When it comes to health insurance, there are many options to choose from. To begin with the most basic, there are 2 initial types. You will either be looking for group health or individual health. This seems to be simple, however it is a great place to be real careful in what your agent / broker shows you.
Many agents try to sell individual plans to small groups. This is not a good idea. First, you may all qualify now with good health, but what happens if you hire an employee with type 1 diabetes? If that employee gets declined do to preexisting conditions, they may sue you. So, make sure that if you are looking for insurance for your employees, that you are getting a true employer group. For today’s discussion, let’s tackle individual health.
Individual health is a fairly simple product. This insures one individual and their immediate family. There are 2 ways to go for this type of insurance. You can go through Obama care, or Healthcare.gov, or find an individual plan through a regular agent or broker.
When it comes to Obama care there seems to be 2 reasons you would want to look there. One reason is affordability. Because these plans can provide subsidies through the federal government, they can be very inexpensive. Second reason is because of serious preexisting conditions. These would include cancer, heart attacks, type 1 diabetes, or any other condition that has a possibility of large medical claims. That leaves you with the second option, underwritten plans.
The best thing about an underwritten plan is that the rates are anywhere from 30 to 70% lower than the Obama care plans … if you don’t qualify for a subsidy. The largest group of people that generally don’t qualify for a subsidy are self-employed individuals. The other group that normally doesn’t qualify are higher income earners or households with a dual income. There isn’t much more to say about Obama care plans as they will take anyone, so let’s do a deeper dive into the underwritten plans.
In this category there are also 2 basic types of plans to choose from. They are limited benefit plans and comprehensive plans. To make this a little easier, learn to ask anytime that you speak to an agent or a broker, “Is this a limited benefit plan, or comprehensive health coverage?”. The problem with a limited benefit plan is just like the name implies, it is limited coverage. So, now for the good stuff, comprehensive health coverage.
Comprehensive plans, also known as major medical, are the best plans to have as they cover 97% of everything. Now nothing covers 100% of everything as each plan has their own little quirks that will exclude something weird or different.
An example is there is only one plan I have seen that covers TMJ. Meanwhile, there is another plan that will not cover a bunion. So in short, stay the route of comprehensive as a limited benefit plan may only cover 25 to 50% of An entire bill leaving you stuck with possible thousands of dollars.
Within comprehensive plans there are 2 types of coverage there as well, PPO of RBP. A PPO stands for Preferred Provider Organization. In this type of plan the facility or Dr’s office has an agreement in place with the insurance company to only charge so much for their services and the insurance company in return agrees to pay that fee in full. This could be considered the least restrictive of health plans. However, the provider or facility you are wanting to see must be with the PPO network. If the provider is not in the network, your out of pocket expenses will increase quite dramatically. This leaves us with RBP plans, (Reference Based Pricing).
RBP are plans that pays according to the Medicare base payment amounts. These plans are excellent for several reasons. The main 2 are that: 1 they are very affordable, 2 that you have freedom of choice of providers. The drawback is that there are a few facilities that will not accept RBP plans. The majority will however. The few that don’t are starting to understand that sometimes RBP plans can actually pay better than a PPO. We will leave that part of the discussion for a different day.
As far as our agents and myself, we primarily place our clients with RBP plans as they are the most comprehensive with affordability combined. There is something much more important when it comes to the sale of an RBP plan. You will see a common response I give to most questions like this, ask more questions.
The way a quality RBP plan will work is that once the insurance company is sent a bill by a facility or DR’s office, the insurance company will automatically send a payment. The base rate the company may pay can be anywhere from 125% to 176%. So, your first question is what is the percentage of the Medicare table do you pay?
The next thing that happens is that a quality RBP plan will negotiate additional payment if the facility demands it. This is the most critical stage of the process. You first need to ask your agent or broker is, “does your company negotiate a balance bill?”. A balance bill is after the insurance company pays, the facility sends you a bill for an additional amount due. If the agent or broker responds yes, they do negotiate, ask them to show in the policy that it will. You want to try and avoid a plan that does not negotiate as you could be left with a big bill.
This all now comes down to the integrity of your agent or broker. In my position, I have only met just a few that know the policy they sell well enough to know whether of not they negotiate claim payments. However, a lot will tell you that they do just to get you to buy the plan. In short, always ask to see it in writing. The higher quality plans will have a guarantee that if negotiations are unsuccessful, they will pay 100%.
Last tip, but not the least important, is don’t fall for the “join our association to get a discount premium”. I have been seeing videos pop up on social media now saying that they will place you in an association and get you a group rate saving you a lot of money, Well my friends, insurance premiums are set according to the amount of claims paid out as well as overhead and expenses. If they are able to show a discount for a membership to an association, then the premiums have been raised in order to lower them just to show a discount. If you research the same insurance company through a broker or agent without an association, you may find the exact dame plan through the exact same insurance company for a lower premium than the association membership is offering.
In conclusion I will leave you with this thought when it comes to selecting a new health insurance plan, Socrates said, “Question everything and not stop until they were sure their beliefs were secure”.
