By Wendy Mihm | Monday November 29, 2010
Some of us may get a little bent out of shape when we shop for health insurance because they use freaky terms like “deductible” and “co-insurance.” Ok maybe that’s just me. This overview is for individuals. If you are looking for coverage in CA for your parents, check out Blue Shield California Medigap.
Anyway, I’m here to take the pain out of this often-dreaded task. It’s really not that hard, I swear. Here’s what you do.
1. Decide if you’re going for a high-end or a basic plan and understand that you will pay more for the high-end plan. (Duh.) A high-end plan will cover some or all of your routine doctor visits and prescription drugs, but will charge a higher monthly fee, called a premium. A more basic plan will not cover these routine medical costs, but will charge a lower monthly premium. My view is that the primary purpose of insurance is to protect you and your family from financial ruin, should something truly terrible happen. For that reason, I tend to recommend the more basic plans in order to keep monthly premiums more manageable. But you should choose what is most comfortable for you.
2. Learn these terms (or just print this out as a cheat sheet for when you shop for insurance online):
Deductible
The dollar amount that you are expected to contribute toward your medical expenses before the insurance company starts kicking in. For example, if your insurance policy has a $1,000 deductible, you must pay all of your medical fees for that year until you reach the $1,000 mark, after which point the insurance company will start paying the bills.
Co-Pay
The dollar amount that some insurance plans require you to pay for some medical services. For example a visit to the pediatrician’s office may require a $40 co-pay under certain insurance plans.
Co-Insurance
This is the percentage of fees that you share with the insurance company. It works like this: if you have 20% co-insurance, it means that you’ll pay 20% and the insurance company will pay 80% of the costs of medical expenses. This term applies to medical expenses after the deductible has been met. Not all insurance plans use co-insurance.
Out-of-Pocket-Maximum
This is the most amount of money that you can be expected to pay for all covered medical services in a given year (in addition to your insurance premiums).
Maximum Payout
This is the total dollar amount that the insurance company is legally required to pay toward your medical expenses throughout the lifetime of the policy. This dollar amount is in flux right now because of the Federal health care legislation that was recently passed by Congress. That legislation made it illegal for insurance companies to cap the dollar amount that they would pay toward any one individual’s medical costs. As insurance plans come up-to-speed with the new legislation, this term will become irrelevant.
3. Understand the concept of the trade-off. If you elect a plan with a high premium, you’ll probably get lower deductibles and other fees. The reverse is also true: if you elect a plan with a low premium, you can expect to have a higher deductible and higher fees for medical services.
4. Use your cheat sheet from above to compare insurance plans online – find the plan that has the combination of benefits that you value the most for a monthly premium that you can afford. I recommend using a website like www.medicoverage.com or http://www.healthgrades.com where you can get quotes quickly and by just entering your zip code, gender, date of birth and smoking status. If the site is reputable, like these two are, all other information will be optional. If you are a senior looking for health insurance you can check out www.senior65.com
5. Identify the appropriate primary applicant. If you’re applying for your family, the youngest spouse should be the primary applicant. Many insurance companies base their pricing on the age of the primary applicant, and the younger this person is, the more favorable the pricing will usually be.
6. When you’re ready to apply, set aside 20 minutes to fill out the online application completely and correctly. You’ll need the following information for everyone you want to include on the application:
- Prescription names and doses
- Dates of recent hospitalizations
7. Select a plan and fill out the online application.
8. Cross your fingers and wait to find out if you are approved!
See? Not so bad. It’s really just about decoding those key health insurance terms, deciding what you’re willing to pay for, then shopping around. Now quit playing Glow-In-the-Dark-Family-Dodge-Ball and you’ll be just fine.
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This really clarifies the questions that our friends are constantly asking. Terrific article.
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