What To Look For In Health Insurance
Considering the rising cost of medical expenses, choosing a good health insurance package could perhaps be one of the most important things that you ever do to protect yourself financially in the event that you require medical treatment.
However, knowing what to look for in a health insurance policy can be difficult, especially when you see how many different policies there are available to choose from. From one perspective, this is good for you as a consumer because it means that you are more likely to find a coverage plan that meets your unique needs and requirement.
But if you don’t know what you are looking for, then all this choice can be very confusing and may even result in you taking out the wrong insurance policy that doesn’t provide you or your family with enough coverage or provides too much coverage which you don’t really need.
In this article, we will try and make things a bit easier for you, by revealing exactly what you should be looking for when trying to find a good health insurance policy.
5 Things To Look For In Health Coverage
In general, there are five things that you should look for in a health insurance policy. We will discuss these briefly now, and then go into each point in more detail throughout the rest of the article.
1 – Coverage Limit
The first and most important thing that you should look at is the coverage limit that an insurance policy offers you. This limit must be high enough to cover any type of medical expense that you face so that you can receive medical treatment with minimal out of pocket losses.
2 – How Much Do You Pay?
How much you pay annually for your insurance coverage should be an amount that you can comfortably afford. If it is too high you may struggle to make your payments, if it is too low you may not be receiving adequate coverage.
3 – Dollar Limit On Expenses
Dollar limits refer to the maximum amount that your insurer is willing to pay for a particular type of treatment or procedure. Ideally, you should have no dollar limits on expenses such as daily room charges or limits for surgical operations.
4 – Referrals
You should have the freedom to see medical specialists without a referral to ensure that you get the best possible treatment from the most appropriate doctor or surgeon.
If you have a particular type of disease or disorder, being able to see a specialist could make the difference between being successful or unsuccessfully treated.
5 – Worldwide Coverage
If you travel a lot then having this type of coverage is very important, as without worldwide health coverage you are exposed to a great amount of uninsured financial risk should you require medical attention or treatment overseas.
How To Get The Best Health Insurance Plan
Now that you know what to look for in a health insurance policy, you will be able to use the previously mentioned points to weigh up the various medical coverages that you come across, and hopefully, choose one that is going to provide you with sufficient protection no matter where you are and no matter what happens to you.
If you are interested in learning more about why each of the above mentioned points are important, then please keep on reading for more detailed information.
1 – Coverage Options
There are two types of coverage options that you can choose from in a health insurance plan. The first is a dollar limit maximum per claim, and the second is a dollar limit maximum per lifetime.
Dollar Limit Per Claim
With per claim health insurance coverage there is a limit that is paid for every claim that you make. If your treatment costs more than this limit, you will not receive additional money from your insurance company.
The advantage of having a per claim policy is that you will know exactly what amount you will be covered for if you have to visit a physician or hospital for any injury or illness that you have.
This also means that you don’t have to worry about your insurance policy running out over time, as your coverage limit will automatically renew itself for every claim you make.
However, if you were to ever suffer from a serious disease that requires long term care, such as cancer, you might find that a per claim policy doesn’t provide you with enough coverage for your medical expenses for that particular claim period.
Such expenses may include:
- Hospital fees
- Doctors fees
- Operating room charges
- Lab test fees
- Fees for drugs and treatments
- Prescriptions
- Caregiver fees
So whilst a per claim policy can be quite a good option to have in general, it can also leave you exposed to uninsured risks in the event of serious injury or illness.
For this reason, if you do opt to have a per claim health insurance policy, then it is a good idea to have some money saved up in the bank as an emergency fund just in case you need to cover any additional medical expenses which your policy does not cover you against.
This will help to ensure that you get the most benefit from a per claim policy, whilst also minimizing the potential risks associated with it.
Dollar Limit Per Lifetime
With a per lifetime health insurance coverage plan there is a maximum limit that you can spend on medical bills throughout your life, but generally, no limit per claim.
Every claim that you make subsequently reduces the pool of money which you have available to insure yourself against future medical expenses.
Obviously, the main advantage in having a per lifetime insurance policy is that you don’t have to worry about not having enough money to cover a particular claim, something which can be a problem with a per claim policy.
Of course, the more claims you make the less money you will have to cover your medical expenses, which means that eventually you may make a claim and then find out that you do not have enough money left in your policy to cover all your medical expenses.
When this happens, you will be left in a similar situation as you would be if you had a per claim policy. The best way to prevent this from happening is to always be aware of how much money you have left in your policy after making a claim, as this will help to avoid any unpleasant surprises later on.
Overall, a per lifetime health insurance policy can actually be very beneficial to have if you are a reasonably healthy person and do not visit the doctor or hospital very often. Such people, are likely to have more than enough money left in their policy to cover the few times that they do require medical attention.
Where per lifetime policies become less desirable to have however, is if you are a person who has suffered from poor health throughout most of your life, or is likely to suffer from poor health in the years to come such as due to an ongoing illness like Alzheimer’s disease.
Such people are likely to make more claims on their health insurance, and therefore run a risk of having their policy run out sooner if their coverage limit was set too low.
However, at the same time, having a per lifetime policy is also likely to be beneficial for such people as they will not have to worry about not being able to afford to pay for medical treatment or for any drugs that they require.
What Coverage Limit Should You Have?
What coverage limit should you look for in a health insurance policy? The choice is yours, although in general it is recommended to have at least $1 million per claim coverage or $3 million per lifetime coverage.
The higher your coverage limit the more expensive your health insurance will be, but the better protection you will get from it.
If you can’t afford to start at such a high limit, start at a lower coverage limit and build it up slowly as your income increases over time.
2 – Reducing Your Out Of Pocket Costs
Almost all medical insurance plans require you to pay some amount of money for your treatment, or before you can receive treatment.
For example, you may have to pay $20 for each doctor’s visit you make or $70 if you visit the emergency room. The actual costs of such visits will be higher, but they will be covered by your insurer. This type of payment scheme is also known as a co-payment, and is generally expressed as a ratio which described what percentage of fees you pay and what percentage your insurer will pay.
Sometimes you may have to pay a deductible. For example, if you have a deductible of $400, you will have to pay the first $400 of your medical expenses and then your insurer will pick up the rest of the bill.
Alternatively, you may have a percentage arrangement with your insurer as previously described, whereby they agree to pay 80% of your medical costs and you pay the remaining 20%.
What’s Best?
In general, paying a per visit fee is very acceptable for a medical coverage plan, as it will cost you a lot less than if you had no coverage whatsoever.
Paying a deductible is also acceptable, but not always. If you primarily have minor inexpensive medical treatments you will be paying the majority of the costs yourself. So in this sense, you are not really benefiting from your health insurance policy.
Where deductibles become useful is when you require expensive medical treatment, as anything above your deductible will be picked up by your insurance company.
What is not acceptable, and what you should try to avoid, is a percentage split payment. Typically, such payments have to be made at the end of the year, which then leaves you with a very large bill to pay all at once. This exposes you to a large amount of risk, a risk that could damage you financially.
3 – Do You Have To Pay Expenses?
Try to avoid taking out a health plan that has coverage limits on medical expenses, as those limits may one day prevent you from getting the proper treatment that you require.
Some insurance agents will try to sell you health insurance policies with limits on expenses, claiming that the current limits are more than enough to cover present day medical costs and therefore are not really limits at all.
Whilst this may be true for the time being, medical costs have been steadily increasing each year. So even though a limit may provide you with enough coverage today, it is unlikely to do so in five or ten years time.
From a long term perspective, limits on your expenses will eventually lead to you suffering from out of pocket losses and so should be avoid wherever possible.
4 – Specialist Referrals
In terms of the treatment you get, you obviously want to receive the best possible care under your health insurance coverage.
For this reason, you should be extremely weary of health insurance policies which prevent you from seeing a specialist without first being referred by a doctor.
Such policies usually only allow you to receive medical care from approved clinics, as this allows your insurer to control the costs involved. If a doctor refers you to a specialist you will be covered by your insurance, but if they don’t, you won’t be covered.
Ultimately, these medical plans place the control of the type of treatment that you receive in the hands of the insurance company. This means that they get the final say on what procedure or treatment you can have. Unfortunately, these decisions tend to be based more on cost rather than on your actual medical needs.
5 – Are You Covered Away From Home?
Most health insurance plans only provide you with coverage whilst you are in your home country. This is fine if you never plan to travel, but if you do travel, then this type of restrictive coverage exposes you to an enormous amount of unnecessary financial risk.
You may be tempted to purchase travel health insurance instead for when you need it, don’t. Travel health insurance only covers you when you are travelling and within a specific date range.
There are also low dollar limit coverages, and lots of exclusions and exemptions buried into the policy which could prevent you from receiving any money for medical treatments that you require.
So if you travel on fairly regular basis, such as once or twice a year out of country, getting worldwide coverage on your health insurance is usually the best option to go for. This is especially true if you have young children as they can be included in your policy at minimal extra cost.
