Health insurance does a couple of very of very important things. The first of which is ensure you can be seen by a professional in the event of a serious health issue. Most hospitals will not admit you for a procedure or expensive diagnostics without confirmation of benefits or a substantial payment from you prior to services being rendered.
This does not mean that if you have a heart attack or are in a terrible car accident they will not provide you with minimal lifesaving treatment, but it does mean that long term treatment and elective procedures could be denied. It also does not mean you won’t get a bill for the services provided.
The hospital may still ask for payment in the hopes that you can cover some or all of the bill. They may pursue legal means in an attempt to collect on the debt. But, they are not being mean. They are following a procedure to its fullest in order to be able to write off the debt for tax purposes. They may have to show that they made every attempt possible to collect the debt in order to claim a hardship on your behalf or file for a loss at the end of the year for tax purposes.
In another “denial of service” scenario you may have an elective procedure denied due to lack of insurance. The cost may be quite high, say for a knee replacement, and the hospital will not invest valuable time and talent into the performing the procedure without some guarantee of payment. Usually this is handled with a call to the insurance company and your policy and coverage is verified.
This is not a lifesaving condition they are going to address with the procedure. It may seem like it if you are in excruciating pain on a daily basis due to a bad knee. But, the hospital would not be obligated to perform the procedure based on the hopes of some future payment or repayment plan. Without proof of payment i.e. insurance you may be turned away at the door of the hospital.
OK, so you can see the importance of having coverage. And there are many important factors to consider when choosing a plan. But, one in particular is more important than any other. I have been preaching this for years now to my clients and non-clients alike. It is not the company, the network, your deductible or the copays. Yes, they all play a part in the quality of your coverage, but if you were to look at ONE aspect as superior, it’s none of those.
The most important part of any health insurance plan is the annual max out of pocket. This is the most that you would have to pay towards your medical expenses under your insurance policy. This is a rarely discussed aspect of health insurance. Mostly because so few people ever spend enough on their medical bills to even approach their out of pocket limit.
Most Americans are actually spending way below their deductible and never even get into the coinsurance portion of their plan much less hit their max out of pocket so it is not on their radar when choosing a new health insurance plan. They focus on what they know and experience normally; co-pays, monthly premiums, networks, etc.
Why is this the most important? Well, it can keep you from being indebted to your local hospital the rest of your life, can protect your credit, help you avoid bankruptcy and protect your assets. Whew! That’s a lot. This is not something to toy with.
You should know that many insurance plans being offered out there do not have a max out of pocket. However, that does not mean that you should avoid them like the plague. Those types of plans are still better than nothing. They can be used to fill in gaps in coverage between major medical plans. Or if things are lean and it’s all you can afford. It is still better than no insurance. Most of those plans are set up to pay very well on accidents and have large networks from which to choose providers. So don’t run for the hills when you are offered one. Just be aware of the long term risk of not have a limit to your financial exposure.
One quick example to illustrate the importance of this “max out of pocket” element. Recently a client called me from one of the videos I posted on line discussing this very subject. He said he had recently been to the funeral of a family friend.
After the services when he was alone with the family they were discussing the huge medical bills the deceased incurred during his long and frequent hospitalizations and treatments. The family was perplexed and frustrated because their family member actually had, what they thought was, “good” health insurance from a well-known company.
Of course “good” is relative. Their family member had bought an “80/20” plan with this big company. Everyone knows 80/20 plans are the best, right? Well, the plan he bought was indeed a good plan and the insurance company paid every nickel of their 80% responsibility. The family just had to cover his 20%. Seems fair.
But, his medical bills exceeded $2 million. That’s 2 with 6 zeros. $2,000,000.
Ok, bust out that calculator and do the math on that. $400,000.
That’s what the family owed. They are going to have to pay $400 a week for 20 YEARS to pay that off. That is literally all of the money from a full time job, for 2 decades. Everything. 40 hours a week after taxes.
They found out the plan was a little cheaper than the one with the max out of pocket which was why he chose that one. What a mistake.
This is a true story. I kid you not.
I do not know the fate of the family and that huge bill. I hope that they were able to come to some understanding and avoid litigation. But, it is a perfect example, if you want long term protection, to find a plan that can put a cap on your personal financial liability whenever possible.
If you need help understanding your current coverage please call me at my Nashville health insurance company and I will happily review your plan and give you an honest assessment of what you have. 615-852-8464