Rising insurance premiums and medical expense are well-known risks in today’s health care market. Premiums for all types of insurance have been rising at double-digit rates for a few years. The latest data estimate premiums will increase by about 14% this year. In addition, individuals pay a higher share of medical expenses than they did in the past.
Individuals seeking lower premiums are finding two new risks in the insurance market. Each risk is growing rapidly as more people earnestly strive to reduce increases in their health insurance premiums and costs.
The first risk is a little-noticed narrowing of medical expense coverage.
People generally assume that most medical expenses are covered by their health insurance policies. In fact, all policies exclude some expenses. In the current atmosphere, more policies are expanding the list of excluded costs. A policyholder has to be a sharp-eyed reader to notice the exclusions and to understand which risks are not covered under his current policy.
For example, a policy might say that it covers transplants. It might not, however, cover all costs related to a transplant. The policy might cover only the cost of the transplant operation. Additional costs that might not be covered or might be limited are transfusions during the operation, medications following the operation, and the search for a proper donor. In addition, bone-marrow transplant recipients are discharged from the hospital shortly after the operation but must reside near the facility for a few months for follow-up treatments. Those additional living expenses might not be covered.
Restricted coverage is most likely to be in employer-paid coverage. You should get a full copy of the insurance policy to review the true extent of your coverage. The limits also are appearing in other types of coverage. Some forms of Medicare supplement coverage (Medigap policies), for example, cover prescription drugs. But that doesn’t mean all prescription drugs are covered. The insurer can decide not to cover drugs for all conditions or can establish a list of approved and unapproved drugs for each condition.
Be sure to read closely the annual changes in your coverage. Often an attractive initial policy is amended in subsequent years to keep premiums down.
The other risk is purchasing an attractively-priced policy that is either fraudulent or extremely limited. In some cases, the “insurance company” isn’t even licensed.
You should be concerned when health care coverage is offered at exceptionally low rates. Health insurance is extremely competitive and crowded market. It is unlikely one insurer has found a way to profitably undercut competitors’ premiums.
Another warning sign is when a policy is sold with little or no medical pre-screening, known as underwriting. At a minimum, you should expect to complete a questionnaire about your medical history. In addition, on most individual, nongroup policies your blood pressure and blood or urine samples are taken. The results could cause a denial of coverage or a change in the premium. Another warning sign is a policy that promises to cover a pre-existing condition that no one else will cover.
You also should be suspicious if the written material you receive avoids using the word “insurance.”
A major problem these days is that many of the suspect policies are offered through groups or associations, known as affinity insurance.
Most state insurance laws exempt policies offered through various associations, guilds, unions, and other groups. The idea is that the organization would look out for its members, so the government doesn’t need to. The exemption did not anticipate that people would join associations that were set up just to sell insurance. You join the group for $10 to $50 annually, get a few inconsequential benefits, and buy the insurance.
Before buying any health insurance policy, get the full name of the insurer behind it. Ask the agent or broker exactly who is responsible for paying the claims. Then, check the insurer with your state insurance commission and the National Association of Insurance Commissioners.
We’re always looking for ways to reduce medical insurance premiums. But paying higher premiums is better than discovering that you have no coverage and a pile of medical bills to pay. Don’t let low premiums seduce you into inferior or non-existent coverage. Follow the steps listed above to be sure you are purchasing a legitimate policy with full coverage.