Avoid this mistake when buying individual medical health insurance « Health Insurance Advisory

Avoid this mistake when buying individual medical health insurance

As healthcare spending continues to dramatically rise in the U.S., the cost of individual medical insurance and employer sponsored group health insurance has moved with it. From 2000 to 2009, healthcare spending increased by 66% to $7,578 per person. Of this amount, $5,748 or 76% was covered by health insurance and $974 or 13% was paid out-of-pocket by individuals (third party payers and programs covered the balance).

When most people shop for individual medical health insurance, they mainly focus on the deductible. Since most other common forms of insurance, such as homeowners and automobile, use deductibles, consumers are conditioned to buy medical insurance in the same way. Individual medical health insurance, unlike homeowners and automobile insurance is different. Many traditional medical insurance plans do not pay 100% after the deductible satisfied.

The key to finding low cost medical insurance is to also consider the health plans annual maximum out-of-pocket cost per person. Why? While a high deductible health plan may seem more risky on surface because the deducible is a larger, the medical insurance plan with the smaller deductible may end up costing you a lot more. These costs will come in the form of both higher monthly plan premiums and greater financial liability if you incur expensive healthcare bills. Why?

When health insurance companies price medical insurance, the health plan deductible carries the most emphasis from an actuarial standpoint. So, if you want low cost medical insurance, then select a larger deductible. If you are saying to yourself “Yea, but the higher deductible is too risky,” then read on…

Many Traditional health plans with low deductibles also require the insured to satisfy an annual maximum out-pocket before the medical insurance plan pays 100% of eligible healthcare expenses. This could cost you an additional $1,500 to $10,000 or more if you or a family member requires expensive healthcare treatment.

High deductible health plans, especially those qualified to work in conjunction with a Health Saving Account (HSA), often pay 100% of the covered in-network healthcare expenses after the deductible is satisfied.

Which individual medical health insurance plan would you purchase?

High Deductible Health Plan and Traditional Medical Plan Comparison High Deductible Plan Traditional Health Plan
Deductible $1,750 $500
Office Visit Copay subject to Deductible $30, then 100%
Coinsurance 100% 80%
Maximum Out-of-Pocket (including Deductible) $1,750 $3,000
Monthly Health Plan Premium $116 $206

The above is a real life example obtained from our online health insurance quotes and assumes the use of in-network healthcare providers.

If you purchased the high deductible health plan, then your monthly premium would be $90 less and your maximum out-of-pocket or financial exposure if you incurred major claims would be $1,250 less. If you set aside the monthly premium savings of $90 to help pay for healthcare expenses, then you would have $1,080 to help satisfy the $1,750 deductible. Although you would give up the comfort of a $30 office visit copay with the high deductible health plan, a source of funds would exist to help cover the added cost of physician office visits.

While the objective of this article is not to promote high deductible health plans and Health Saving Accounts, it is to illustrate that many individuals, families and the self employed would find a high deductible health plan is a better financial alternative.  Since the new healthcare law, called the Affordable Care Act, was enacted in 2010, there are new rules for health insurance plans. Since all medical insurance policies are required to cover preventive care services at 100%, your out of pocket costs with a high deductible health plan for these services will be substantially less.

To find low cost medical insurance quotes and get a personalized proposal, click here. Our tools let you shop and shop and compare many different types of health insurance with top health insurance companies.

At healthinsuranceadvisory.org, our goal is to provide the tools, information and support to aid consumers in making intelligent and informed decisions regarding individual medical health insurance and individual dental insurance. Call us today at 800-403-8511.

 - Statistics from the 2012 U.S. Census Bureau




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