy that they
might need to fully recover from a stroke.
Q. So, what do you think
happens almost 100% of the time when I ask these individuals "BASIC"
questions about their health insurance policy?
A. They almost always do
not know the answers!
The following is a list of
10 Questions that I routinely ask a prospective health insurance client.
What Insurance Company are you insured with and what is the name of your
health insurance plan? For example, Blue Cross Blue
What is your Calendar Year Deductible and would you have to pay a
separate deductible for each family member if everyone in your family
became ill at the same time? For example, the majority of
health plans have a per person yearly deductible, for
example, $250, $500, $1,000, or $2,500. However, some plans will
only require you to pay a 2 person maximum deductible each year,
even if everyone in your family needs extensive medical care.
3. What is your
Coinsurance percentage and what dollar amount (stop loss number) is it
based on? For example, a good plan design works this way. After
you have satisfied your calendar year deductible, the insurance company
will pay 80% ($8,000) and you will pay 20% ($2,000) of the first $10,000
in medical bills that you incur each year. This first $10,000 is termed
the "stop loss number." After this brief sharing arrangement is
over, the insurance company pays 100% up to the Maximum Lifetime
Benefit, which is typically, $2-5 Million per insured for the rest of
that calendar year. Then, everything starts over again on the first day
of each subsequent calendar year. Stop loss numbers can be as little as
$5,000 or $10,000 or as much as $20,000. However, be aware that there
are some policies on the market that have NO stop loss number at all!
Therefore, it is critical that you ask what your stop loss number is
before you purchase a plan.
4. What is your
Maximum Out of Pocket Expense per year? Keep in mind that the
Maximum Out of Pocket Expenses per year includes all deductibles plus
all coinsurance percentages plus all applicable access fees, service
deductibles or other fees.
5. What is the
Lifetime Maximum Benefit the insurance company will pay if you or
someone in your family becomes seriously ill and does your health plan
have any "per illness" maximums or caps? For example, some
plans may have a $5 Million Lifetime Maximum, but there might be a
benefit cap of $100,000 per illness. This means that you would have to
develop many separate and unrelated life-threatening illnesses costing
$100,000 or less to qualify for the $5 Million of Lifetime Coverage.
6. Is your plan
a Schedule Plan, in that it only pays a certain amount for a specific
list of procedures?
For example, Mega Life & Health & Midwest National Life, endorsed by the
National Association of the Self-Employed, (N.A.S.E.) endorses schedule
plans under the name "Health Markets." Another one to watch
out for are the AIM limited benefit plans:
7. Does your
plan have Doctor Copays and are you limited to a certain number of
doctor co-pay visits per year?
For example, many plans have a limit of how many times you go to the
doctor per year for a copay and, quite often the limit is
8. Does your
plan offer Prescription Drug Coverage and if it does, do you pay a
co-pay for your prescriptions or do you have to meet a separate drug
deductible before you receive any benefits and/or do you just have a
discount prescription card only? For example, some plans offer
you prescription drug benefits right away, while other plans require
that you pay a separate drug deductible before you can receive
prescription medication for a copay. Today, many plans offer no copay
options and only provide you with a discount prescription card that only
gives you a 10-20% discount on all prescription medications. This is a
dangerous policy design that can lead to catastrophic out of pocket
expenses if you were to contract any one of a host of major medical
conditions such as, Multiple Sclerosis or Rheumatoid Arthritis that
require expensive outpatient maintenance medications which are usually
not available in Generic form.
9. Does your
plan have any reduction in benefits for Organ Transplants and if so,
what is the maximum your plan will pay if you need an organ transplant?
For example, some plans only pay a $100,000 maximum benefit for organ
transplants for a procedure that actually costs as much as $500K or
more. In addition, this $100,000 maximum may also include the cost of
expensive anti-rejection medications that have to be taken after a
transplant. If this is the case, the insured will often have to pay for
all anti-rejection medications (a.k.a. Immunosuppressants) out of
pocket. Keep in mind that these medications are among the most expensive
medications which individuals requiring an organ transplant will have to
take for the rest of their life.
10. Do you have
to pay a Separate Deductible or Access Fee for each hospital admission
or for each emergency room visit? For example, some plans, like
the Assurant Health's "CoreMed" plan have a separate $750 hospital
admission fee that you pay for the first 3 days you are in the hospital.
This fee is in addition to your plan deductible. Keep in mind that many
plans have benefit
"access fees" for out-patient services, such as, physical therapy,
speech therapy, chemotherapy, radiation therapy, etc. Benefit "caps"
could be as little as $500 for each out-patient treatment, leaving you a
bill for the remaining balance if the fee for that particular service
exceeds $500. "Access fees" are also additional fees that you
are required to pay per treatment. For example, for each outpatient
chemotherapy treatment, you may be required to pay a $250 "access
fee"per treatment. So for 40
chemotherapy treatments, you would have to pay 40 x $250 = $10,000.
these fees would be charged in
addition to your plan deductible.
Now that you have read the
list of questions that I ask a prospective health insurance client, ask
yourself. How many questions you were able to answer?
If you were not able to answer all
ten, don't be discouraged. That does not necessarily mean that you are not a
smart consumer. I am sure you comparison shop for everything else. Maybe you
were just extremely confused by all of the insurance terminology or you had
a "bad" insurance agent who did not take the time to
really explain the type of coverage you were purchasing.
So how would you know if you dealt
with a "bad"
insurance agent? Because a "great" insurance agent
would have taken the time to help you really understand your insurance
benefits and s/he would have answered all of your questions about your
health plan purchase BEFORE you signed on the dotted line.
Remember, insurance agents are not
different from any other professional. There are "great"
insurance agents and brokers that care about clients and offer exceptional
customer service, and then there are "bad" agents
that avoid answering questions and typically don't return phone calls when
clients leave messages about unpaid claims or skyrocketing health insurance
Q. How do you know if you have a "great" agent?
A. A "great" agent
will recommend a health insurance plan based on all four variables; wants,
needs, risk and cost. A "great" agent gives you enough information
to weigh all of your options so
you can make an informed purchasing decision. And, lastly, a
"great" agent looks out for YOUR best interest and NOT the best
interest of the insurance company.
Another way to tell whether or not
you have a "great" or a "bad" insurance
agent is to determine how
many of the ten questions you were actually able to answer without looking
at your health insurance policy.
If you were able to answer all ten questions, you have a "great"
If you were able to answer at least
seven out of ten questions, you probably have a "good"
insurance agent. But, if you were only able to answer a few questions or
less than seven out of the ten, you most likely have a "bad"
Always keep in mind that your
health insurance purchase is just as important as purchasing a house or a
car, if not more important. So don't be afraid to ask your insurance agent a
lot of questions to make sure that you understand what your health plan does
does not cover.
If you don't feel comfortable with the type of coverage that your insurance
agent suggests or if you think the price for the plan is too high, ask your
agent if s/he can select a comparable plan so you can make a side by side
comparison before you make a purchase.
And, always make sure that you read
all of the
"fine print" in your health plan brochure and please
remember to take the time to read through your policy during your
"10-day free look period."
Remember, if you don't understand
something, or aren't quite sure what the asterisk (*) next to the benefit
description really means in terms of coverage, call your insurance agent or
contact the insurance company directly to ask for further
clarification. Furthermore, make sure you take the time to perform your own
research on the Internet.
For example, if you research
Mega Life and Health
Midwest National Life Insurance Company,
endorsed by the National Association for the Self Employed (NASE),
you will find out that there have been
multiple class action lawsuits
brought against these companies since 1995. Many health insurance
companies, especially the ones that have to pay huge insurance fines often
change their name and target more unsuspecting consumers. In fact, today
these companies are selling health insurance under the name "Health
So please perform your own due
diligence and ask yourself, "Is this a company that I can trust to
pay my health insurance claims?"
Additionally, find out if your
agent is a "captive" insurance agent or an insurance
insurance agents can only offer ONE insurance company's products. In
contrast, an "Independent" agent or insurance "Broker"
can offer you a variety of different insurance plans from many different
Over the years, I have developed
strong and trusting relationships with my clients and I am constantly
developing new clients through existing client referrals. This
is partly because of my level of insurance expertise and primarily due to
the level of personal service that I provide.
Because personal service is extremely critical to building long-term client
relationships, this is the main reason that I caution people to be very
careful when using online quoting engines and online applications to buy
health insurance on the Internet.
Again, in my professional opinion,
there are too many variables to consider when shopping for health insurance.
Therefore, I am a firm believer that a health insurance purchase requires
the level of expertise and personal attention that only an insurance
professional can provide. And, since it does not cost a penny more to
purchase your health insurance through an independent agent or broker, my
advice to you would be to use Ebay and Amazon for your less important
purchases and to use a knowledgeable, ethical and reputable independent
agent or broker for one of the most important purchases you will ever
make....your health insurance policy.
Lastly, if you have any concerns
about an insurance company, contact your state's Department of Insurance
BEFORE you buy your policy. Your state's Department of Insurance can tell
you if the insurance company is registered in your state and can also tell
you if there have been any complaints against that company that have been
filed by policyholders.
Also, if you suspect that your agent is trying to sell you a fraudulent
insurance policy, for example, you have to become a member of a union to
qualify for coverage, or s/he isn't being honest with you, your state's
Department of Insurance can also check to see if your agent is licensed and
whether or not there has ever been any disciplinary action previously taken
against that agent.
In closing, I hope I have given you
enough information so you can become an INFORMED insurance consumer and you
can understand why"The
Best Policy Is A Great Agent."
Whatever decision you make in regards to your health insurance, please
always remember to heed the following words of wisdom.
"If it sounds too good
to be true, it probably is!" ..........and
"If you only buy on
price, you get what you pay for!"
What Do Women
Really Want? Watch The Video Below
To Find Out.
Ten Questions You
Should Ask Your Agent Before You Buy A Policy
If you are a business owner, self-employed or an employee
of a company that is not offered medical coverage through your employer, you may
have to undertake the frustrating, daunting and time consuming task of
purchasing health insurance on your own. If this is the case, there are certain
things that you can do become an informed consumer so you can ensure that you
are purchasing the type of health insurance coverage you really need
at a price
you can afford.
When you purchase a health
insurance plan, it is important that you balance four important
variables: wants, needs, riskand cost,
before you spend your
Although you may "want"a health plan that offers you 100% coverage and a $5 Copay for
prescription medications, you may not "need"this type of health plan if you are healthy, take no medications and do
not have any significant health related "risk"
Since a 100% health plan will
"cost"significantly more than an 80/20
Plan, it may not be in your best interest to pay higher monthly premiums for
100% coverage if you are currently healthy.
Although no one knows exactly when
they will actually use their insurance coverage, considering these four key
variables prior to purchasing a health plan is a good rule of thumb.
It is also critical for health
insurance consumers to understand that all plans, even 100% Plans, have some
form of coverage limitations. Knowing what your policy DOES NOT cover, is
more important than knowing what it DOES cover.
Many plans also have a separate
deductible for emergency room visits. These deductibles are in place to
discourage policyholders from using the emergency room as a doctor's office.
Typically, these ER deductibles are waived if the patient is admitted to the
The following is a list of
10 key questions that
should help health insurance consumers to better understand the coverage
limitations of the plans they are considering purchasing. Make sure you ask
your insurance agent these questions BEFORE purchasing a health insurance
What insurance company do you represent and are you a "captive" agent,
"independent" agent or an insurance "broker?" "Captive" agents
represent ONE insurance company's products only.
An "independent" agent or insurance
"broker," on the other hand, typically represent many quality insurance carriers
and can sell a variety of different insurance products without any contractual
Dealing with a "captive" agent may limit your choices, since these agents
can only sell that particular insurance company's health plans.
What is the plan's calendar year Deductible and would I have to pay a
separate deductible for each family member if everyone in my family
became ill at the same time? The majority of health plans have
a per person calendar year deductible, for
example, $250, $500, $1,000, or $2,500. Some plans are designed so in a
"worse case scenario" only two family members will have to
pay their deductible in any given calendar year.
BEWARE!Some plans will require each person in the
family to pay their calendar year deductible. This can be a huge financial
burden if everyone in the family was involved in an accident or if members
of the family became ill at the same time. Many
plans have a separate drug deductible before the plan will pay for any
medications. Make sure you know what deductibles you will be responsible for
before you buy a health plan.
What is the plan's Coinsurance percentage and what Stop Loss Number is
this percentage based on?
These percentages are typically
based on a specific dollar amount, known as the "stop loss number."
Here's where it get's tricky. Quite often, health insurance plans have
different "stop loss numbers".
I have seen some plans that have a "stop loss number"
as low as $2,000 and as high as $25,000 or some with none at all.
Let's figure out the
insured's maximum out of pocket on an 80/20 plan that has a $1,000
deductible and an 80/20 split of the first $5,000 ("stop loss number.")
$1,000 + 20% of $5,000
($1,000) = A Maximum Out of Pocket of $2,000.
Now, let's figure out the
insured's maximum out of pocket on an 80/20 plan that has a $250 deductible
and a $10,000 "stop loss number."
$250 + 20% of $10,000
($2000) = A Maximum Out of Pocket of $2,250. (Note: Total does not include
any separate "service deductibles" or access fees. Many low quality plans
also have these.)
Again, after this brief 80/20 cost
sharing with the insurance company, also know as a the coinsurance
percentage split, most major medical plans will pay 100% of in-network
covered charges up to the Lifetime Maximum amount that is specified in the
Some policies on the market are sold with
NO stop loss, but still
list a coinsurance percentage. Therefore if you purchase an 80/20 with no
stop loss, you will actually be paying 20% of all of your medical bills each
calendar year. So unless you want to be responsible for 20% of all of your
bills, make sure you find out what the "stop loss number" is BEFORE you
purchase a health plan!
What is the plan's Maximum Out Of Pocket Expenses per year?
This expense is a total of all deductibles, plus all coinsurance
percentages, plus all applicable "access fees",
"service deductibles" or other "fees" outlined in your policy.
Quite often agents neglect to tell prospects about hidden fees, so make sure
you have a good grasp on the basics, like deductibles, coinsurance & stop
loss numbers. Always ask about additional "fees" BEFORE you purchase the
5. What is the plan's
Lifetime Maximum Benefit if I become seriously ill and does the plan
have any "per illness" maximums or caps? The majority of health
insurance plans have a two million or five million dollar Lifetime
Maximum Benefit. The Lifetime Maximum Benefit is the maximum
amount the insurance company will pay if you or someone in your family
becomes seriously ill.
Some policies will stipulate that there is a maximum benefit cap of $100,000
per illness. This means that you would have to develop many separate and
illnesses costing $100,000 or less to qualify for the five million dollar
Lifetime Maximum Benefit.
Mega Life & Health, Midwest National Life a.k.a.
Health Markets, formerly U.I.C.I., endorsed and promoted by the
National Association for the Self Employed (N.A.S.E) and the Alliance for
Affordable Services are known for selling "schedule" plans with "per illness
Is the plan a Schedule Plan, in that it only pays a certain amount for a
specific list of procedures? Some health plans only pay a
specific dollar amount for certain procedures, despite the fact that the
procedure often cost more than the plan stimulates.
Mega Life & Health, Midwest National Life a.k.a. Health Markets, formerly
U.I.C.I., endorsed and promoted by the National Association for the Self
Employed (NASE) and the Alliance for Affordable Services are known for
selling "schedule" plans.
Does the plan have unlimited doctor copays or is there a limited number
of doctor copay visits allowed each year? Many quality plans
have no limit on the number of times you can use your doctor copay.
Several plans have a limit of how many times you can go to the doctor each
year for a Copay. Quite often, the limit is 2-4 visits per year.
Does the plan offer Prescription Drug Coverage and if it does, what type
of coverage? Some plans offer prescription drug benefits on
both generic and brand name medications right away. Other plans will
require you to pay a separate outpatient prescription drug
obtain your prescription medication for a Copay.
Today, many plans offer NO outpatient prescription drug Copay options.
Typically, these plans only provide the insured with a discount prescription
card which only offers the insured a 10-20% discount on prescription
medications. This can lead to catastrophic out of pocket expenses to the
Does the plan have any reduction in benefits for Organ Transplants and
if so, what is the maximum the plan will pay out for an organ
The majority of quality major medical plans treat organ transplants as
any other illness. This means that the insurance company will cover the
insured until the Lifetime Maximum Benefit of the plan is reached.
Again, in most cases, this Lifetime Maximum is five million dollars. You
should accept no less than one million dollars of coverage for Organ
Today, some plans only pay a $100,000 maximum benefit
for organ transplants. Plans that offer limited organ transplant coverage
are extremely risky, since organ transplant procedures often range in the
neighborhood of $350-$500K. In addition, it is not uncommon for a transplant
patient to need a second organ transplant. Keep in mind, that the $100,000
maximum payment for organ transplants on many plans also includes the cost
of expensive anti-rejection medications. If you have an organ transplant,
you will quickly reach the $100,000 maximum benefit, which means that you
will be required to pay for costly anti-rejection medication out of pocket.
This can lead to catastrophic out of pocket costs to the insured.
Does the plan have any separate "services deductibles" or "access fee"
for each hospital admission or for each outpatient test? Some
plans, like Assurant Health's "CoreMed" plan have a separate $750
hospital admission fee for the first three days of each hospital stay.
These hospital admission fees may also be called "Access Fees" on other
policies. Typically the insured is responsible for paying these access
fees for each hospital admission in addition to their calendar year
health plan deductible.
"Access fees" and "service deductibles" are separate from your plan's
calendar year health plan deductible.
Be aware that many plans now have benefit "caps" or "access fees"
for out-patient services, such as, physical therapy, speech therapy,
chemotherapy, radiation therapy, etc. These "benefit caps" could be as
little as $500 for each out-patient treatment, which will leave the insured
responsible for the remaining balance that is over $500.
Again, "access fees"
are additional fees that you may have to pay per treatment before the
insurance company will pay the provider. These fees can quickly add up. For
example, if you need to have 40 outpatient chemotherapy treatments, and you
must pay a $250 "access fee" per treatment, you would have to pay an
additional 40 x $250 = $10,000.
Remember, purchasing a health plan
is the most important purchase you will ever make. Insist that your
insurance agent explain to you exactly what your health plan does and does
not cover and take the time to read the "fine print"
in the plan brochure and ask questions about terminology you don't
In addition, when you receive your
health insurance policy in the mail, don't just detach your insurance cards
and place them in your wallet or purse and then throw your insurance policy
in your desk drawer or filing cabinet. Take the time to sit down and read
your policy page by page.
Once you receive your policy, you
have a 10-day free look period, so if your coverage is not
what you thought you purchased, you have time to call the insurance company
and cancel the policy without incurring any fees.
Finally, if your being pitched a
health plan that seems to good to be true (e.g. all pre existing conditions
are covered, the plan is significantly cheaper than all other plans) contact
your state's Department of Insurance BEFORE you buy the policy. Your state's
Department of Insurance can tell you if the insurance company is registered
in your state and can also tell you if there have been any complaints
against that company that have been filed by policyholders.
Remember, if you suspect that your
being scammed or you think the agent is trying to sell you a fraudulent
insurance policy, (e.g. you have to become a member of a union to qualify
for coverage) your state's Department of Insurance can also check to see if
any prior disciplinary action has been previously taken against that agent.
Don’t Fall Victim To
Health Insurance Scams 10 Red Flags To Watch For
In today's fast
paced world, business owners don't often have the time to thoroughly check out
the companies they rely on to provide goods and services. In many cases, a
determination of product/service quality can be made at the time goods are
delivered or services are rendered. If goods or services do not meet
expectations, there is often an immediate remedy available. For example,
poor quality goods can be shipped back to the supplier and/or payment for
services can be withheld until services are satisfactorily rendered.
business owners do not always purchase items that are tangible items, in the
sense that they can immediately determine the quality of the goods and/or
services at the time of purchase. One example of such a purchase is health
insurance. Since health insurance is not usually used immediately after
purchase, the quality of care or the legitimacy of the policy may not even come
into play until the business owner, or a family member, actually needs to have
medical treatment. This is one of the primary reasons that many companies, often
appearing legitimate, can get away with selling bogus health insurance coverage
to unsuspecting business owners.
In most cases,
fraudulent health insurance policies are sold to business owners by
telemarketers or "agents" through bogus Associations and Unions. In that, the
buyer must join a professional and/or trade association or become a union member
to qualify for health insurance. In fact, in a study published by the U.S.
General Accountability Office (GAO) in 2004, the GAO found that association
schemes ranked at the top of the marketing methods followed by bogus health
insurers. According to the report, "Employers and Individuals Are Vulnerable to
Unauthorized or Bogus Entities Selling Coverage, between 2000 and 2002, the U.S.
Department of Labor and state insurance regulators identified 144 unauthorized
entities selling health insurance unlawfully. These entities defrauded 15,000
employers and more than 200,000 policyholders out of $252 million."
However, it is
important to mention that many individual and group health insurance products
are endorsed by reputable Associations, such as the AARP and the American Bar
Association and, many reputable Unions, such as the AFL-CIO and the Teamsters.
These organizations have long been recognized for bringing a common class of
professionals or citizens together for other purposes that have very little to
do with health insurance. Membership commonly includes a wide range of other
benefits in addition to discounted health insurance. Typically, the
organizations have a governing organization, a constitution and bylaws, a set of
officers, voting rights, regular membership meetings and a professional code of
individuals do not find out that they were making hefty monthly payments or
premiums to fraudulent Associations or Unions until they have a severe condition
that requires medical treatment. Usually, it isn't until after they receive
treatment that they receive notice from their medical provider that the claim
that was submitted to the insurance company was denied and that all the medical
charges that were incurred are now their responsibility.
Often, the scheme
starts when business owners are contacted by telephone or approached by someone
who claims to represent a certain, official sounding, Association or Union. The
business owner is then informed that if s/he becomes a member of the Association
or joins the Union, s/he could qualify for a low cost group or individual health
insurance plan. Typically the Association or Union is promoted to represent
self-employed individuals and small business owners. The low cost health
insurance is usually presented as one of the many "perks" that the business
owner can qualify for, in addition to many other "member" benefits, like
discounts on other services, such as dental, eyeglasses, office
supplies, hotels, rental cars, etc.
In many instances,
these bogus companies involve licensed health insurance agents to sell their
fraudulent health insurance products. Sometimes the "agents" know the products
are fraudulent, other times, the "agent" also falls prey to the scheme.
Often, the schemes prey upon consumers who have been previously declined
insurance coverage or suffer from a pre-existing condition. Since these
consumers have very limited options to purchase private health insurance
coverage, the benefits of an Association or Union membership that offers health
insurance coverage for a "membership fee" or "union due" is enticing. To the
unsuspecting consumer that has a pre-existing medical condition or is paying
high premiums for coverage, the "membership fee" or "union due" is a small price
to pay for what they believe will be a quality health plan that provides
"guaranteed" coverage with no "pre-existing condition exclusions" and no
circumstances, the print materials that are left with the consumer are very well
designed, however, the majority of the time, the language in the "health plan
brochure," if there is one, is very unclear. The literature may name the entity
that is authorized to act as the health plan administrator of the plan, but
neglect to name the actual insurance company that is providing the health
insurance coverage. Unfortunately, it is often difficult for the consumer to
separate the illegitimate companies selling official sounding health plans from
the legitimate ones. Typically fraudulent health plans have many commonalities.
Here are 10 "Red
Flags" that may indicate health insurance fraud:
The "agent" is not a licensed
insurance agent but an "enrollment" or "membership" coordinator.
term "discount plan" is written in the product literature, but the term
health plan, health insurance or policy is frequently used by the plan
promoter. Discount plans often provide nothing more than a discount for
medical services, such as prescription medications, eyeglasses, dental,
etc. These plans are not designed to offer major medical health
official sounding "Association or Union" is one that you have never
heard of before.
plan is referred to as an ERISA plan. The Employee Retirement Income
Security Act of 1974 (ERISA) is a federal law that allows employers to
set up employee benefit plans for employees and their dependents. ERISA
plans are not subject to state regulation and are not regulated by the
state insurance commissioner. ERISA plans are normally not sold as
health insurance, but are instead, established by employers, unions or
groups acting on behalf of employers. Therefore, unsuspecting
buyers believe these plans actually offer health insurance coverage,
when if fact, they do not.
buyer is told that the "membership fee or union dues" includes the
health insurance premium, but there is no mention of the word "premium"
in any of the plan literature.
plan offers "guaranteed" insurance coverage with no exclusions for
"pre-existing conditions" and no "waiting periods."
plan is significantly cheaper in price than other health insurance
term "reinsured" is used in regards to the plan. Reinsurance is
something insurance companies buy to protect themselves against their
own risks. It is insurance for insurance companies. Licensed insurers
rarely have their agents mention any of their reinsurance arrangements
during a sales presentation.
Association or Union is comprised of members from all walks of life
and/or requires its members to state that they belong to a certain
trade, class or group of professionals that they have no affiliation
with, for example, the Association or Union is said to be comprised of
"Food and Beverage" workers, but "Florists" and "Machinists" are allowed
to enroll as members.
the Association or Union is said to have a special arrangement with a
health insurance company, a plan administrator or another third party
that has designed the plan using a legal "loophole" that allows members
to purchase health insurance at a discounted rate or to purchase a
individual or group health insurance policy.
So how can you
protect yourself from falling victim to a fraudulent insurance scam? Make
sure you contact your state's department of Insurance to determine if the health
insurance company and the third-party administrator are licensed to do business
in your state and make sure that the "agent" selling the plan is a "licensed
health insurance agent." Additionally, make sure that health insurance
company has been approved to sell the particular policy that is being offered.
Since it may be difficult to tell if fraud is involved, always put off buying
your health insurance policy until you have had the opportunity to perform your
own due diligence.
If you are one of the 46.6 million
Americans that have joined the ranks of
the uninsured, what you may not know is
that you may have to pay more for your
medical treatment than your privately
insured counterparts. If those without
insurance get sick, they usually have to
pay much more for the same medical
services, since insurance companies can
negotiate discounts with doctors,
hospitals, pharmacies, and others health
care providers. This means that the
average uninsured working man or woman
who suffers a mild heart attack can be
stuck with a hospital bill that is in
excess of $30,000 compared to the
$10,000, negotiated rate, which is
charged to an insured patient's private
insurance carrier. In many cases,
uninsured individuals are charged 3-4
times more for the exact same medical
treatment that is administered to
patients with private insurance.
Additionally, uninsured patient with
huge medical bills are usually
aggressively pursued by collection
agencies and new bankruptcy laws make it
extremely difficult to discharge medical
debt. If you don't have health insurance
coverage, you have a 25% greater chance
of developing a life-threatening disease
or condition than those with health
insurance. Here are some startling
statistics from the National Institute
of Medicine (IOM) - an arm of the
National Academy of Sciences:
Lack of health insurance causes
18,000 unnecessary deaths per year
Adults without health insurance
coverage have a 25% greater chance
of dying from a disease or condition
than those with health insurance
The nation spends $65 to $130 billon
a year in lost resources because of
diminished health and premature
deaths relating to uninsured
Today, there are more uninsured
Americans than any point in history.
According to the U.S. Census Bureau,
approximately 15.9 percent of Americans
are walking around without health
insurance coverage and paying for
medical expenses out of pocket. Although
treatment for a sore throat or broken
ankle can be a manageable medical
expense for some families, more
expensive treatments like surgery or
chemotherapy can be financially
devastating. If you are the type of
person that wouldn't risk driving your
vehicle without car insurance, consider
the fact that there is a statistically
greater chance that you will suffer from
an illness or injury than an auto