What to look for in health insurance...

I know, I know... It's been a week since I have updated this. There really hasn't been much happening with the Health Care bill lately. Most of what I have been reporting on is about all that we still know. We just need to see what happens with the states filing Federal lawsuits about the constitutionality of it all.

What I want to do this week is change gears a little and talk to you about your current health plan. A lot of people trust that agents will have their customers' best interest at heart. But, what I see a lot of times is that some agents are looking out for their own best interest. This week, I want to explain how Health plans work, what to look out for and what to run from.

First, if someone is offering you a health care plan that you're not familiar with please check them out via the Texas Department of Insurance company look-up link. This will give you information on how many complaints have been filed, what their financial stability looks like and, most of all, how long they have been selling in the state of Texas. You can also click here to look up your agent to see how long they have been licensed as well as who they are appointed through.

Texas is one of the few states that allows many different companies to offer their products. If you recall during the debates about health care reform, some states only allow 1 or 2 companies to offer products. This is why Congress really wanted to have more competition; because some of the Representatives come from those states that only allow 1 or 2 companies in. Now, this is a whole different issue that I can get into later... for now, lets talk about what to look for in your health plan.

Each family or group has their own needs and you really need to make sure the plan your agent offers meets those needs. There are a lot of different plans you can choose from so it's very important that you let your agent know what you're looking for.

You need to decide what is more important: keeping the monthly cost low or receiving more benefits. One of the things you need to ask yourself is "how many times do I go to the doctor per year?" If this is a simple once or twice a year for check-ups, there are plans that only allow 1 or 2 doctor visits a year. This will help keep your monthly costs down.

The next question is "how much money do I have saved in case of an emergency?" This will tie in to your plan 2 ways. The first and foremost is your deductible. The higher the deductible, the less risk the insurance company is going to have to pay out on a large claim, thus lowering your monthly premium. The 2nd way this ties in is on your co-insurance. (I will explain this in a few minutes.) Can you pay 30% after your deductible or is 20% going to work for you in your situation?

Now, companies do have a stop loss on their plan, this is the most you would be out on any given claim after your deductible. Let me explain...

John gets into a serious car accident. He is in the hospital for 3 months and his total bill is $40,000. His insurance plan has a $5,000 deductible and an 80/20 plan (meaning the insurance carrier pays 80% and John pays 20% after the deductible). Of the $40k that is owed, John has to pay the first $5,000, leaving a balance of $35,000. The insurance carrier will pay 80% of the $35,000 and John is responsible for the 20%. This leaves John with a payout of $7,000. So, in total, John has to pay out $12,000 of the $40,000 owed. Right?

Not really. Because as I said before, the insurance carrier has a stop loss (it depends on the carrier and the plan) of $3,000 of the 20%. So, all he has to pay out is $8,000 instead of $12,000.

Simple example of John's costs:

Bill $40,000
Deductible $5,000
Balance $35,000
20% of $35,000 = $7000
John's Stop-Loss = $3,000 maximum instead of the full $7,000
Total out-of-pocket for John is $8,000

Now, there are little things you can adjust on your plan to keep costs low as well. You can get a higher doctor co-pay, have a deductible for your prescriptions, and get a higher co-pay for those prescriptions.

I will always recommend that people get an agent to show these plans just because if you don't know what you're doing - and I have seen it happen too many times - you will wind up with a plan that will not pay out what you think it will and then you will be upset with the carrier. As agents, we get you the same rates that you can get directly through the carriers. It doesn't cost you any more to have an agent work for you. So, why would you try to navigate these plans yourself?

In closing, I would also recommend that your agent show you 2-3 plans from a couple of carriers and you choose which one is best for you. If the agent only shows you one company, it should raise several flags. He or she should have 2-3 carriers, even though one may be higher than the other, just to show you that they shopped the market and this is what they came up with.

As always, I do offer personal and group consultations to review your plans at no charge. If you want to make sure you're in the best possible plan, please click here and schedule your free consultation.