Health Insurance – What’s Right For Me?

Article by R. Joseph Ritter, Jr. CFP® EA

One of the biggest questions facing Americans today is what to do for health insurance – how much do I need, what coverages are right for me, and how much will it cost? As if the cost of health care is not high enough, health insurance premiums are becoming unaffordable for many.

You want health insurance to cover your largest financial exposure. Your largest exposure is hospitalization, whether in the emergency room or as an inpatient, surgery and major illnesses such as cancer. It is true that some hospitals work with patients in paying for care, however, this should not be your primary approach to paying for medical care. Look for lifetime maximum coverage that is unlimited because it will provide your best coverage in the long run.

Depending on your health and age, physician appointments are often more manageable without insurance. Selecting coverage for physician appointments with limited hospitalization can be a costly mistake. Life can throw curve balls at any time. Hospitalization and major illnesses are always going to be your largest financial exposure. A healthy young family or retired couple, for example, is unlikely to exhaust their deductible during the year simply through physician appointments. Since you are paying the deductible anyway, a careful look should be taken at how badly you need physician appointment coverage. If you opt out of coverage for physician appointments, you can inform your doctor or provider up front that you are a cash-paying patient and would appreciate the same discount they give health insurance companies.

Pharmaceuticals can be a big drain on a senior citizen’s finances but not for a healthy family or individual. The best thing you can do for yourself is review your health care needs and costs and determine your largest financial exposure. Rank them from highest to lowest and then speak with a health insurance agent about finding a plan that meets your needs.

If you know that your largest financial exposures are covered, then more routine appointments and even unexpected events become much more manageable.

There is no sense in paying premiums for something you don’t need. The lower your premium the more you can set aside in savings to help pay for routine appointments as well as catastrophic health care needs.

Do You Have Critical Illness Coverage?
As you are looking at quotes for health insurance premiums, you may come across a feature called “Critical Illness.” You may even be able to select individual “critical illnesses” to include in the coverage.

But what is it? And do you need it?

According to the American Association for Critical Illness Insurance, when you suffer a critical illness such as cancer, stroke or heart attack, you must continue to pay your health insurance premiums. Your emergency fund may support your household for 3 to 6 months if you are unable to work during this time, but do you have enough to cover deductibles, co-insurance and premiums? If you are unable to work for 6 months, you could be looking at $20,000 in health care costs alone between the deductible, co-insurance and premiums. With some policies having deductibles more than $10,000 and co-insurance up to 40%, this figure could be even higher.

Critical Illness coverage provides benefits to help pay these costs in the event you experience one of the covered health issues. What’s more, the premiums for this add-on coverage can be very affordable. So don’t overlook it when you’re shopping around, and don’t assume your agent is building it into your quote.

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