HOW TO BUY INDIVIDUAL HEALTH INSURANCE

We have discussed many of the basics (and some of the pitfalls) of insurance in general, and health insurance in particular. Armed with that information, now may be the time to go shopping. Here are some factors, terminology, and legwork that have to be understood and done.

1. Find a health insurance agent (sometimes called a “broker” if he/she represents multiple insurers) with whom you can work and whom you trust. The agent does not have to become your “friend”, but he or she should not treat you as just “another customer”. Look for someone who takes an interest in and understands your needs and objectives. This may take some time, and may involve meeting with a few agents. There are many good online sources by which to find and secure coverage, but an online transaction is often less personal and more mechanical.

2. Legitimate agents/brokers are licensed by the State(s) in which they do business and are authorized to transact particular kinds of insurance business (such as life, health, property & casualty, and others). Therefore, you should make sure that the person is a licensed health agent. You can confirm licensure by contacting the Insurance Department in your State; some States have licensure records online. You can also find out if there has been any discipline taken against the agent/broker. If so, that may influence your choice. However, an ongoing investigation of an agent or broker might not be disclosed when you call the Department.

3. Make sure that the insurer to which you will apply is licensed to conduct insurance business in your State. Call your Insurance Department or check online.

4. Make sure that the agent is “appointed” by the insurer to transact business on its behalf. An “appointment” is the legal authorization of the agent to act on behalf of the insurer. Appointments are documented with the Insurance Department, so you will want to ask about that when you check on the agent’s licensure. The appointment of an agent by an insurer may make the insurer responsible for a range of acts of the agent, and thereby give you another remedy in case something goes wrong with the transaction.

5. Determine how much of the financial risk of illness or injury you can or are willing to absorb. This will have a bearing upon the premium that is charged for your insurance in a few ways:

• Lifetime policy limits: Although it is hard to predict future healthcare needs, health insurance can be purchased with different lifetime limits. This is the maximum that the insurer will be obligated to pay for covered expenses while the policy is in force during your lifetime. In general, the higher the lifetime limits, the higher the premium. The limits are sometimes expressed in terms of an amount per person, or an aggregate amount if multiple people are covered (such as a family). Once the limits are exhausted, you will be responsible for the excess.
• Deductibles: A deductible is fixed amount of money that you are responsible for paying before the insurance company’s obligation to pay for covered services is triggered. The deductible is usually expressed as an annual amount. There can be different deductibles within the same policy, such as a separate deductible per hospital admission (instead of or in addition to the annual deductible). Deductibles may vary based on whether care is received from a provider who is on a list approved by the insurer or not. You may choose the deductible that best suits your financial circumstances from those offered by the insurer. Generally, a higher deductible will mean a lower premium.
• Copayments: A copayment divides or shares responsibility for medical costs between you and the insurer. It requires you to pay a fixed dollar amount when a medical service is obtained, and the insurer is responsible for the remainder. Based upon the medical services obtained, different copayments may apply. Generally, a higher copayment can translate into a lower premium.
• Coinsurance: This refers to the percentage of covered medical expenses that the insurer pays after the deductible has been met. Common coinsurance rates are 20-30% of the amount the insurer has approved for the healthcare service. This means that the insurer will pay the remaining 70-80%. Some health insurers offer optional higher coinsurance amounts, which, if selected, usually reduces premiums, but means that you will be responsible for a greater portion of the charges. 6. Answer all questions on the insurance application truthfully. The importance of this cannot be stressed enough. If you withhold information or lie, the insurance company may have the right to cancel coverage retroactively. If that happens, it will be as though you never had insurance. What’s more, depending upon the circumstances, you may be treading dangerously near to insurance fraud, which is a crime.

Copyright 2010, Luke S. Brown (Used with permission)