|Some people would underscore "oxymoron" when reading the words
"low cost health insurance," especially since healthcare costs
have been rising by double digit inflation over much of the past
decade, slowly now to the 8-9% level, still way ahead of overall
inflation. Yet, just "Google" the term and you will receive
dozens if not hundreds of opportunities to purchase "low cost
health insurance" through broker groups.
In fact, it is possible to obtain lower cost health insurance
with a slightly different proviso, i.e., "There's no such thing
as a free lunch." Regardless of the advertising you will see
on-line and elsewhere about low cost health insurance, these
offerings are based on one of two models: some type of
group-like coverage at negotiated rates or some type of general
Let's look at general discounting first. Companies that offer a
medical care discount card, usually for an annual fee, have
established networks of medical providers who will accept a
discount on their fees when presented with a discount card. In
general, these discounts are very simple for providers to agree
to because in most cases, they never expect to get full,
established prices for services. Most providers have fees that
are established at higher than expected levels because those
fees will necessarily be discounted by major insurers as well as
Medicaid and Medicare. Anyone who opts for a discount card, by
definition, does not have any other insurance, and will be
required to pay by cash or charge. Providers are happy to
provide the usual discounting in exchange for a simple billing
arrangement. So, are these cards useful? Yes, they can be
helpful in dealing with medical providers, pharmacies and
medical supply companies. If you have no insurance and need to
be hospitalized, you are better off working directly with the
hospital to negotiate the best arrangement.
Companies offering low cost insurance, or brokers who offer to
find such insurance products for you, may have legitimate
offerings and may be able to help you select the right coverage,
but you must understand that by purchasing low-cost coverage,
you are trading payment today for some type of risk or payment
These insurers or brokers have not discovered some new, secret
formula for lowering healthcare costs. They are simply
manipulating risk or payment options. In general, health
insurance can become lower cost, that is, lower premium
payments, in one of the following ways:
* High deductible. You may pay a low monthly premium but need to
pay a large amount out of pocket before the insurance begins to
cover expenses. This may be an excellent type of coverage for
someone who is healthy and probably won't need much medical care
during the year but does need to insure the risk of a major
accident or some other hard-to-predict major medical event.
* Coverage exclusions: Some health plans keep premiums low by
not covering services that they consider to be expensive, such
as prescription drugs, allergy treatment, etc. Again, this type
of coverage may work for you if you can live with the
* Pre-existing conditions: Some plans will not cover
pre-existing conditions for a period of time. This tactic does
not save enough money over the long term to be a viable single
strategy so pre-existing condition clauses are usually just one
cost-saving component of a low cost insurance plan.
* High cost-sharing. Some plans reduce the cost of health
insurance by creating significant cost-sharing requirements. For
example, instead of requiring a $15 co-pay for a doctor's visit,
the plan may require a 40% cost share that could translate into
a $50 to $100 cost to you, depending upon the services rendered.
In general, the healthier you are, the more likely you will be
able to manage well with a plan that requires less monthly
premium payment in exchange for higher payments if you actually
need service. If you have chronic medical conditions, you will
need to look very carefully at which plan provides the best
benefit for your situation.
About the author:
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