How to Buy Health Insurance (4/4)

Part 4/4 - How to Choose

How to Choose

  1. Understand the different types of policies available.
  2. Collect a few competitive bids.
    • Group Policies - If you have access to a group policy, understand its cost and coverage. Don't forget to contact any association that you are a member of, or could become a member of (i.e. trade associations such as the National Restaurant Association, Society of Industrial Engineers, etc. or affinity groups such as American Association of Retired People, AAA, etc.)
    • Insurance Agents - Ask for a referral from friends, family and coworkers. Choose one that you feel comfortable with and is available to answer your questions. Be sure to verify that the agent is licensed to sell insurance in your state (go to your state's insurance website)
    • Direct Sales - Some insurance companies don't use agents. They only sell directly to individuals or companies. You can find a list of these companies by checking with your state insurance department.
  3. Compare your out-of-pocket expenses.
    • Premium - the monthly or annual payment to participate in the plan.
    • Coinsurance - the percentage of the covered expenses you must pay in addition to the deductible. Usually 20% for in-network doctors and a higher percentage for out-of-network doctors.
    • Deductible - the initial dollar amount that you must pay before the insurance company begins to pay. The deductible may apply to each individual or to the entire family and start over each year.
    • Copayment - a predetermined dollar amount you pay for covered health care services (usually found in PPO plans).
    • Out-of-Pocket Limit - many policies will have a provision that limits the amount you will be responsible for.
    • Usual, Customary and Reasonable (UCR) - a limit on the amount the insurance company will pay for a given procedure based on average range of fees within given geographies.
  4. Understand coverage and renewable conditions.
    • Does the plan cover your choice of hospitals and physicians?
    • Are there limits on medicines, specialist referrals, or the types of treatment available?
    • Are there benefit limits per person, family, illness, treatment or hospital stay?
    • What is the process for out-of-network emergency care?
    • Are there yearly or lifetime maximums?
    • How quickly are claims processed?
    • Under what conditions will the policy be renewable?
  5. Determine which type of policy best fits your needs. How much flexibility do you need / want?
  6. Compare insurers credit ratings and complaints.
    • Check the company's rating (A.M. Best, S&P, Weiss Ratings, Moody's, Duff & Phelps)
    • Verify that the company is authorized to sell insurance in your state. Look at the number of complaints a company has had (e.g. New York)