Health Insurance Tips Blue Cross Blue Shield of North Carolina

This article lays out some basic guidelines to use when searching for a health
insurance policy and exposes several of the tricks health insurance companies and
agents use to get you to buy their policy.

1. Annual Cap on Benefits
The most important benefit of an individual health insurance policy is the
major medical or catastrophic benefit. Some health insurance companies limit
their exposure to risk by capping benefits at $100,000, $50,000, or even as low as
$20,000 per year. $100,000 seems like a lot of money, but I’m sure you know at least
several people who have had an annual claim higher than that. After you reach the
annual cap, you are on your own, either paying for that expensive operation out of
pocket or relying on the mercy of the hospital.

Policies with annual caps are better than nothing, but if you accept one of
these you are taking a gamble. Many policies with annual caps have decent
prescription or office visit benefits because health insurance companies know
consumers are drawn to these types of plans. However, it is better to have a policy
with strong catastrophic benefits and no prescription or office visit benefits than to
sacrifice catastrophic coverage for higher day to day benefits to cover you from a large
loss.

2. High Complaint Ratio
A very important and often ignored component of a policy is the health
insurance company’s complaint ratio. This ratio can be viewed as a customer
satisfaction indicator. A high complaint ratio is bad and a low one is good. This will
give you an idea of how the company pays insurance claims based on the expectations
of policy holders. Most complaint ratios will be less than 10, and an excellent complaint
ratio is less than 1. I have seen complaint ratios over 1,000 so this is worth checking
into. C lick here to find these ratios for North Carolina. (the search box is in the upper
right corner of the page)

3. Discount Plans Masquerading as Health Insurance
The general population have learned that discount plan is a bad word. For the
majority of these plans, you pay a lot for very little benefit. Discount plans often
call themselves “health plans,” and will have small accident policies and dental plans
from companies you recognize. They will group these benefits together for “limited time
offers” and they will cost much less than your other health insurance quotes. They
may be part of a PPO to offer discounts but when it comes time to pay major medical
bills the plans lose much of their appeal. Again, they have many gimmicky benefits but
lack the core of a good health insurance policy, major medical benefits.

4. Annual Cap on Office Visits
Another health insurance policy trick is to limit office visits to 2-3 per year.
Generally, the more specific a policy is about what it will pay, the less it pays for. For
example, some policies only pay usual and customary charges, or will evade charges
by saying that the claims were not coded properly. These types of tricks will normally
show up in their complain ratio. If a policy is clearly advertised as limiting office visits,
then this is a valid approach for reducing health insurance premiums.

5. Unrealistically Low Health Insurance Quotes
Be aware that some unscrupulous agents may try to lure you in with low health
insurance quotes and then come back with a higher final rate. Sometimes this is
unavoidable if the agent was not aware of some health issue or an unfavorable height
to weight ratio. Avoid this pitfall by asking what percentage of applicants get
the quoted rate. The agent may not have an exact number but should be able to
give you a ballpark figure. Also, ask if the quote is based on the best rating. If it is
then it probably is not a very accurate quote unless you are in optimal health.

HSA (Health Savings Account)
HSAs are a bare bones health insurance policy. You save on monthly premium, but
have higher out of pocket expenses. Think of them as a major medical or catastrophic
plan with tax benefits. The tax benefits are fairly simple, your contributions to the
account are tax deductible. Then you use the money to pay for qualified medical
expenses. The IRS has a list of qualified expenses. I will leave it to you and your
accountant to decide if one of these policies would be in your best interest from a tax
saving perspective.

From an agent's point of view, they are what I recommend when you are trying to keep
your premiums as low as possible. With an HSA you will pay all medical expenses until
you reach your deductible. That's not quite as bad as it sounds because with most
HSAs you will get in network discounts.

An important question with an HSA policy is if prescriptions and office visits count
towards your deductible. Also, make
sure the network is large and that the policy has a high lifetime benefit (more than $3
million but preferably $5 million or
higher).

Copyright 2008 Goebelt Insurance Services Inc.

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Goebelt Insurance Services, Inc. and David Goebelt are an independent authorized agency/producer licensed to sell and promote products
from Blue Cross and Blue Shield of North Carolina (BCBSNC). The content contained in this site is maintained by Goebelt Insurance Services,
Inc. Blue Cross and Blue Shield of North Carolina is an independent licensee of the Blue Cross and Blue Shield Association.

David Goebelt
Authorized NC Agent
800-918-1158

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