Why is health insurance so Confusing?

March 7, 2010 @ 01:00 Filed under: Health Insurance Tips — Alston

Comparing one health insurance policy with another is too much of an apples to oranges comparison. People should understand what benefits they are buying and what they are not buying. The lack of transparency here makes buying health insurance difficult because it is difficult to compare health insurance plans.

The focus of my agency has been health insurance for the last five years or so. In the 90s I sold health insurance for Mutual of Omaha. I also helped people buy car and homeowners insurance in the 80s when I worked for MetLife.

The Difficulty of Comparing Health Insurance Plans

I actively sell medical insurance. I haven’t sold car or homeowners insurance in over twenty years, but it still takes me less time to understand a car insurance policy from a company I haven’t seen before than it does a health insurance policy from a company I haven’t seen before. There is something wrong with that! I don’t think it is my neurology. I think it is the fact that auto and homeowners policies are standardized and health insurance is not.

If people were able to more easily understand and compare health insurance plans, many of the policies I see today would not be sold. There are several policies that we have decided not to sell because they limit the important benefits. However, they have some attractive bells and whistles that distract the consumer and make them believe that the policies are better than they are.

I remember buying a tape player from an off brand company a long time ago. When I got it home I realized that it didn’t have a rewind button. If I wanted to rewind the tape I had to turn it over and press fast forward.

There was nothing on the box or in the documentation that said that it had a rewind button. I still felt ripped off. I had come to expect that functionality in a tape player.

Health insurance should cover all the major things we all expect unless there is a clear statement “on the box” saying that there is no rewind button. Health insurance should be standardized and easy to understand.

Standardization hasn’t hurt the auto and homeowners insurance industry. People still purchase those types of policies everyday and there are many insurance companies and policies to choose from.

When the policies are the same or nearly the same, we can make better decisions. If we decide to spend 10% extra to buy from a brand name company or better service, that’s OK. The consumer gets to make that decision for him or herself. However, we shouldn’t pay 20% extra and merely think that it is only 10%.

I’m sure that some companies went out of business when they realized that they couldn’t keep up. Insurance companies that are unable to dazzle us with brilliance will go out of business once they can no longer baffle us with their misleading policies. I say good riddance!

If I were king medical insurance policies would be standardized so that people would know what they are buying. This would make it much easier for people to make intelligent decisions about something as important as the insurance that will pay for them to have their children and live longer, healthier lives.

Why is health insurance so complicated? I don’t know why for sure, but it shouldn’t be.

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National Health Care: Alston’s Proposal

February 27, 2010 @ 21:32 Filed under: National Health Care: Alston's Proposal — Alston

This is the first of a series of blog posts which will end with what I believe is a common sense approach to solving our health care problem in a way that will make both as individuals and as a nation healthier, happier and wealthier.

Your comments and opinions are encouraged.

Health Care Who’s on First?

It seems to me that our objectives are to make sure that everyone is as healthy as possible for as long as possible at as low a cost as possible. The first two objectives are, or at least appear to be, at odds with the third. However, a healthier citizenry can in theory be a more productive citizenry. That extra productivity has the potential to make up for the additional cost.

As a business owner, I think a lot about where my resources should go to generate the most profit. Where can I put a dollar and expect to get two dollars back in the shortest period of time? When I look at the issue of health care I think along the same lines. If we first do what we can to keep more of our citizens productive and healthy during their working years, we may be able to generate more tax dollars and pay for some or all of the cost of better health care for all our citizens.

Some of the health problems that keep so many of us from working could be easily and cheaply fixed or could have been easily and cheaply prevented. In my health care proposal the money would go here first.

How do we easily and cheaply improve our nation’s health and wealth? Perhaps we can step up screening for the diseases that most affect people in their working years or as children. Perhaps we could pass a law that states that only those who are of legal age to smoke at the time of the law’s passing get to smoke in the future. Perhaps we get our school buses to drop our kids off a mile from school unless the weather is bad or the streets are unsafe. There must be a million creative ways to improve our nation’s health without spending a lot of money.

Too much of the health care debate is about who pays for health care. Too little is about what we can do to lower the costs of treatment. If we can use expensive health care interventions less frequently because we need them less, we can lower the cost of health care instead of merely shifting the cost of health care to different parties.

A healthier population will be a more productive population. This will increase GDP and our tax base. Further if we have a healthier country and fewer parents die before their children reach maturity everybody wins both today and tomorrow as we will also be helping to make the next generation healthier and more productive.

As stated above, your comments are encouraged.

Tomorrow I will attempt to answer the question “Does health care need to be so complicated?”

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Discount Insurance Rates

January 12, 2010 @ 13:04 Filed under: Finding Health Insurance, Health Insurance Tips — Tags: discount insurance rates — Alston

It is important to know that there are no discount insurance rates. Insurance companies file the rates for their policies with the insurance department and no website, no face-to-face broker and not even the insurance company itself can offer you a discount. This is true for not just one of the companies but for all. Discount insurance rates do not exist for private health insurance.

However, this doesn’t mean that each company charges the same rate. Each insurance company has a different system for determining their rates.
There is definitely a benefit to shopping around and looking at different company’s prices. Often there is a big difference between the highest priced carrier for a given age, gender and zip code.
Since we are appointed with all the private companies offering individual and family health insurance, we can help you shop all the companies if you are looking for health insurance prices for Connecticut. if you are looking for private health insurance in another state visit our sister site.

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Why Does Health Insurance Cost So Much?

January 11, 2010 @ 16:27 Filed under: Medical Insurance Miscelaneous — Alston

As you can see in the graphic below, the main reason that health insurance costs so much is because health care costs so much. Most of the money that health insurance companies take in goes right back out to pay for their policyholders’ claims.

If you add the cost of marketing (which includes my compensation) to the insurance company profits you will get 7%. Would a 7% reduction in the cost of health insurance solve this crisis?

AHIP health insurance dollar

The graphic above is based on information in the AHIP report.

The idea that massive insurance company profits are the cause of our national health care crisis is ridiculous. Any health care reform proposal that is based on the idea that removing these profits will solve our problem should be discarded. Any politician who promotes an idea that is based on this premise is either lying or uninformed.

Logically the solution to the problem must involve reducing the 87 cents that are being spent on health care not on the other 13 cents that goes to marketing, administration and insurance company profits.

Not only has the cost of doctor and hospital services risen, but the frequency of use has also risen. Less nicotine, alcohol and other drugs ingested might make a difference here. More walking and cleaner water might also make a difference. I’m not sure how our government can or should get involve in these areas, but it would seem like some proposals that are designed to help us be healthier might have more impact.

As an insurance agent of over 20 years, I do have an unavoidable bias. However, I also have more information about this industry than most do. I’ve found an industry full of people who appear no more or less scrupulous than the population in general.

It is not hard to find anecdotal evidence that would lead you to believe that the health insurance industry is full of unscrupulous practices. However, we must bear in mind that this is an industry that services over a hundred million people.

I’d love to have your comments on this post. I do read my blog comments almost every day.

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Newborn Insurance

January 10, 2010 @ 14:35 Filed under: Medical Insurance Miscelaneous — Tags: baby insurance — Alston

Newborn insurance can sometimes refer to life insurance for your child. However this article is about health insurance for a baby.
This type of newborn insurance is generally available with no medical questions asked if one of the parents is covered by a health insurance policy so long as the health insurance company is notified of your desire to cover your child immediately.
Most contracts will require that you formally request coverage for your child within 30 days in order for your child to be covered by your policy without medical underwriting. To protect the health and welfare of your child as well as your finances it is important that you notify your insurance company as soon as possible.
Your insurance policy doesn’t need to cover maternity expenses to have this provision. So even if your policy doesn’t include maternity coverage, it is important to keep the policy so that your child can be insured regardless of any medical problems that may arise.
Also, it is important to know that most health policies that do not cover normal childbirth will typically cover the complications of childbirth. This is another reason to keep your health insurance policy in place if you discover that you are pregnant, but do not have maternity insurance.
It is important that you have medical coverage for your newborn. Insurance can protect you from the high costs of the life-saving procedures performed on a lot of infants. If you are in a situation where your child’s health is in danger, a lack of money should not impact the difficult decisions you will need to make. It is sad but newborn hospital deaths are highest for those with no insurance.

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Self Employed Health Insurance Rates

January 8, 2010 @ 10:49 Filed under: Group and Self Employed health insuranc — Alston

When looking for self-employed health insurance rates it is important that you not limit yourself to only group health insurance. Group policies are sometimes the best option but usually the best health insurance for self employed people is an individual or group insurance policy.

Group health insurance is typically more expensive than policies that you can purchase as an individual or family. I know that this seems contradictory. We usually expect to get a discounted price when we purchase something in bulk or as part of a group.

The reason that group health insurance in Connecticut is usually more expensive than individual medical insurance is the way the policies are underwritten. Underwriting is the insurance carrier’s process of deciding who to insure and at what price. This primarily involves reviewing the health status of applicants.

When you purchase a group insurance policy in Connecticut, the insurance carriers are not allowed to say “no” based on your health status. For this reason the carriers incur higher claims per person on their group policies and are forced to charge higher rates.

Because of this, we only recommend group insurance for self employed individuals if there is a reason that the individual will not qualify for a group insurance policy.

We can help you get self-employed health insurance rates if you do have a medical condition that makes an individual health insurance policy unavailable to you, but we recommend that you look at individual or family policies first.

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How Long Can I Carry Cobra Insurance After My Job Loss

January 6, 2010 @ 14:29 Filed under: Finding Health Insurance — Tags: COBRA — Alston

One of the questions we get frequently is “how long can i carry cobra insurance after my job loss?”

For most people the answer is typically 18 months. However there are exceptions. In certain situations disability and divorce can extend the time period of COBRA eligibility.

COBRA is usually more expensive than individual or family health policies that one can purchase directly on their own or through an agency like ours. However the current COBRA subsidies may mean that COBRA is a better option for you. Those who qualify only have to pay 35% of their COBRA premiums.

One big drawback to COBRA, however, is the fact that it is temporary. Once your eligibility ends, you will probably want to purchase an individual or family policy if your then current employer does not offer a medical package as part of their benefits.

There will are always people who are healthy when they chose COBRA who were not when their COBRA eligibility ended. If they had opted for an individual policy when their job ended they would have been allowed to keep that policy until they became eligible for Medicare.

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Maternity Insurance

January 5, 2010 @ 01:15 Filed under: Uncategorized — Alston

Currently there are only two private health insurance companies that cover maternity expenses that are approved for the State of Connecticut. Maternity insurance is available from certain policies from Connecticare and Anthem Blue Cross Blue Shield.

Other policies will not cover expenses associated with normal child birth but may cover complications. The complications of pregnancy can be classified as a sickness, however normal pregnancy is not.

Health insurance policies that cover maternity tend to be much more expensive than policies that do not cover pregnancy expenses. Maternity expenses are, however, even more expensive. Because of this we ask our clients to thoughtfully weigh the pros and cons of any decision regarding adding or removing maternity coverage.

Getting a policy that covers maternity before you need it can add thousands of dollars to your medical insurance bills each year. The same is true if you wait too long to switch to another policy.

If you develop a serious medical condition while on a policy that covers maternity you may be stuck with it longer than you want to be. Your insurance company will not be able to take your coverage away because of a condition you developed after you were approved for your policy, but you may not be able to switch to another cheaper policy.

On the other hand waiting too long to get coverage for maternity can mean that you have to foot the entire bill for you pregnancy. Health insurance policies that cover maternity all require that your policy be effective before you conceive.

We will be happy to answer any questions you may have about the policies that provide maternity coverage in Connecticut.

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Zero Deductible Health Insurance with Cash Back

November 20, 2009 @ 13:45 Filed under: Health Insurance Tips — Tags: zero deductitble health insurance — Alston

I spoke with a woman the other day who requested private medical insurance quotes from us. She had a zero deductible health insurance policy that cost her $1500 a month. I suggested a policy that had a $2500 family deductible that cost $1100 a month.

At first she balked. She said that the zero deductible policy was better than the policy with the $2500 deductible. I agreed that it was. However, the real question is:

“Is the more expensive health insurance policy, $400 a month better?”

We did a little math. (We are ignoring the fact that every policy has exclusions and limitations on benefits for the examples below.)

If she set aside $1500 a month for her overall health care expenses and bought the zero deductible policy that cost $1500 a month, she would have no money left over at the end of the year but no medical bills to pay.

If she set aside $1500 a year for the health insurance policy with the $2500 family deductible that costs $1,100 a year she would have $4,800 left over if her family had no medical expenses. She $2,300 left over even if her family had catastrophic medical expenses.

(She would do even better if she funded a health savings account with the “excess” money because of the tax advantages, but that is a post for another day.)

Buying the $2,500 deductible policy would actually create a scenario where she would in effect have a zero deductible policy with cash back.

Need help deciding on a policy? If you are a Connecticut resident give us call at 203-374-3645! We’re here to help!

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Cheaper Health Insurance can be Better Health Insurance

November 12, 2009 @ 15:50 Filed under: Finding Health Insurance, Health Insurance Tips — Tags: cheap health insurance — Alston

A cheaper health insurance policy will usually cover less than a more expensive one. However, when you are comparing policies that are similar with the exception of the deductible, you will usually find that the less expensive, high deductible health insurance policy will cost you less in the long run when compared to the high cost low deductible policy.

Most of us are aware that if we buy a policy with a higher deductible, we will pay less and get less coverage. This is true, but the important thing you should be aware of is that the proportionate differences are not likely to be equal. The more expensive policy may be better, but the difference in quality may not be enough to justify all of the additional cost.

For example a policy that costs twice as much may only cover 50% more. This means that you will very often get more “bang for your buck” when purchasing a policy with a medium deductible or a high deductible.

If you are comparing two otherwise identical policies where one policy costs $100 a month and has a $1200 deductible and another policy costs $200 a month but has a zero deductible, which is the better deal?

In the worst case scenario your overall cost for health care will be the same with each policy.

If you purchase the more expensive health insurance policy, you will pay $1200 ($100 times 12) for the premiums and $1200 to pay your deductible. This will total $2400.

If you purchase the more expensive zero deductible option you will pay the same in a catastrophic situation. ($200 times 12 equals $2400).

Although they are equal in a catastrophic situation, you will save money with the cheaper plan during any year that you don’t meet your deductible. The cheaper health insurance policy is the cheaper health insurance policy.

Although I’m advocating that you look at cheaper, high deductible policies, I strongly suggest that you make sure that you purchase from a good company and that you purchase a policy that has good coverage for the big things. I generally recommend policies that have at least a $5,000,000 lifetime cap and no annual cap on the major benefits.

You can sometimes, get a good deal from an “off brand” health insurance company, but make sure that the company is approved by your insurance department and is financially stable. We recommend policies from Aetna, Anthem BCBS and Connecticare more often than we recommend policies from other companies, but the lesser known companies at times offer better options for our clients. This is providing that they meet the above criteria.

The cheaper health insurance plan is the better deal in many situations assuming that you are comparing similar policies. Don’t be afraid to pay less for health insurance! so long as you understand what your policy covers and doesn’t cover.

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