Shopping for insurance, Part 5: How do I decide?

Looking for affordable, effective health insurance can seem to start with an impenetrable thicket of questions. And even after you’ve made a decision, you might feel that your consumer comparison-shopping radar didn’t save you from a mistake or two.

We’re here to help.

Welcome to Part 5 of our handbook for people who are shopping for insurance. We’re running  several articles in this series, much like  our “Ways to Save” series, and we’re  archiving them on the site.

Here’s Part I of the series,  Part 2, Part 3 and Part 4. (We started out calling it “If you’re uninsured,” but we have changed it to “Shopping for insurance.”) You might be insured — but also be wondering if there’s a better, lower-cost insurance plan out there.

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How do I decide what’s a good plan for me?

You may want to think about doing your own research — and also using a broker to help you sort through the choices.

Of course, don’t forget the basics: The insurance business works by pooling risk. The insurer estimates the total potential cost of insuring a group of people (in a business, in a union, for example), then establishes income that will be counted against that cost in the form of premiums, co-pays, deductibles and the like. The total amount of money taken in needs to surpass the total amount of money paid out.  Insurance companies exist to move money around, and they commit in their contracts to make sure the money is available to pay the benefits specified in a contract.

Many individuals find insurance plans on their own, by recommendation of a friend or colleague (see resources in this series), but because of the complexity of the process, some choose to consult a professional. An insurance broker can help with many tasks:

  • Help you evaluate your health insurance needs
  • Explain details of the different plans
  • Offer specific recommendations
  • Review your plans periodically and explain any changes that have occurred
  • Advise on claims dispute resolutions and insurance regulations.

Here are a few things to keep in mind while you shop for the right broker:

  • Keep yourself informed. Brokers sell health insurance plans for several different companies, while agents work for a single company. Brokers can offer an array of plans, but like agents, they work on commission, so as a consumer it’s important to be discerning, and gather as much information about each plan as you can.
  • Ask for referrals from your friends, family, co-workers — people you trust. It’s always better to work with someone whose track record is proven.
  • Research your broker: you can do a quick internet search of your broker to find out more about him or her, or you can check an agent or broker’s disciplinary record by calling the insurance commissioner’s consumer hotline. For brokers operating in New York, you would call the Albany office at (518) 474-6600, or go to the Web site at http://www.ins.state.ny.us/nyins.htm.

Consult online resources. Here is a list of Web sites that aid consumers in their search for health insurance brokers. One thing to recognize when consulting services like these is that they are for-profit enterprises, meaning that the agent working with you will receive a commission for each policy he or she sells a consumer. That said, the brokers are knowledgeable and understand how insurance works.

Consumer sites including these can help

We talked to Nate Purpurra of Ehealthinsurance.com about some of the most important things to keep in mind when shopping for an insurance plan, and what kinds of mistakes consumers often make.

“First thing we tell people is, know the rules of your state,” he said. “The next thing is don’t let a pre-existing condition deter you from trying to get insurance. We’re always calling in customer stories. We had …  a recent college graduate with asthma. She was sure she wouldn’t qualify for department

insurance. We produced a whole list of conditions that are not always going to get you declined. Insurers tend to have leniency.

“The third thing is, individual insurance is the tapas menu, while a group insurance plan is an all-you-can-eat buffet. With individual plans you have to make sure the benefits you want are part of the plan. Like prenatal, mental health, prescription drug benefits. You need to pay attention to that kind of thing. A lot of these rules change in 2014, when health reform gets fully implemented. The guarantee issue goes away — at  that date, if the court doesn’t change it, there will be a mandate that people buy coverage, and there will be no denying patients for preexisting conditions.

You also have to be careful that the benefits you need and want are on your plan. It is particularly important for women to know that individual health insurance plans don’t automatically cover maternity benefits. Some plans may not cover prescription drugs or only cover generic drugs, and benefits like chiropractic care or mental health coverage are not automatic.

“There are 8 states that require health insurance plans to provide maternity coverage; Montana, Colorado, New York, New Jersey, Massachusetts, Oregon, Washington and Vermont. And, there are 11 states that require men and women to pay the same amount for health insurance, which is generally referred to as ‘gender rating.’ California, Oregon, Washington, New York, New Jersey, Massachusetts, Vermont, Minnesota, New Hampshire and Montana do not allow insurers to gender rate in the individual insurance market.

“Creditable coverage is a big issue. If you want to avoid a gap in coverage, you want to make sure you’re buying creditable coverage. It’ll provide you discounted access to a network of physicians. You don’t want to buy a limited benefit plan that has a low cap on what they’re going to cover. Short-term health insurance plans don’t have these caps, but they don’t qualify for creditable coverage. It’s inside baseball stuff, but I encourage people to apply for a major insurance policy. You don’t want to bust out your discount insurance plan and get hit with a $25,000 bill because your insurance will only cover $2,500.

“Discount health plans may provide discounts on medical services or provide limited coverage for specific benefits like doctor visits and prescription drugs, but they do not generally meet the criteria for ‘creditable coverage.’ Additionally, be cautious of so-called ‘low cost’ options that promise that anyone will qualify. Either of these may leave you with big bills to pay in the case of a major hospital stay or medical emergency.

“Limited benefit plans typically have very low limits on the amount of coverage they’ll provide for overnight stays in the hospital or trips to the ER. Some plans have caps as low as $2,500, which is why it’s critical   that you read the fine print or work with an agent licensed in your state.  eHealthInsurance does have a U.S.-based 24/7 call center staffed with agents licensed in every state. Don’t assume that everything is covered. Research plans online and talk to a licensed agent to educate yourself. Doing a little bit of homework now will save you a lot of money later.”

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Next: What to look for when selecting a health-care insurance plan.