Affordable Health Plans?

Affordable health plans? Is this an oxymoron? The answer to that question may surprise you. For years larger companies have been cutting back on employee benefits such as health care by seeking out plans with less coverage and by shifting more of the premium costs onto the employees. Small businesses have always struggled with this issue and frequently provide no health plan for either the employees or even the owners.

Whether you are employed in a small business, receiving (and paying for) COBRA, or are struggling to pay your ever-increasing part of the health plan provided by your employer, you are no doubt painfully aware of the high costs of maintaining your major medical insurance. For those paying the premiums the cost usually begins around $500 per month and can swell to $1,200 or more per month depending on the specifics of your coverage.

However, you have options other than major medical insurance. For instance, an individual could apply for a hospitalization plan for a monthly premium of about $70 to $300 depending on the specifics of his or her coverage. Usually, the deductible is around $500, which is far less than most major medical plans. Also, most hospitalization plans follow the 80% coverage and 20% coinsurance model that is common in major medical insurance.

Another advantage of many hospitalization plans is their portability. This is coverage you can take with you no matter what changes occur in your employment or residence. Generally, you can visit any hospital or doctor without worrying about referrals or networks. For most plans, the only limitation is regarding coverage outside the United States.

So what's the catch? There are basically two trade-offs between major medical insurance and individual hospitalization plans. The first is medical underwriting. If you are in a group health plan through your employer, then you should realize that you were not required to answer any medical questions to apply for coverage. Individual plans, whether major medical or hospitalization, require medical underwriting.

Of course, this means that not everyone can qualify for coverage. However, the absolutely salient point is that many people do. Unfortunately, it is beyond the scope of this post to review the medical questions for all the hospitalization plans available. But if you would like to find out if you qualify, then contact your health insurance agent and ask. If you live in the Carolinas, then feel free to e-mail me and we'll get together to review your situation.

The second trade-off is limits in coverage. For instance, many major medical plans will pay out life-time benefits up to $1 million or more. Most hospitalization plans limit coverage to a yearly amount such as $50,000 or $100,000. Others place a limit such as $50,000 or $100,000 for each injury or illness, which is obviously better coverage than a yearly limit.

For your information, studies have revealed that most people spend less than $5,000 per year for medical services (which is less than most major medical premiums) and only about 1% spend more than $50,000. For those spending more than $50,000, a large percentage are due to strokes, heart attacks, and cancer. The good news is that these and similar illnesses can be covered through extremely affordable (i.e. $3 -- $30 / mo.) health plan supplements -- more on those later.

In closing, here are a few tips. First, never cancel your existing insurance until your new plan is issued. This will usually occur between 2 to 4 weeks after you applied. Second, save yourself some money on the premiums by finding a flexible plan. This will allow you to get the coverage where you want it without a bunch of extra bells and whistles that you don't need to buy.

Third, make sure that your plan is guaranteed renewable. This means that your plan can never be cancelled (no matter how much you use it, your health conditions, or your age) as long as you pay the premiums. Fourth, try to find a policy that is age-issued. This means that you pay the rate for the your age when you first buy the plan. On these type of plans your rate will not increase because you get older.

Fifth, if at first you don't succeed; try, try again. All companies do not use the same underwriting. Even though you may not qualify with one insurer, you may with another. Finally, choose a company and an agent you are comfortable with. Ratings companies such as A.M. Best will tell you which companies are financially sound. As you meet with an agent, you will get a good idea of the agent's and the company's philosophy of customer service.