So do most policy holders really know what is in their 47-82 page health insurance policy? Yes, lots of confusing insurance jargon. Sure, the average policy holder could probably tell you how much their monthly premiums are, but can they tell you what their insurance policy doesn’t cover? Usually the policy holder doesn’t even realize what their policy doesn’t cover until they file a claim and receive a “denial letter” from the insurance company.

Unlike car buying, where the buyer knows that the engine and transmission are standard, and that power windows and cruise control are optional, health insurance is a maze of confusion. Unfortunately, many health plans are purposefully designed to offer “limited” standard benefits. Often, coverage for other medical expenses, like “maternity” and “organ transplant” coverage are optional. Usually a policy holder doesn’t even realize that their policy doesn’t cover something “important” until they undergo medical treatment and then receive a huge bill from the hospital stating that “benefits were denied.”

Yes, we all complain about insurance companies, but we all know that they serve a “necessary evil.” Very few of us could afford to pay for open heart surgery, if we needed it, without insurance. This being the case, how can YOU, the consumer, protect yourself against the big, bad, greedy insurance companies? And, how will you know if you are truly getting the best plan for the lowest price? Simple…buy the type of health insurance plan that you really “NEED.”

Sure, everyone wants to have affordable, quality health insurance coverage, but in my experience, particularly dealing with the small business and self-employed market, very few people individuals can distinguish between the benefits they “want” and the benefits they really “NEED.’

I have read many comments on various blogs about plans that cover 100% (no deductible and no-coinsurance) and I agree that those types of plans have a great “curb appeal.” However, I would not recommend to anyone that they work overtime and give up time with your family just so they could afford a plan with 100% coverage. Do those types of plans offer the policy holder greater peace of mind? Absolutely! But is 100% coverage something that the policy holder really needs? Probably not!

Just like you would do, if you were purchasing options for a new car, you would have to weigh your “wants” vs. your “needs.” For example, although heated seats are a nice optional feature, “Do you really need heated seats if you live in Arizona?” Not unless you are planning to frequently drive to Alaska! So if you are healthy, take no medications and rarely go to the doctor, do you really need a plan with 100% coverage, and a $5 co-payment for prescription drugs? Is it really worth paying for this “option” if it costs you an additional $300 a month in insurance premiums to have this type of coverage?

Or, is it worth $200 more a month to have a $250 deductible and a full drug card vs. an 80/20 plan with a $1,000 deductible and a discount drug card. Wouldn’t the 80/20 plan still offer you adequate coverage? Don’t you think it would be better to put that extra $200 ($2,400 per year) that you would be giving to the insurance company in premiums in your own bank account, just in case, something happens in the future and you have to pay your $1,000 deductible or buy a $12 Amoxicillin prescription? Don’t you think it is wiser to keep your hard-earned money rather than handing it over to the insurance company? Remember, the insurance company offers you NO REFUNDS on insurance premiums if you stay healthy.

In my experience, this is one of the primary reasons that most people I speak to feel like they have been defrauded or “ripped-off” by their insurance company and/or insurance agent. In fact, time and time again I hear almost identical comments from every business owner that I speak to. Comments such as, “I have to run my business; I don’t have to be sick!” “I think I have gone to the doctor two times in the last five years.” “My insurance company keeps raising my rates and I don’t even use my insurance?”

As a business owner myself, I can understand their frustration. Many business owners complain that it is not easy to determine what type of health insurance coverage they really need. So, is there a simple, secret formula that everyone can follow to make health insurance buying easier? Yes! Become an INFORMED Consumer. Every time I contact a prospective client or call one of my client referrals, I ask a handful of specific questions that directly relate to the policy that particular individual currently has in their filing cabinet. You know….the policy that they are relying on to protect them from having to file bankruptcy due to medical debt. The one they bought to cover that $400,000 life-saving organ transplant that they may need someday or those 40 chemotherapy treatments that they may have to undergo on an outpatient basis should they develop lung cancer.

So what happens almost 100% of the time when I ask these individuals “BASIC” questions about their health insurance policy? They have difficulty answer them! The following are 10 questions that I frequently ask a prospective health insurance client. Let’s see how many YOU can answer without looking at your policy.

1. What Insurance Company are you with and what is the name of your plan?
2. What is your deductible?
3. Do you know what your coinsurance percentage is and what dollar amount (stop loss) it is based on? (e.g. 80/20 coverage means you pay 20% of some dollar amount, what is it?)
4. What is your maximum out of pocket expense per year? (e.g. deductibles + coinsurance + other fees)
5. What is the Lifetime maximum benefit the insurance company will pay out if you become seriously ill and does your plan have any “per illness” maximums or caps? (e.g. the plan has a $5 million lifetime maximum, but only pays out $1 million per illness. This means that you would have to develop FIVE separate and unrelated life-threatening illnesses costing $1 million or less to qualify for $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? (e.g., Mega Life & Health & Midwest National Life, a.k.a. National Association of the Self-Employed NASE)
7. Does your plan have doctor copays and are you limited to a certain number of doctor copay visits per year? (e.g. Can only go to the doctor 2 times a year for a $20 copay?)
9. Does your plan offer outpatient prescription drug coverage and if it does, do you pay a copay for your prescriptions or do you have to meet a separate drug deductible before you receive any benefits?
10. Does your plan have any reduction in benefits for organ transplants and if so, what is maximum the plan will pay if you need an organ transplant? (e.g. Some plans only pay a $100,000 maximum benefit for organ transplants, but the procedure actually costs $250-$400K)
9. Do you have to pay a separate deductible for each hospital admission or for each emergency room visit? (e.g. Some plans have a separate $750 hospital admission fee for each hospital admission which is separate from your deductible. Others have a separate $100 E.R. deductible that may be waived if you are admitted to the hospital.)
10. Are there any restrictions, benefit “caps” or “access fees” on out-patient services, such as, physical therapy, speech therapy, chemotherapy, radiation therapy, etc.? (e.g. Some plans pay a $500 maximum for each out-patient treatment and others require you to pay a $250 “access fee” per treatment. This is usually separate from your plan deductible. So for 40 chemotherapy treatments, you would have to pay 40 x $250 = $10,000)

So how many questions could you answer? If you couldn’t answer all ten questions either, that doesn’t necessarily mean that you are not a smart consumer? It may just mean that you just dealt with a “bad” agent, because a “great” agent would have really taken the time to help you understand your insurance benefits. A “great” agent asks questions to try to understand your insurance needs and recommends plans based those needs. A “great” agent takes the time to explain the difference to you regarding “needs” and “wants” and gives you enough information to weigh all of your options so you can make an informed purchasing decision. A “great” agent looks out for YOUR best interest and NOT the interest of the insurance company.

So how do you know if you have a “great” agent? If you can answer all of the above questions without looking at your health insurance policy, you have a “great” agent. If you can answer the majority, you may have a “good” agent. If you can only answer a few, you, most likely, have a “bad” agent. Just like any other profession, there are insurance agents that really care about the clients they work with, and there are others that avoid your questions and duck your calls when you leave messages about your unpaid claims or your skyrocketing health insurance rates.

Remember, purchasing health insurance is just as important as purchasing a house or a car, if not more important. Ask your agent a lot of questions and make sure that the answers that s/he provides are thoroughly explained to you. If you don’t feel comfortable with the coverage, price, etc. ask your agent if you can see another plan so you can make a side by side comparison before you buy. Additionally, read the “fine print” in your health plan brochure and policy and ask your agent what every asterisk (*) next to the benefit description really means.

Furthermore, do your own due diligence. For example, if you research MEGA Life and Health, a.k.a. Midwest National Life a.k.a. National Association for the Self Employed (N.A.S.E), you will find that there have been 14 class action lawsuits brought against them since 1995. So ask yourself, “Is this a company I would trust to pay my insurance claims?

Furthermore, ask your agent if s/he is a “captive” agent or an insurance “broker.”
“Captive” agents can only offer ONE insurance company’s products.” Independent” agents or insurance “brokers” can offer you a variety of different insurance plans from many different companies. These plans can often be customize to meet your specific insurance needs and budget.

Health insurance is probably one of the only things that I would not recommend buying off of the internet. In my opinion, there are too many variables to consider. A health insurance purchase requires the level of personal attention that only an insurance professional can provide. So use Ebay and Amazon for your less important purchases and use a knowledgeable, ethical and reputable insurance agent or broker for the most important purchase you will ever make….your health insurance policy.

Lastly, if you have concerns about an insurance company or agent, contact your state’s Department of Insurance BEFORE you buy your policy. Your state’s Department of Insurance can tell you if there have been any complaints filed by policy holders against that insurance company and the reason for the complaints. If you suspect that your agent is trying to sell you a fraudulent insurance policy, (e.g. you have to join an association to qualify for health insurance, you have to become a member of a union, you have to become part of a group or a professional association) you should contact your state’s Department of Insurance to check to see if you agent is licensed and to verify that the insurance policy and insurance company are registered in your state.

In closing, I hope I have given you enough information so you can become an INFORMED consumer. However, I remain convinced that the following words of wisdom still go along way:

1. “If it sounds too good to be true, it probably is!”
2. “If you only buy on price, you get what you pay for.”

C. Steven Tucker, President
Licensed Multi-State Insurance Agent
Small Business Insurance Services, Inc.
“The Best Policy Is A Great Agent”
Visit Us: http://www.smallbusinessinsuranceservices.com
Email Us: http://www.smallbusinssvcs@aol.com
Call Us: 1-866-SBIS123 (724-7123)