Small Business Health Insurance: The Best Policy Is A Great Agent I’ve been a health insurance broker for over a decade. Every day, I read more and more “horror” stories about health insurance companies not paying claims, not covering certain illnesses, and doctors not getting paid for their services. Sadly, insurance companies are motivated by profits rather than people—despite the fact that they require people to generate profits. There is a good chance that the insurance company will discover a valid reason not to pay a claim, and as the customer, you will suffer as a result. However, the majority of people are unaware that an insurance policy contains very few “loopholes” that give the insurance company an unfair advantage over the customer. In fact, insurance companies go to great lengths to explain the limits of their coverage by giving policyholders a free look period of 10 days to look over their policy. Sadly, during their 10-day free look, the majority of people keep their insurance cards in their wallet and keep their policy in a drawer or filing cabinet. Typically, it is not until they receive a “denial” letter from the insurance company that they take their policy out and really read through it.
When it comes to buying their own health insurance, the majority of people rely heavily on the insurance agent who sells the policy to explain the benefits and coverage of the plan. Because of this, a lot of people who buy their own health insurance plan can only tell you how much they pay in premiums and how much they have to pay to meet their deductible. Other than that, they can’t tell you much about their plan.
Purchasing health insurance on one’s own can be a daunting task for many customers. A health insurance policy is not like buying a car, where the buyer is aware that power windows are an option and that the engine and transmission are standard features. A health insurance plan is much more hazy, and it’s often hard for the customer to figure out which benefits are optional and which are standard. This, in my opinion, is the primary reason why, until they receive a large bill from the hospital stating that “benefits were denied,” the majority of policyholders do not realize that they do not have coverage for a particular medical treatment.
We are all aware that insurance companies serve a “necessary evil” despite our complaints about them. In addition, despite the fact that purchasing health insurance can be a time-consuming, frustrating, and intimidating process, there are steps you can take as a consumer to ensure that you are receiving the right amount of coverage at a fair price.
As I have dealt with small business owners and the self-employed market, I have realized that it is extremely difficult for people to differentiate between the benefits they “need” and “want” from health insurance. Although I agree that health plans with 100 percent coverage (no deductible and no coinsurance) have a great “curb appeal,” I can tell you from personal experience that these plans are not for everyone. Recently, I have read comments on various blogs advocating for such plans. Are 100% health plans better for the person who has the policy? Probably. But does the majority of consumers really require a plan that covers 100% of their medical expenses? Most likely not! According to my professional opinion, when purchasing a health insurance plan, you must strike a balance between the following four essential factors: needs, wants, risks, and costs. Before spending your money, you must weigh all of these factors, just as you would when purchasing options for a new car. Do you really require a 100% plan with a $5 co-payment for prescription drugs if it costs you $300 more per month if you are healthy, take no medications, and rarely visit a doctor?
If you pay a once-a-year $100 Rx deductible, is it worth paying $200 more each month for a $250 deductible and a $20 brand name/$10 generic Rx co-pay over an 80/20 plan with a $2,500 deductible and a $20 brand name/$10 generic co-pay? Isn’t the 80/20 plan still going to give you enough coverage? In the event that you are required to pay your $2,500 deductible or purchase an Amoxicillin prescription for $12, don’t you think it would be in your best interest to save an additional $200, or $2,400 per year, in your bank account? Isn’t it better to keep the money you’ve worked so hard for than to pay more for insurance?
Yes, there are a lot of different ways to keep more of the money you would normally give to an insurance company by paying more for premiums each month. To give consumers more control over how their health care dollars are spent, the federal government, for instance, encourages them to purchase H.S.A. (Health Savings Account) qualified H.D.H.P.s (High Deductible Health Plans). An HSA Qualified H.D.H.P. allows customers to set aside additional funds each year in an interest-bearing account to cover out-of-pocket medical costs. Even treatments like Lasik eye surgery, orthodontics, and alternative medicines, which are typically not covered by insurance companies, can be deducted completely from a person’s taxable income. The money that was deposited into the tax-deferred H.S.A. can be rolled over to the following year and earn an even higher interest rate if there are no claims that year. The majority of H.S.A. administrators now offer thousands of no-load mutual funds into which you can transfer your H.S.A. funds in order to potentially earn an even higher rate of interest. This is the case even if there are no significant claims for several years, as is frequently the case.
I’ve found that people who choose their health insurance plan based on their wants rather than their needs feel the most cheated or “ripped off,” according to my experience. In point of fact, almost all of the business owners with whom I speak say the same thing. remark like, “I have to run my business, I don’t have time to be sick!” “My insurance company keeps raising my rates and I don’t even use my insurance!” and “I think I have gone to the doctor twice in the last five years!” As someone who owns a business, I can empathize with their frustration. So, is there a straightforward formula that can be used by everyone to make purchasing health insurance simpler? Yes! Become a knowledgeable customer.
When I get in touch with a potential client or call one of my referrals, I always ask a few specific questions about the policy that person currently has in their dresser drawer or filing cabinet. You are familiar with the insurance policy that they purchased to keep them from having to file for bankruptcy due to medical debt. that policy they bought to cover the $500,000 transplant of a life-saving organ and the 40 chemotherapy treatments they might need if they get cancer.
So, when I ask these people “basic” questions about their health insurance policy, what do you think happens almost always? They do not have the responses! A list of ten questions I frequently ask prospective clients about health insurance is provided below. Let’s see how many you can respond to without consulting your policy.
1. What is the name of your health insurance plan, and what insurance company are you covered by? such as Blue Cross and Blue Shield’s “Basic Blue”) What is your deductible for the calendar year, and if everyone in your family fell ill at the same time, would you have to pay a separate deductible for each person? For instance, the majority of health insurance plans have a yearly deductible for each individual of, say, $250, $500, $1,000, or $2,500. However, even if everyone in your family required extensive medical care, some plans will only require you to pay a maximum deductible for two people each year.)
3. What dollar amount (stop loss) is your coinsurance percentage based on? For instance, a good plan with 80/20 coverage means that you only pay 20% of a certain amount. This amount, also known as a stop loss, can be different depending on the kind of policy you buy. There are policies on the market with no stop loss at all, and stop losses can be as low as $5,000 or as high as $20,000.)
4. What is your annual maximum out-of-pocket expense? For instance, all coinsurance percentages, deductibles, and applicable access or other fees. If you become seriously ill, what is the insurance company’s lifetime maximum benefit, and does your plan have any “per illness” maximums or caps? For instance, some plans may have a maximum benefit cap of $100,000 per illness but a lifetime maximum of $5 million. This means that in order to be eligible for $5 million in lifetime coverage, you would need to develop a lot of separate, unrelated illnesses that could kill you and cost less than $100,000.)
6. Is your plan a schedule plan in the sense that it only covers a predetermined number of procedures? For instance, the National Association of the Self-Employed (N.A.S.E. is known for supporting schedule plans) has given endorsement to Mega Life & Health and Midwest National Life. Are you limited to a certain number of doctor co-pay visits per year and has your plan co-pays? For instance, a lot of plans have a cap on how many times a year you can go to the doctor for a co-pay, usually between two and four times.)
8. If your plan covers prescription drugs, do you have to pay a co-pay for them, do you have to meet a separate drug deductible before you get any benefits, or do you just have a discount prescription card? If your plan does, do you have to pay for them? For instance, while some plans immediately provide you with prescription benefits, others require you to pay a separate drug deductible prior to receiving medication for a co-pay. Today, a lot of plans don’t allow for co-pays and only give you a discount prescription card that saves you 10 to 20 percent on all prescription drugs.
9. If so, what is the maximum amount your plan will pay for an organ transplant? (Does your plan have any benefits for organ transplants that are reduced? For instance, some plans only cover a maximum benefit of $100,000 for organ transplants, even though the procedure typically costs between $350,000 and $500,000, and this $100,000 maximum may also cover the pricey anti-rejection medications that must be taken following a transplant. If this is the case, you may be required to pay out-of-pocket for all anti-rejection medications.
10. Is there a separate “access fee” or deductible for each hospital admission or emergency room visit? For instance, some plans, like the “CoreMed” plan from Assurant Health, have a separate $750 hospital admission fee that covers the first three days you spend in the hospital. Your plan’s deductible is in addition to this fee. Additionally, out-of-hospital services like physical therapy, speech therapy, chemotherapy, and radiation therapy are subject to benefit “caps” or “access fees” in many plans. For each outpatient treatment, benefit “caps” can be as low as $500, leaving you with a bill for the remainder. Access fees are extra costs you pay for each treatment. You may, for instance, be required to pay a $250 “access fee” for each outpatient chemotherapy treatment. You would have to pay $10,000 for 40 treatments of chemotherapy (40 x $250). Once more, these costs would be added to your plan’s deductible).
After reading the list of questions I ask prospective clients about health insurance, count the number of questions you were able to answer. Don’t get discouraged if you couldn’t answer all ten questions. That does not disqualify you from being an educated consumer. It could simply indicate that you worked with a “bad” insurance agent. So, how could you tell if an insurance agent was “bad”? because a “great” insurance agent would have spent time assisting you in fully comprehending your insurance benefits. A “great” agent takes the time to learn about your insurance needs by asking you questions. Based on these four factors, a “great” agent recommends health insurance plans: needs, wants, risks, and costs. In order for you to make an educated purchasing decision, a “great” agent provides you with sufficient information to weigh all of your options. Last but not least, a “great” agent acts in YOUR best interest, not the insurance company’s.
So, how can you tell if your agent is “great”? It’s simple: you have a “great” agent if you were able to answer all ten questions without looking at your health insurance policy. You might have a “good” agent if you were able to answer the majority of the questions. However, you may have a “bad” agent if you were only able to answer a few questions. Insurance agents are professionals just like any other. There are insurance agents who really care about the people they work with. On the other hand, there are agents who don’t answer questions and don’t return phone calls from clients when they complain about unpaid claims or skyrocketing health insurance rates.
Keep in mind that getting health insurance is just as important, if not more important, than buying a house or a car. So, don’t be afraid to ask a lot of questions to your insurance agent to make sure you know what your health plan covers and doesn’t. Ask your agent if he or she can select a comparable plan so you can compare them side by side before making a purchase if you don’t like the type of coverage your agent recommends or think the price is too high. The most important thing is to read all of the “fine print” in your health plan brochure and to read your policy when it arrives during your 10-day free look period.
Call your agent or contact the insurance company if you have any questions or are unsure of what the asterisk (*) next to the benefit description actually means in relation to your coverage.
Additionally, put in the effort to conduct your own research. For instance, fourteen class-action lawsuits have been filed against MEGA Life and Health or Midwest National Life, two insurance companies endorsed by the National Association for the Self-Employed (NASE), since 1995. Therefore, consider the following question: “Is this a company that I would trust to pay my health insurance claims?”
Also, find out if your agent is a “captive” agent or a “broker” for insurance. “Captive” agents can only sell products from one insurance company. Insurance “brokers” or independent agents can provide you with a wide range of plans from numerous insurance companies. Because that is the only plan they can sell, a “captive” agent might recommend a health plan that doesn’t exactly meet your needs. A “broker” or “independent” insurance agent will typically be able to provide you with a selection of insurance products from a large number of reputable carriers and will frequently be able to tailor a plan to meet your particular insurance requirements and budget.
Due to my expertise in insurance and the level of personal service I provide, I have developed trusting relationships with my clients over time. I do not recommend purchasing health insurance online for a number of primary reasons, one of which is this. I think there are too many factors that people who buy insurance online don’t usually take into account. I am of the firm opinion that purchasing health insurance requires a level of expertise and individual attention that can only be provided by an insurance professional. Additionally, since purchasing health insurance through an agent or broker does not incur additional costs, my recommendation is to use eBay and Amazon for smaller purchases and a reputable, ethical, and knowledgeable independent agent or broker for one of the most significant purchases you will ever make—your health insurance policy.