7 signs a health plan might be junk

In our investigative report on buying your own health insurance, we found that some policies just won't give you decent coverage when you really need it. We'll post the full story later today, but in the meantime, do everything in your power to avoid plans with:

Limited benefits
Never buy a product that is labeled “limited benefit” or “not major medical” insurance. In most states those phrases might be your only clue to an inadequate policy.

Low overall coverage limits
Health care is more costly than you might imagine if you’ve never experienced a serious illness. The cost of cancer or a heart attack can easily hit six figures. Policies with coverage limits of $25,000 or even $100,000 are not adequate.

“Affordable” premiums
There’s no free lunch when it comes to insurance. To lower premiums, insurers trim benefits and do what they can to avoid insuring less healthy people. So if your insurance was a bargain, chances are good it doesn’t cover very much. Check how much a comprehensive plan would cost you by entering your location, gender, and age as prompted, and look for the most costly of the plans that pop up.

No coverage for important things
If you don’t see a medical service specifically mentioned in the policy, assume it’s not covered. We reviewed policies that didn’t cover prescription drugs or outpatient chemotherapy but didn’t say so anywhere in the policy document—not even in the section labeled “What is not covered.”

Ceilings on categories of care
A $900-a-day maximum benefit for hospital expenses will hardly make a dent in a $45,000 bill for heart bypass surgery. If you have to accept limits on some services, be sure your plan covers hospital and outpatient medical treatment, doctor visits, drugs, and diagnostic and imaging tests without a dollar limit. Limits on mental-health costs, rehabilitation, and durable medical equipment should be the most generous you can afford.

Limitless out-of-pocket costs
Avoid policies that fail to specify a maximum amount that you’ll have to pay before the insurer will begin covering 100 percent of expenses. And be alert for loopholes. Some policies, for instance, don’t count co-payments for doctor visits or prescription drugs toward the maximum. That can be a catastrophe for seriously ill people who rack up dozens of doctor’s appointments and prescriptions a year.

Random gotchas
An AARP policy we looked at began covering hospital care on the second day. That seems benign enough, except that the first day is almost always the most expensive, because it usually includes charges for surgery and emergency room diagnostic tests and treatments.

Before you buy a policy, use our insurance cost calculator to help you compare out-of-pocket costs. Then see our survey-based ratings of HMOs and PPOs (subscriber).

Comments

[medicare supplement insurance plan]

Thanks for having that great pose, but is there a possibility that a health plan can be a junk when one of its policies fails to give what it has stated?

It’s really hard to be cheated because there is no assurance that you can get another benefit when one of the policies fails right.

Also, how many companies are able to have a perfect health plan, what I mean is none of their members experience even 1 of the listed in 7 above

[Galen McPherson]

I agree with both posts above, and strongly with Stan. For some people, a full bore major medical is simply out of reach budgetarily. Not having ANY insurance is NOT the only alternative to having major medical. Mona is also right, that consumers need to be informed about what they are purchasing. Many of my customers purchase "limited" or indemnity plans because that is all that they can afford at this time, or it is all that they feel they need, AFTER I have explained the ramifications (both pros and cons)of each type. The crux of the matter is finding an informed and ethical agent who will truly explore ALL options with you [and not just his portfolio, or "plan of the month"] so that you, the insurance consumer, can make the best decision for you. Unfortunately, the stigma of earlier days of insurance salesmen is still hanging like a pall over the current generation of agents, an opprobrium we must erase one client at a time.

[ConsumerAdvocate]

It's very important for consumers to understand the difference between
(1) CDHP with a high-deductible that provides great coverage
(2) Medical "discount product" that is really junk insurance

So many consumers get confused by these two that I'm happy to see an effort to explain the differences.

I am a huge fan of CDHPs. When consumers are in the drivers seat making informed choices about their own health, good things result including:

- more transparency
- better patient care
- improved patient services
- lower prices (more competition)
- more innovative services

Mona Lori
Founder
OutofPocket.com

[Stan]

I wonder who paid for this article? A company that provides overpriced Major Medical Insurance?