December 13, 2006 by bob.

Q. I have a pre-existing condition that insurance companies are not willing to include in their coverage. Why should I have insurance if the policy does not cover what I need it for?

A. Let me ask you this. If you had an accident last month and applied for health insurance coverage today, would you expect the policy to cover last months injury?

Of course not.

Why is it any different for an illness?

Some pre-ex conditions can and will be covered by insurance. The only time a carrier will rider or exclude coverage is for ongoing or anticipated future treatment that is considered to be more costly than policy pricing can allow.

As to your closing question (why have insurance?) the answer should be obvious. One purchases insurance in advance of the need to protect one’s assets against seizure or depletion in the event of a catastrophic event. If the event is such that you can cover the cost from your cash reserves, then there is no need for insurance. But if the event is significant enough to cause a major financial setback, then you have reason to purchase insurance.

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December 12, 2006 by bob.

I devote a lot of time to freely answering questions in public forums, both live and on the web. One thing that always baffles me is the number of folks who want answers from people who lack experience & training in specialized fields. Recently I ran across the following question on a site for programmers.

Q. I’m a self-employed programmer who is about to become a father. Previously, my family’s insurance has come through my wife’s employer, but she is eagerly looking forward to being a stay-at-home mom. We must look for that elusive low-cost insurance in order to enable her to do this. Losing her insurance is not a huge loss as, due to failed negotiations, the hospital in our city (3rd largest city in the state), along with most of the doctors that refer to it, is dumping the network (largest in the state) that our insurance uses. On the individual coverage plan front, my research shows story after story of deception, fraud, and general run-around or obfuscation by most of the major players and nearly all the minors. With all of the bad experiences out there, I’ve yet to see a good review of an insurance company. What does the Slashdot crowd use and recommend? Company and plan-type? PPO? HMO? HDHP + HSA (High Deductible Health Plan + Health Savings Account)?”

A. These are certainly fair questions, but unfortunately they are posed to the wrong people.

The individuals who frequent this site are computer programmers, not health insurance experts. Further, health insurance is state, and even region specific. The loss of the PPO network providers is specific to his state and city. Insureds in other states, or even other areas of the state will be immune to his particular problem.

The comment “I have yet to see a good review of an insurance company” is biased. Most who comment on carriers do so in public forums and only use the forum to vent their frustrations. Most of the time the complaint is generated by a lack of understanding of the way insurance, or their particular policy, works.

Most of the “fraud & deception” can be attributed to uneducated marketers of health care products who are selling to an uneducated consumer. Consumers are easy targets who are constantly looking for the “best deal” and unfortunately, that is where they are subject to being defrauded.

And, most of the complaints revolve around either of two issues. My premiums are too high, or, they did not pay my claim.

In most (but not all) cases the premiums are too high because the individual bought the wrong kind of plan. The spread between what people want their plan to do, and what they can afford, is often canyon sized. This is because they fail to understand why they need health insurance. It is to pay those claims that are financially impossible to cover out of income & reserves. Nothing more, nothing less.

As for claim denial, this too is a lack of understanding of what they bought. Most individual plans will not pay for treatment of a pre-existing (or related) condition. There are also restrictions on coverage when you go out of network, or have procedures done that are extra contractual.

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December 4, 2006 by bob.

Q. I am looking for health insurance and want to keep my costs down. One of my options is a “saver” plan with a premium that is 20% less than the regular coverage. I am also looking at a hospital only plan which is even less. My agent is advising against the plans. I think it is just because he wants me to pay a higher premium so he can earn a bigger commission.

A. Your agent is looking out for you, in spite of your beliefs.

The Saver plan you refer to does not cover doctor visits, does not cover X-ray & lab unless performed within 14 days of discharge from the hospital or following surgery, and does not cover brand name drugs. The only outpatient coverage you have for major items is chemo & radiation therapy, which is more than most plans like this cover.

You should know that some meds (for which there are no generic equivalents) run several thousand dollars per month. A popular drug for treating colon cancer runs $9,000 per month and drugs for other forms of cancer routinely run $3000 - $4000 per month.

How will you pay for meds that cost more than a monthly mortgage payment if you go ahead and buy a plan like this just to save $100 per month in premiums? Would you buy an auto policy that is only good from midnight to 6 AM? Would you buy a life insurance policy that only pays if you are killed in a hold up?

Why would you want a plan that only gives half coverage?

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