By Tomer Shoval, CEO of Simplee.com: A guest post.
What’s worse for your pocketbook and for your health than not having medical insurance? Perhaps having bad insurance. There are many products out there today that walk and talk like a health insurance policy, but won’t give you the financial protection that a health plan will. And you definitely don’t want to be paying for a plan only to discover you’re not covered when you need it. If you are shopping for a plan for yourself or your family, here are a few common traps to avoid.
Medical Discount Plans
These plans provide just what the name implies—discounts on medical care. They are sometimes marketed as insurance, but really only offer you a discount on services such as doctor’s visits or prescription drugs. The discounts can be limited to certain providers who have agreed to work with the plan and the benefits may be unclearly stated—for example “Up to 50% off” is no guarantee of the actual percentage you will save. But the bottom line is the same—medical discount plans might provide some savings on basics that you’d be getting anyway, but they won’t help you out on larger, more expensive procedures
Critical Illness or Dread Disease Policies
These plans can either cover treatment for certain major diseases or pay you a sum of cash if you are diagnosed with the illness. Common covered diseases include cancer, multiple sclerosis, heart attacks and strokes, HIV/AIDS, or organ transplants. If anything, critical illness insurance should be purchased as
a supplement to regular health insurance, not as a substitute. However, with most comprehensive health plans offered today, most people do not need this extra coverage. Especially now with limits on annual and lifetime maximum benefits to be phased out (see our post The Affordable Care Act: What’s in the Patient’s Bill of Rights for me?), consumers have increased protections against their health benefits running out.
Short Term or Temporary Plans
These plans are meant to provide coverage for anywhere between one to twelve months to help bridge you from one insurance to another. However, they do not always cover pre-existing conditions or routine preventive care. Short term or temporary health insurance is good for emergency care, but may not be reliable for full, comprehensive coverage. These plans are not necessarily bad—buyers should just know how they’re limited and rely on them only as temporary coverage.
Special, Limited–time Health Reform plans
This idea is really just a scam: Some companies have taken advantage of the Affordable Care Act and attempted to sell plans that are “required by the new health reform bill” and only available for a limited time. In reality, the bill does not require anyone to purchase a specific insurance plan at any point in time. The plans being sold may be real health insurance; however, consumers should be cautious of any product that is being falsely marketed.
If you’re unsure about an insurance plan, check what your state’s Department of Insurance has to say about the company. Can’t find the company listed with them? Then odds are, it is not insurance.
The Coalition Against Insurance Fraud publishes a list of companies to watch out for: www.insurancefraud.org.
And as always, read into the details before signing on to any policy.
Tomer Shoval is the CEO and co-founder of Simplee, a free online personal health care expense management tool. Connect with him on twitter, facebook or email.