Health Insurance Tips and Advice for Self Employed and Small Business Owners

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 suffer.

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 deductible. 

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."

There 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 that they 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 smarter to 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 qualified HPHP. A HSA qualified HDHP (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 here now.

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 comments from 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 insurance consumer!

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 scenario" so they wouldn't have to file bankruptcy or lose their home due to unpaid medical debt. 

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.

•  1.  What Insurance Company are you insured with and what is the name of your health insurance plan? For example, Blue Cross Blue Shield-"Basic Blue." 

•  2.  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 is the AIM limited benefits 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 2-4 visits.  

•  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 "caps" or "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. Again, 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 premiums.

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" insurance agent. 

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" insurance agent. 

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 and, more importantly, 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 and 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 Markets." 

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 "broker." 

Why?  

"Captive" 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 quality carriers.  

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!"

More Great Health Insurance Advice:

Now for a little "Health Insurance" comic relief:

Ten Questions You Should Ask Your Agent Before You Buy Health Insurance

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, risk and cost, before you spend your money.

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" factors.

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 hospital. 

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 policy. 

•   1. 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 restrictions.

BEWARE!  Dealing with a "captive" agent may limit your choices, since these agents can only sell that particular insurance company's health plans.

•   2. 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.

•   3. 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 policy.

BEWARE! 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!

•   4. 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.

BEWARE! 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 plan!

•   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.

BEWARE! 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 unrelated life-threatening 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 caps."

•   6. 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.

BEWARE! 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.

•  7. 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.

BEWARE! 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.

•  8. 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 deductible before you can obtain your prescription medication for a Copay.

BEWARE! 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 insured.

•  9. 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 transplant? 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 Transplants.

BEWARE! 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.

•  10. 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.

BEWARE! "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 completely understand.

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.

Excellent Health Insurance Advice from Dateline NBC

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

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 premiums.

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" insurance agent. 

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" insurance agent. 

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 and, more importantly, does not cover.

COBRA Stimulus has now ended. What are your Health Insurance options now?

If you are one of the many American's who elected to take advantage of a 65% reduction of your COBRA continuation premiums under the "American  Recovery and Reinvestment Act Of 2009" your reduced COBRA premium would have increased substantially in the month of December 2009 when the "Cobra Stimulus" was originally planned to come to an end. However on December 21st 2009, President Obama signed an extension to the ARRA "Cobra Stimulus" which continues the 65% reduction until February 28th. 2009. That extension has also now come to an end. The question that everyone is asking now is, if I can't afford my Cobra premium now that the Cobra Stimulus has expired what are my options? Kimberly Langford at Kiplinger's Personal Finance discusses what to do after your Cobra continuation ends:

As Kimberly mentions, there are several lower cost alternatives to paying high priced COBRA continuation premiums.  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:

•  1.) State Continuation of Coverage

•  2.) Individual Health Insurance Policy

•  3.) Small Group Health Insurance Plan

•  4.) State Risk Pool Coverage

Let's take a look at these alternative plans:

•  1.  The 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. This law does not apply to self-funded plans, so make sure to check with your State's Department of Insurance to see if your State mandates State Continuation of Coverage.
   

•  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.

Today, the "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.

An HSA 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 "guaranteed insurability," 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 here

How Long Can I Keep My Child On My Health Insurance Plan?

Long before the “Patient Protection and Affordable Care Act” (a.k.a. “Obamacare”) was signed in to law on March 23rd, 2010. There were Federal & State laws that were already in force around the country that provide protection for dependent children regardless of their college student attendance status. As well as laws that guarantee coverage for pre-existing conditions for all Americans. See www.TRUTHaboutpreexistingconditions.com

In fact, the “Obamacare” legislation does NOT include protection for dependent children regardless of student eligibility status until 2014. Neither does it guarantee access to health insurance coverage regardless of pre-existing conditions until the year 2014. Even though, the President stated repeatedly that “within 6 months of the signing of this legislation, dependent adults will be able to stay on their parent’s policies until 26 years of age and children will no longer be denied coverage for a pre-existing condition“.

Thanks to America’s Health Insurance Plans (who had already suggested such legislation in 2008) children will not have to wait until 2014 to obtain guaranteed access to health insurance coverage for pre-existing conditions so long as they are insured on a parent’s policy. This is true because America’s Health Insurance plans voluntarily agreed to do so this year instead of waiting until 2014.

As of 9/23/2010 all dependent children can now remain on their parent’s policies until the age of 26 without the need to be attending college. In addition, more than 80 new Preventative Care mandates have also been added to all “non grandfathered” health insurance plans (plans purchased after March 23rd, 2010).

Another law that was passed by Congress in 2008 also protects college students. Such as Michelle’s Law (H.R. 2851) which requires insurance plans that use student status to determine dependent eligibility to allow dependents to take up to 12 months of medical leave without jeopardizing their eligibility. More than 20 percent of states had enacted similar laws prior to federal action.

Then there are COBRA Continuation Coverage Rights which were passed more than 14 years ago in 1996. Under these laws, a dependent child will become qualified for COBRA benefits if they lose coverage under their parent’s employer-sponsored insurance (20 employees or more) if:

1. the parent/employee dies;
2. the parent/employee’s hours of employment are reduced;
3. the parent-employee’s employment ends for any reason other than his/her gross misconduct;
4. the parent/employee becomes enrolled in Medicare;
5. the parents become divorced or legally separated; or
6. the child stops being eligible for coverage under the plan as a “dependent child.”

Don’t Fall Victim To A Health Insurance Scam: Ten Red Flags To Watch Out 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.

Unfortunately, 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 conduct. 

Unfortunately, most 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 "waiting periods."

In many 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:

•  1.) The "agent" is not a licensed insurance agent but an "enrollment" or "membership" coordinator.

•  2.) The 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 insurance coverage.

•  3.) The official sounding "Association or Union" is one that you have never heard of before.

•  4.) The 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.

•  5.) The 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.

•  6.) The plan offers "guaranteed" insurance coverage with no exclusions for "pre-existing conditions" and no "waiting periods."

•  7.) The plan is significantly cheaper in price than other health insurance plans.

•  8.) The 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.

•  9.) The 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.

•  10.) If 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.

Uninsured Americans Charged More For Medical Treatment

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:

1. Lack of health insurance causes 18,000 unnecessary deaths per year

2. Adults without health insurance coverage have a 25% greater chance of dying from a disease or condition than those with health insurance coverage

3. The nation spends $65 to $130 billon a year in lost resources because of diminished health and premature deaths relating to uninsured Americans

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 accident.

© Copyright 2000 S.B.I.S. Inc.