Five Questions You Need To Ask When Shopping For Health Insurance


1. Ask your agent: “What is the total amount for which we could be personally responsible under this plan if someone in our family experiences a serious illness?”

Most health insurance policies have “stop loss” or “maximum out-of-pocket” provisions. These limit the amount of money you could be personally responsible to pay if you become ill or injured while covered under your health insurance policy.

Unfortunately, there are companies that offer policies with no such provision. This means there is no limit on how much you could have to pay if you become ill or injured while covered under the policy, even though you are “insured.” If the health insurance you are considering has no maximum out of pocket amount, or the maximum out of pocket amount is more than you can or want to afford, then you need to look for a different policy.

2. Ask your agent: “Do the benefits provided by this policy meet the costs of medical care today?”

Some health insurance policies provide benefit levels that are far below the ordinary cost of medical procedures. Before you buy, have your agent explain how well the plan’s coverage meets actual, average medical costs in your area.

For example, the average cost of hospital room and board for a semi-private room is about $2,000 per day. Some insurance companies “limit” hospital room and board benefits to a much lower amount. If you are hospitalized under a plan that pays “up to $500 per day” for hospital room and board, for example, your insurer will leave you personally responsible for the other $1,500 per day. That’s not most people’s idea of insurance!

3. Ask your agent: “Will this plan protect me in the event of a serious illness or injury?”

Some health insurance plans are comprehensive, covering the costs of primary care, preventive care, disease management, emergency services, hospitalization, doctor visits, x-rays, lab work, outpatient services, and mental health. Some limit or omit coverage for things like preventive care, mental health, or prescription drugs, but will still protect you from the cost of treatment for a serious illness or injury. These are often called “catastrophic” or “major medical” insurance policies.

But there are also “scheduled benefit plans” so riddled with limitations and exclusions that they will only protect you from a small percentage of the cost of a serious, or even moderate illness. Maintaining this type of coverage could easily result in your personal bankruptcy. People shopping for health insurance are frequently lulled into purchasing scheduled or limited benefit plans through deceptive sales presentations. They wind up paying good money every month for insurance that will provide just a small discount on the total cost of care if someone under the policy gets sick.

4. Ask your agent: “What is your background, and how much experience do you have selling health insurance?”

Insurance agents are not all equal. Some are recent trainees who lack sufficient familiarity to know if what they are selling will actually protect you in the event of an illness. They may not be able to competently explain the plan’s limitations and exclusions. They may not be able to tell if a particular insurance policy is deficient.

Ask your agent how long she has been selling health insurance, and whether or not she has sold for more than one company. Ask about her training, where she received it, and about her general background. Ask her to explain the plan’s limitations and exclusions to you in clear, plain English. If she cannot or will not, find another agent and keep shopping.

5. Ask your agent: “May I have a specimen copy of the policy and other documents you have shown me today?”

Be wary if your agent claims to have run out of documents containing details about the policy you are considering. Also be wary if the agent breaks a promise to provide such written information to you at a later date. Be on guard if, at the end of the sales presentation, the agent gives you only very general written information containing no details about the terms of the policy you are considering.

The details matter. Most people assume, for example, that the deductible under a health insurance policy is annual, and covers the entire family. Some “basic” plans, however, apply the deductible separately per hospitalization, or per “period of confinement” for each insured person under the policy. This means you could have to pay the deductible several times per year in the event of illness.

Beware if you see language describing the policy as “basic” anywhere in the documents, such as any reference to a “Basic Hospital-Surgical Expense Certificate.” Be suspicious if the documents refer to a “health plan” or “health program,” but you don’t see the word “insurance.”

Especially if you do not recognize the company’s name, check the Internet to see what customers, journalists, regulators, and other insurance agents are saying about the company. This will help you to avoid unwittingly purchasing a “nightmare policy” that provides only skeletal “benefits,” and to obtain a policy that legitimately protects you.