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.  Click 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.

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 buy preferably $5 million or
higher).

Copyright 2008 Goebelt Insurance Services Inc.
Goebelt
Insurance
Services, Inc.
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David Goebelt
Authorized NC Agent
800-918-1158