How to Evaluate Health Insurance Companies

There are at least three distinct areas that you'll want to investigate when researching health insurance companies:

• The insurer's financial rating
• The quality of health care it provides
• Its overall customer-satisfaction rating

A company's financial ratings

Quality of care under a particular policy What could be more important? Under an indemnity insurance plan, you select your doctor, so if you are not satisfied with the quality of health care you are receiving, it is easy to switch physicians.

Under a managed care health policy, however, the network of doctors you'll be working with is pre-selected. Trusting the physicians and feeling confident about the care you're receiving is invaluable.

Check the employment and educational histories of the network's doctors. The American Medical Association provides information about any physician. The Directory of Medical Specialists, which can be found at your local library, lists information about doctors too. Use these free resources to your advantage.

Customer satisfaction

You'll be in contact with your insurer often enough, so good communication can make a huge difference.

Although this is a hard area to gauge before you actually purchase a policy, you can still get a sense by calling the health insurance company's customer service representative with a question.

Does it take them long to answer your question? Are you put on hold? If you request information to be sent to you, how long does it take?

You can also try to "test" commitment to satisfaction. Ask a health insurance company representative if you can switch primary care physicians mid policy year? If not, they may be inflexible about other personal concerns and indifferent about your health care needs.

Unfortunately, while financial information about a health insurance company is fairly easy to come by, specific measures of patient satisfaction with a particular health policy are not. You'll probably have to pay for this information.

Consumer Check or Consumer Reports both offer heath insurance company and health policy evaluations for a fee.

You can also do your own research into which companies and plans are better for you, by using the questions I provided to the various types of health plans. This will take some work, but it will help you learn first-hand how health insurance companies differ.

10 Essentials of a Good Plan

1. Good ratings
   This is especially important if you are purchasing your policy from a new and unfamiliar company, but it's still always wise to check out any provider's health insurance ratings to make sure you are dealing with a valid and trustworthy business.

2. The Lifetime Payout
   In the event of a catastrophic illness, your policy needs to provide a sufficient amount of health care coverage. However, to protect itself from ever having to pay too much, your insurer limits the lifetime payout. Therefore, lifetime payout is the maximum amount of reimbursement the health insurance company provides during your lifetime.

   $1 million is a good figure. Anything less and you run the risk of prematurely depleting the entire compensation for health care costs available to you, while aiming for a higher limit might make finding a inexpensive health insurance plans too difficult.

3. Largest deductible and co-payment you can afford
   Setting a high deductible and high co-payment will lower your premium payments significantly. Although out-of-pocket medical costs will be higher, (and don't agree to a policy that puts these figures out-of-reach) this rule is key to bagging those inexpensive health insurance plans that are out there.

4. Reasonable out-of-pocket limit
   This policy provision limits your out-of-pocket payments per year. It is especially important in the event of a serious illness, and I recommend that you consider only policies that carry one. Remember that setting a low maximum will increase the amount you pay in premiums. Try to establish a reasonable out-of-pocket maximum to balance risk with cost.

5. Waiver of premium provision
   A waiver of premium provision allows you to skip premium payments during lengthy illness. Although not absolutely necessary, the provision is beneficial, should an illness prevent you from working for an extended period of time.

6. Renewable provision
   The renewable provision is a must. It guarantees your health insurance plan will not be canceled because you become ill. You may be required to continue paying your premiums while ill (unless the health insurance includes the waiver of premium provision too), but you won't lose your coverage.

7. Timely coverage of pre-existing conditions
   Often insurers require a waiting period before covering the health care costs for pre-existing health problems. Although it is standard for them to assign a waiting period, it should never be over a year.

8. Emergency coverage
   Your policy must cover emergency medical services. In the past, some managed care plans were criticized because they required the primary care physician to approve emergency health care. This tactic may save money, but emergency care shouldn't be jeopardized. Read through your health insurance plan paying special attention to the definition of emergency and verify with the health insurance company what is exactly covered.

9. Few prerequisites
   Prerequisites are requirements you must first fulfill before receiving medical attention. Health insurance plans with too many prerequisites are too restrictive. A policy with a few prerequisites is fine - it's how the company survives (and how you get a low cost health insurance policy), but good health care should never be sacrificed.

10. Use online resources to find the best health insurance plans. The internet is a great resource for health insurance ratings, learning centers, and comparisons.

Health Insurance Policy Exclusion

Exclusions in your policy's definitions section

Next, locate the definitions page of your health insurance policy. Often, health insurance companies hide coverage exclusions within their definitions of words.

The way your health insurance company defines a certain word may be quite different than the common definition.

For instance, you may define the term "emergency" as anything that requires instant medical attention, while your health insurance policy may define it as a life threatening condition that cannot be reasonably treated by your primary care physician. With this definition, the health insurance company can deny coverage for emergency room treatment of a broken arm on the grounds that a broken arm is not life threatening.

This is an extreme example, but a good illustration of how a coverage exclusion can be hidden in a definition.

I advise you to read over the health insurance policy definitions, paying close attention to these seven key words:

• medical emergency
• medically necessary
• accidental injury
• experimental or investigational
• pre certification
• pre-existing condition, and
• reasonable and customary.

Find out how your health insurance company defines each of these. What health care services are experimental? What is considered an emergency?

Exclusions In Your Policy's Conditions Section

For instance, a policy may state that your primary care physician will be responsible for arranging all your health care needs, making referrals, and approving health care treatment. However, this may mean emergency medical services without a pre-approval from your primary care physician will not be covered by your insurance company.