Top 5 Health Insurance Myths

Health insurance can be a tricky subject, particularly when you’re talking about individual health insurance, and understandably so. The Government is constantly changing the rules of the game, and most people are on company policies that offer limited to no plan options or flexibility. Therefore, people often don’t see the need to understand their insurance plans and options available to them. However, this is certainly not the case. Like anything else, the more you understand the better off you are and the more money you can save. With that in mind, we’ll take a look at the top 5 most misunderstood health insurance topics.Different brokers have different prices?A broker is going to charge me more by adding a commission, right?Wrong! Many people believe that health insurance brokers have the ability to negotiate on price, or offer cheaper prices than the competition. This is not the case! Health insurance policy premiums (prices) are regulated by each state, and are the same across the board. However, different brokers may be able to find alternative plans, or carriers that are less expensive. For example, broker A may quote you on a PPO plan from insurance carrier X. However, broker B may quote you on an HMO plan for insurance carrier Y. Broker A’s plan will be considerably different than broker B’s plan. The trick is to find a broker that quotes multiple insurance carriers and is well versed in each carrier’s plans. You can filter out the inexperienced brokers by looking at their websites and seeing how many carriers they offer. Then when speaking to the broker ask them how many different carriers and plans they quote.Group health insurance plans are better, right?Individual and group plans both have their respective positive and negative aspects. But if your company offers a group health insurance plan, that is the best option right? Well, maybe, but probably not. Here’s why:Group health insurance plans often are more expensive if the company or group sponsor is not paying a major portion. This is due to the ever increasing costs of group plans and the dramatic effect an unhealthy person in your company can have on the group’s premiums. Say for example your company has 500 employees, if one of those employees gets dramatically ill, this will increase the premiums for the remaining 499 employees due to increased costs. But when the law of large numbers comes into play, as with individual policies, your group of individual policy holders is much larger, which allows the costs to be spread out and decreased on an individual basis.Also, with group plans, if you get sick while in the group and decide to leave the company, there’s a good chance you will have a very difficult time finding a provider to cover you. However, with individual plans there is no need to worry about losing the policy due to job loss, and individual plan benefits and coverage cannot be cut or dropped.Lastly, group plans are limited to what your company is offering in regards to carriers and types of plans like HMO and PPO. If you get an individual plan, you have the flexibility to shop around as much as you please. This allows great flexibility and customization.Individual policies are cancelable?If I purchase an individual health insurance policy and get sick, the provider can simply cancel, right?Individual/family policies must be guaranteed renewable. The only ways you can lose your individual/family policy is if you do not pay your premium or if the insurance company goes bankrupt. As long as the insurer’s financial stability is rated at least A (or Excellent) by A.M. Best or one of the other independent insurance company rating agencies, then bankruptcy is unlikely. However, plans that are not insurance such as medical discount programs or lump-sum payment critical illness plans are not regulated the same as individual health insurance.Premiums are too expensive on individual plans?Depending on your age and health, individual health insurance plans with good benefits are often under $100 per month. However, if you are getting quotes which are more than you can afford, try raising the deductible or the maximum out-of-pocket cost a bit. This is an easy way to lower the monthly premium. Also, if you are working with a broker they may be able to gets quotes for alternative plans or lower cost carriers. Picking a good broker is always a smart move!I’m healthy, I don’t need health insuranceA friend of mine recently took a skiing trip to Big Bear ski resort in Southern California. She took a fall and broke her forearm in three places, and ended up with a hospital bill near $30,000. Health insurance is a must for everyone, even you. The best time to get coverage is when you are healthy. This is because you have your choice of carriers and plans while being able to lock in a good rate.