Here is a list of 5 common mistakes people make when choosing whether to renew their existing health insurance plan (accepting the enormous premium increase) or find a new plan.
Gotcha #5 – “My local hospital was in the network when I first enrolled so I’m sure it’s still on the PPO list”
Don’t bother going back and digging up your PPO (Preferred Provider Organization) directory. That list was actually outdated the day it was printed! Being out-of-network is similar to handing the hospital administrator your checkbook and allowing him to bill you whatever he wants. We have seen 80% or more of the original charges be discounted because the facility was in the PPO network. There are constant fluctuations with physicians and hospitals moving in and out of PPO networks. Today the only way to get real-time PPO participation is to look up the network online. Most insurance cards will show the provider network name or website. When I travel out of town, I print a PPO network for the city I am traveling just to be safe.
Gotcha #4 – “I’ve had the same insurance company for my auto, home, and life. They have always paid well so their health insurance should be fine also.”
We all know the jack-of-all-trades story line. Just because their auto insurance paid for your fender bender doesn’t mean their health insurance will cover a $940 per week prescription drug to fight cancer. You should search for an independent health insurance agent that represents many different insurance companies and is familiar with the pre-existing condition limitations and underwriting criteria. It is difficult for an insurance agent that offers many different lines of insurance to remain up-to-date with the changing health insurance landscape.
Gotcha #3 – “A guy I work with recommended this company. He’s had them for years.”
Ask your friend if he has had any claims, and if so, how big were they. There are many inferior health insurance plans being renewed year after year simply because the insured has never had any real large claim experience. If they are limited benefit plans they have internal limitations that can have severe consequences. Some common health insurance policy limitations are annual maximums for prescription drugs or outpatient treatment (some “saver” plans exclude these altogether!) and daily maximums for chemotherapy, hospital room charges & intensive care. I recommend comprehensive major medical plans that include inpatient, outpatient, physician visits, and outpatient prescription drug coverage. These should all count together towards a large lifetime maximum of at least $2 million (I personally own a $5 million plan).
Gotcha #2 – “My employer group plan has got to be better and less expensive than an individual health insurance policy.”
Not so fast! That depends on how much your employer contributes. Since group health insurance plans require the employer to pay at least half of the employee’s health insurance cost, it is very rare for an employee to be able to purchase an individual plan on their own for less. The additional family members are a different story. Most employers pay little or none of the additional family monthly premium. We often see healthy families paying $500 to $900 per month to get a spouse and/or children covered on the group plan. With HSA qualified plans (Wow! This is the first time I mentioned Health Savings Accounts this whole post!), we can sometimes cut this cost in half leaving the other half to deposit in the HSA. This premium savings can be enough to fully fund the family out-of-pocket maximum within 12 to 24 months!
Gotcha #1 – “The plan with the lowest deductible and lowest co-pays is the best plan!”
If your family had to choose between 2 plans from the same insurance company using the same PPO network, the first plan has a $0 deductible 80/20 co-insurance plan with co-pays for physician visits and prescription drugs at monthly cost of $900, the second plan is an HSA qualified plan with a family calendar year deductible of $5000 and 100% co-insurance that includes all physician visits, prescription drugs, inpatient and outpatient hospital charges at a monthly cost of $450 per month, which would you choose?
Let’s do the math: $900 – $450 = $450 per month premium savings x 12 months = $5400 in premium savings to offset a true “out-of-pocket maximum” of $5000 for the HSA qualified plan. Tough decision here… With the $900 per month plan, you still have to come up with additional money out of your pocket to pay the co-pays and co-insurance. With the HSA plan, you would have the entire deductible available in your HSA within the first year. You should still allocate $900 per month for your health care, but give $450 per month to the insurance company and put the other $450 into your HSA account. You get a tax deduction for every dollar you deposit. It pays you interest tax free. Withdrawals can be made at any time tax free for eligible medical expenses. There is no other savings vehicle that is tax free at both ends.
The beauty of an HSA is that if you don’t spend your HSA dollars, YOU KEEP IT! Unspent balances roll over year to year (not like an FSA or section 125 which are use-it-or-lose-it).
Just how much money could you be saving with an HSA qualified plan? Now you can find out! We utilize unique technology that allows real-time highly competitive HSA qualified health insurance quoting and enrolling online.
The ultimate “Gotcha” is paying too much for health insurance.
Do the math…
Get an HSA!
June 9, 2008
Categories: Group Health Insurance, Individual/Family Health Insurance . Tags: co-insurance, co-pay, employee, employer, FSA, Group Health Insurance, health insurance, health insurance agent, health plan, Health Savings Account, hsa, individual health insurance, insurance agent, intensive care, limited benefit, out-of-pocket maximum, physician, PPO, PPO directory, PPO network, premium increase, premium savings, prescription drug, scott borden, tax deduction, tax free, use it or lose it . Author: Scott Borden, HSAe . Comments: 6 Comments
My HSA Guy 