Health insurance is a big ball of wax — so big, in fact, that many of us put it on the back burner rather than deal with it. But it’s one of the most important decisions we have to make as consumers. Not only does it determine the care that we receive should our health take a wrong turn, but it can be the wild card in your financial plan. Roughly half of all bankruptcies filed in the United States are caused by illness and medical bills.
Whether our next president will be able to wrangle our healthcare system remains to be seen. Until then, choosing the right healthcare plan remains one of your most important decisions — not just for those people who are selecting from an employer’s benefits menu, but for those 46.6 million uninsured Americans who are trying to put at least some coverage in place.
Here’s how to whittle down the choices and keep costs for premiums, co-pays and prescriptions from draining your bank account:
Location
Insurance plans and prices vary widely by state. New York, for example, has some of the most expensive individual plans in the country, largely due to its guaranteed-issue policy that requires companies to insure everyone, regardless of health.
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The best way to kick off your shopping is by doing a little research on your state’s insurance Web site, says Kimberly Lankford, author of “The Insurance Maze: How You Can Save Money on Insurance and Still Get the Coverage You Need” (Kaplan Business, 2006). A good site will list companies available in your area, prices for both individual and family plans, and any lower-cost options your state offers if you meet certain income requirements.
Write out your priorities
Do you love your current doctors? Then you should choose an insurance company that covers their service. “It’s so important that you make a list of the top five things important to you, and bring them up to the broker or insurance company,” advised Michelle Katz, a healthcare consultant and author of “101 Health Insurance Tips” (LifeTips.com, Inc., 2007). This way you can really start to narrow things down by your needs, whether that means low premiums, customer service or the doctor you’ve been seeing since college.
Don’t be afraid to use a broker
An insurance broker can be a huge help. He can do the legwork to find a well-suited insurance company, help shop for the best rates, and explain the ins and outs of your plan. To find a reputable broker, check credentials with either the National Association of Insurance Underwriters (nahu.org) or the National Association of Insurance Commissioners (naic.org). You also want to make sure he has a large “book,” the industry term for the network of providers he works with. More options mean a better deal and a better fit.
Ask for a “free look”
Lots of things come with a trial period — your gym membership, magazine subscription and virtually anything hawked on an infomercial — but did you know that you can sometimes test-drive your insurance plan? They call this a free look, and it basically means that you can get your money back if you’re unsatisfied within a set period of time, explained Katz. The key here, though, is staying on top of things and making sure you follow the guidelines. Restrictions vary by company and plan, but you could have anywhere from one to six weeks to ask for a refund — probably in writing.
Consider a Health Savings Account
An HSA is a great option for people who generally only have to whip out their insurance card once or twice a year. Maybe you go for a yearly checkup, and then to the doctor if you have the flu. It goes hand-in-hand with an insurance policy that has a high deductible ($1,100 for individuals; $2,200 for families), but low premiums. The money you save on premiums each month can be deposited into the HSA pre-tax, where it grows tax-deferred. You then use it to pay for any unexpected medical expenses. The bonus? Once you turn 65, you can withdraw any money you didn’t use and spend it on anything you want, including funding your retirement.
Negotiate
You’ve chosen a plan, but you’re still not home free. Bills can pop up everywhere, from services that aren’t covered to doctor and hospital co-pays to costs for prescriptions. Many insurers have instituted a system of preferred pricing when it comes to prescriptions, meaning that if yours isn’t generic and on a list, it could still cost a bundle.
“Now, even people with employer coverage have to be smart shoppers for prescription drugs, especially if they have a regular medication that is pretty expensive,” said Lankford. Keep your costs low by shopping around (prices can vary among pharmacies — your best bet is a discount store or price club) and asking for generics whenever available. You can also have your doctor write out a prescription for a longer period of time, so you’ll get a 90-day supply instead of a 30, advised Katz.
The co-pay will be the same. And don’t be afraid to negotiate with your doctor if you’re paying out of pocket. In a recent Harris Interactive poll, three out of five people who did so received a discount. With the cost of a single visit often tallying over $200, it’s definitely worth a try.
Sound health is an indispensable feature of every individual’s life. No targets and success can be achieved if we are physically unwell. In order to safeguard this central aspect of our life, health insurance is the need of the hour.
Health insurance as we all know is the best way to secure your health against all expected and unexpected problems. Due to this almost every individual seeks to acquire a health insurance policy.
At present there are many companies offering health insurance. While going for a health insurance policy you will confront a choice between private and government insurance. Prior to opting for either policy, you should know that with a private health insurance you would have an access to luxurious private hospitals, wide range of private doctors to choose from and mostly immediate treatment. While in a government health insurance scheme the lifetime health cover penalizes people who take out health insurance later in life with higher premiums. If you take the policy after your 31st birthday you will be required to pay a 2% surcharge annually up to 70%. So for instance if you acquire the policy at the age of 50 you will have to pay 30% more than a person who joined at the age of 30.
Government health insurance policy also comes up with a Medicare levy surcharge according to which unmarried people earning more than $50k and married couples with or without children earning more than $100k will pay an extra 1% Medicare surcharge in addition to 1.5% Medicare levy most people pay. But this extra annual expenditure of $500 to $1000 can be avoided by opting for hospital insurance.
Premium plays a key role in choosing the kind of policy you want. Money can be saved on premium in various ways such as purchasing a policy with ‘excess’ or the money that an individual is required to pay for stay in a hospital before benefits are payable. You can also buy a policy that asks for a co-payment. In case of co-payment if you don’t go into hospital, the member decides to pay usually a fixed amount of money each time he avails the service. Choosing a policy that doesn’t include several treatment facilities is also an option to lower your premium rates. Besides this you can also buy a policy that only covers you as a private patient in a public hospital. However it is better and in the long run beneficial to take a policy that offers a high ‘excess’ in comparison to those that exclude several treatment conditions. Some commonly barred treatments are- cosmetic surgery, cataract surgery, rehabilitation, hip, knee and other joint replacements, obstetrics and birth related care, assisted reproduction and psychiatric care. In case you want coverage for any of these treatments, prior to purchasing make sure your policy includes it.
Access to health insurance is protected by federal law if your employer offers group coverage. But if you need to buy insurance on your own and you have a history of medical problems, finding affordable insurance can be a challenge.
Either way, you can take steps to control your health-care costs.
Get the most from your employer plan
If you’re insured through your employer, review your coverage annually when your company holds open enrolment. (See “9 keys to choosing the right health plan.”)
* You may have a choice of several types of providers. Base your decision on access to quality care and what the plan does and doesn’t pay for. Examine deductibles, co-payments, limits on out-of-pocket expenses, lifetime maximum benefits and prescription coverage. (See “When your health plan won’t pay.”)
* Have your medical needs changed? A plan that couples higher premiums with lower co-pays is better for people with health problems.
* You can pay out-of-pocket health-care expenses with a flexible spending account using pre-tax dollars, meaning Uncle Sam covers as much as a third of the tab. But you’ll lose what you don’t use in the calendar year (employers can extend the deadline to mid-March), and you can’t take it from job to job.
* You may be able to lower your premiums by taking advantage of employee incentives to lose weight, exercise and stop smoking. (Your employer’s plan cannot single you out for higher premiums or drop your coverage if you develop health problems.)
Cheaper ways to buy it yourself
Another option for paying out-of-pocket medical expenses is the health savings account. An HSA is available only if you buy high-deductible health insurance through your employer or on your own. (See “Get cheaper medical coverage — with a tax break.”) Not every high-deductible plan can be partnered with an HSA.
* The Internal Revenue Service will allow maximum HSA contributions of $2,900 for individuals and $5,800 for families in 2008. Your contribution is either pre-tax or deductible, even if you don’t itemize, and earnings and withdrawals for medical expenses are tax-free.
* Unlike a flexible spending account, your money is invested, and what you don’t spend will roll over to the next year. You can take the account with you if you change jobs.
* Use HSA Insider, HealthDecisions.org or eHealthInsurance.com to find insurance that qualifies as high-deductible under IRS regulations.
* You can make contributions up to age 65. After that, you can make taxable withdrawals for any purpose.
For those awkward in-between times
If you’re between jobs, try not to let insurance coverage lapse. Some provisions of federal law that protect access to insurance don’t apply if you’ve been without coverage for 63 days (longer in some states).
COBRA, the Consolidated Omnibus Budget Reconciliation Act of 1985, allows you to continue group coverage after your job ends, generally for 18months, but you’ll pay the entire premium. Know your rights under federal law and state law.
* You can continue contributing to your flex account under COBRA, giving you more time to use the money.
* You can use your HSA to pay COBRA or other health insurance premiums if you’re receiving unemployment compensation.
* Under certain circumstances, you can make penalty-free withdrawals from an IRA to pay premiums if you’re unemployed.
When you start a job, enrol in your employer’s health plan at the first opportunity. Under HIPAA, the Health Insurance Portability and Accountability Act, you cannot be denied coverage for a pre-existing condition (one for which you’ve received advice or treatment in the previous six months, including mental health disorders but excluding pregnancy) for more than 12 months (shorter in some states) or 18 months for late enrolees. That period will be reduced by the amount of time you were previously insured without a 63-day break in coverage.
Going it alone?
If you’re self-employed or your employer doesn’t provide health insurance, use MSN Money’s Insurance Planner and read “Health coverage for all” to learn about options.
* Cost and availability of individual insurance vary from state to state. Check your state insurance department’s Web site. Visit eHealthInsurance.com and the Web site of the National Committee for Quality Assurance.
* HIPAA says a private insurer cannot deny insurance or exclude coverage for pre-existing conditions if you had coverage for 18 months without a 63-day break, most recently with a group plan; have exhausted or are ineligible for COBRA; and are not eligible for a group or government-sponsored plan. Each state has rules for providing HIPAA coverage.
* Many states have high-risk pools for people who meet the HIPAA guidelines and for those unable to find affordable coverage because of pre-existing medical conditions. Many states set a cap on pool premiums, usually between 125% and 200% of market rate.
Medicare kicks in at age 65. Even so, a couple should plan to spend $215,000 for out-of-pocket medical expenses in retirement, not including the cost of long-term care.
* Even if your company now offers retiree health insurance, it may not by time you retire. (See “Don’t bet on your retiree health care.”)
* Count on Medicare premiums to go up. By federal law, 25% of Medicare’s costs must be covered by premiums.
* More than half of people on Medicare buy Medigap supplemental insurance (.pdf file). Medicare Select is a lower-cost alternative.
* Read “How to pick a Medicare drug plan.” Consult the Medicare site for information about prescription coverage and filling a gap in the coverage. Help is available to pay for medications.
* Many of us will eventually need nursing-home care. Consider buying long-term-care insurance with inflation protection in your 50s, when premiums are lower. (See “No long-term-care insurance?)
More than 46 million Americans have no health insurance. Some help is available. (See “A survival guide for the uninsured.”)
* Medicaid provides health care for those in poverty, and states provide insurance for low-income children.
* Free or low-cost care and reproductive planning are available at community health centers. Also look for free or low-cost mammograms and Pap tests.
* Prescription drug help may be available at NeedyMeds and the Partnership for Prescription Assistance.
* Lions Club International provides free vision screening and used eyeglasses.
* If you live near a medical school, you may be able to find affordable dental or eye carethrough students — overseen by doctors, of course.
Insured or not, you can cut your expenses for medications:
* Buy generic if possible, and price shop. Check Rxaminer and DestinationRx. Some stores offer big discounts on generics. If you shop online, chose a provider accredited by VIPPS, Verified Internet Pharmacy Practice Sites. Never buy from an online pharmacy that doesn’t require a prescription. (See “13 ways to save on prescriptions.”)
* Ask your doctor and pharmacist if alternative therapies or over-the-counter medications will provide the same results. (See “How to get prescription drugs for less.”) Check Consumer Reports’ Best Buy Drugs.
* Buy store-brand or off-brand OTC drugs, which are often identical to their more expensive brand-name cousins.
* Ask your doctor to double the dosage so you can use a pill splitter to cut costs. Ask for free samples.
* Go to RxAssist to learn about drug discount cards.
