Medical Expense Issues

The continuing escalation in health care costs makes a well-designed health insurance program essential to your financial security. With semi-private room rates averaging over $500 per day, a "few days" in the hospital could equal thousands of dollars in expenses.

When reviewing your health insurance coverage, consider the following:

A. Deductibles:

How much of the initial costs must you absorb in the way of a deductible? Is it charged only once in the calendar year? Is there a limit of two or three deductibles per family or must each member satisfy it? Generally the higher the deductible, the lower the insurance premium.

B. Coinsurance:

Beyond the deductible, what percentage of the expense must you pay, 10%, 20%? Most important - Is there a "stop-loss" provision, which eliminates any coinsurance and pays 100% of the charges after you reach $1,000 or so in out-of-pocket expense?

C. Family Benefit Maximums;

Should be "unlimited" or extremely high; e.g., $1,000,000, due to potential costs of a major surgery, hospitalization, a series of family illnesses, etc.

D. Inside limits;

Such as "$200 for X-rays," etc., should be avoided in favor of "comprehensive coverage"; i.e. a flat percentage of the cost incurred.

E. Determine age limits;

On child coverage. Full-time students may be covered until age 22 or 23. After graduation students may need their own coverage.

F. Outpatient benefits;

Should be examined carefully since may procedures are now done on an outpatient basis; e.g., preadmission testing, diagnosis, etc., due to the high cost of hospitalization.

G. Preferred Providers:

Some medical plans call for the use of a preferred supplier and provide a list of doctors or hospitals from which you must choose. This can substantially reduce costs.

H. Health Maintenance Organizations (HMOs);

Offer a different approach from traditional health insurance, in which you pick the doctor, pay as you go and receive reimbursement from an insurance company. With an HMO, you or your employer pay an annual fee, for which the plan's own doctors handle almost all of your health needs.

HMOs typically cost less that there are usually no deductibles (although their may be a "co-pay") and they cover a higher percentage of costs than traditional plans. Since your are limited to the services of this organization, it is important to ask:

A. Where do I go if I require hospitalization?

B. What about emergency treatment out of the local area?

C. How substantial is the local staff? Are all specialties represented?

D. How long must I wait to get an appointment? Is the plan facility oversubscribed?

I'm Retired, I don't need health insurance.

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