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Thursday, May 23, 2013

Shopping for health insurance? 5 tips on how to get it right.

Shopping for health insurance is all about comparing the benefits of the various cover plans available vis-à-vis their cost and then selecting a plan which best suits your needs and budget. The variations in health insurance plans are quite puzzling and, therefore, few individuals bother to understand or even go through the terms of contract till they run into trouble.  Moreover, the vast variations between states only add to the complexity of this matter.  For instance, some states authorize medical underwriting, thereby giving your insurer permission to raise your premium or even totally reject you from a policy based on your heath history. Those which don't permit underwriting are no better as the premiums will usually be higher overall.

In deciding which plan is best for you, you will need a clear understanding of how your personal medical spending patterns relate to the fine prints of the different medical plans you qualify. Whatever plan you choose, if you have been previously entitled to a medical cover by your employer, prepare for sticker shock.
To get you through this mind boggling process, below are 5 tips on how to go about it:
1.    Understand the different alternatives available
If you were recently laid off or left your job, COBRA is the simplest option as it let you stay on your employer's medical plan. However, you will need to pay the full cost, therefore may not utterly be the cheapest option. That is because, more than often, employers subsidize their employees' premiums letting them only pay a fraction f the full bill. If you are in good health and rarely need to see the doctor, you may find a low cost high-deductable medical plan with a lesser amount of coverage.
Conversely, if you have issues with your health, COBRA may be superior deal overall. The major advantage of the COBRA plan is that you qualify for it irrespective of your pre-existing condition.
In deciding the best plan, you need to consider what you need, its cost, and how it weighs against other option. Paying highly for a coverage you are not going to use is like, as Martin Rosen (Heath Advocate co-founder) put it, "throwing your money down the fireplace."  If you are between jobs, and therefore having some financial constraints, you better go for the state-run programs that often discounted. For example, the state of New York provides cheaper health insurance cover for low income groups courtesy of its "Healthy New York" program.
2.    Shop Around
Due to the complexity of insurance, the cost implication of being in a wrong plan may be great. Therefore, it is necessary to shop around and ensure you understand what you are buying before signing that contract.  Here, the online heath insurance brokerages will give you a starting point. They automatically give you the quote of whatever plan you opt for. Just enter your information and get the quote.
Alternatively, you can hire a health insurance broker to guide you through. The brokers are listed in the National-Health-Underwriters, NAHU's database. However, not all brokers are qualified therefore getting a referral from a family member or a friend will be advisable.
Either way, you will need to get different quotes for the different plans and then compare the details and monthly premium costs.
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3.    Affiliation with Groups
All factors constant, group insurance will be cheaper than getting a health insurance yourself. When you are a staff member, your company automatically qualifies for group rates. When you are going it solo, one good way to go would be to create or find a group. Alumni associations, trade groups and other organizations sometimes offer association insurance to their members. Nonetheless, you will still need to compare the coverage against the rates for a good choice as association insurance may not always be the cheapest option.
4.      Consider Tax Deductions
Self employed persons can always deduct their insurance premiums prior to taxation. The premiums are "above-the-line" deduction which will reduce your gross income irrespective of whether or not you itemize them. On the other hand, medical expenses are a schedule-A deduction that can only be taken when itemized and has exceeded 7.5 percent of your gross income. In the end, the net cost of every dollar you spend on your health insurance cover will generally be less that spent on medical care.
5.      Calculate the long-run cost of different plans
Cheaper insurance plan may not necessarily prove to be cheaper in the long-run. The long-term cost will depend on the cover exclusions, your heath spending, your in-network as well as out-of-network usage and several other factors. Consider your entire family's health spending and patterns - the doctors you visit, your past medical services as well as a need to travel. You may find that you're not covered by some plan.
Having a fully understood your heath issues, you may also want to consider the financial ones. Even though premiums are important, they are accompanied by some extra fees like co-insurance for seeing the doctor. Check for exclusions and benefit limits of your intended plan. A full understanding of your health issues and financial limits of the plan will help you know whether that particular cover will be cheaper or expensive in the long run.

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