Buying Health Insurance

Going It Alone When Buying a Health Policy 

.he sour economy is prodding more Americans to buy their own health insurance, a daunting task for people not prepared to navigate the possible pitfalls.
Tina Smith, who owns a residential-cleaning service with her husband in Lyndhurst, Ohio, was seeking to lower her premiums when she bought an Assurant Inc. policy from an agent who visited her at home. She says the agent played up the health plan’s affordability and its $2 million lifetime coverage.

But Ms. Smith said the agent didn’t mention that the policy had a $5,000 annual limit on what the insurer would pay for outpatient treatment, or medical care when a patient hasn’t been admitted to a hospital. She acknowledges that the limit was disclosed in the plan’s full paperwork. Last year, the 52-year-old was diagnosed with lymphoma. She quickly exhausted the $5,000 benefit and ran up an additional $86,000 in bills for imaging scans and other procedures. Ms. Smith hopes to reduce that debt to around $20,000 with aid from a nonprofit organization and other sources. “I’m not health-care savvy, and it didn’t occur to me I had to go over this with a fine-tooth comb,” she says.
Assurant said in a statement that it provides “current and thorough training and support” for agents and requires them to “uphold the highest levels of service and expertise.”
Like Ms. Smith, a growing number of consumers will likely need to pore over such health-insurance details as out-of-pocket maximums and excluded benefits. After holding steady for several years, the number of people buying their own coverage rose to an estimated 18.4 million last year from 17.9 million in 2007, and is expected to grow to 19.6 million this year and 20 million in 2010, according to an analysis by McKinsey & Co. The consulting firm attributed the expected increases largely to lost jobs and employers cutting workplace benefits.

onsumers can find coverage on their own through an agent, or from one of the growing number of insurance-brokerage Web sites. Policies also can be purchased directly from insurers, but this doesn’t allow consumers to compare plans from different companies. Regardless of where you buy a plan, your premium for that policy will be the same.
Here are some steps to ensure you get good guidance:
Start by making sure you understand all your options. For many people, it’s better to avoid the individual market, since in most states insurers can reject you because of preexisting health conditions. If you are laid off between Sept. 1, 2008, and the end of 2009, you might qualify for a federal subsidy that would help you pay to keep workplace health insurance for nine months. To learn more, check the Kaiser Family Foundation’s Web site and search for Cobra, the acronym for the federal law that provides the right to continued coverage.
If you are going to buy your own insurance, start your research with Web sites that explain the basics, such as healthinsuranceinfo.net, sponsored by the Georgetown University Health Policy Institute, and healthcarecoach.com, from the nonprofit National Health Law Program.
Then you can noodle around on Web-based brokerages that sell health insurance, including eHealthInsurance.com, HealthPlanOne.com, HealthInsurance.com and InsureMonkey.com. You can get tentative quotes based on limited anonymous information.

Some consumers choose plans based solely on online research. But without guidance, it can be tough to fully understand the nuances of a plan and how it compares to other options. First, make sure you’re actually buying insurance, not some other product such as a discount card. Don’t just look at premiums. Figure in other fees you will face, such as a percentage of the cost of doctor visits. Make sure you understand the policy’s annual out-of-pocket maximum, meaning the most you might have to spend in a year, since certain charges might not count toward the total.
Also, watch out for benefit limits or exclusions. If you focus just on price, “on the back end, you’re going to get stung,” says Ida Schnipper, founder of patient-advocacy firm Health Champion LLC.
Before making a final decision to purchase a policy, closely review the full plan explanation, sometimes called the certificate of coverage or the evidence of coverage, and seek help from the Web brokerage’s agents or other experts if you don’t understand it. Insurers may let you review this document only after you tentatively choose a plan.
Gail Bogossian, a corporate lawyer in West Hartford, Conn., bought coverage late last year for her family after leaving a job as general counsel for a health insurer. Ms. Bogossian, 54, checked out policies through online brokerages and other Web sites. But she “just found them too confusing” because it was difficult to glean details of the plans and compare them, she says. Finally, she turned to an agent who outlined different policies to help her choose a setup she liked.
First-time purchasers should strongly consider consulting several independent agents before buying to compare their advice. To find an agent, ask friends or family members for recommendations. You can find agents who specialize in health insurance through the National Association of Health Underwriters, at nahu.org. Online brokerages also typically have live agents available to answer questions by phone.
Check with your state regulator that an agent has a valid license and a clean record, and make sure health insurance isn’t a sideline or a new specialty. You want an agent who represents a number of major insurers, rather than just one company.
You also may want to ask agents how they’re compensated. Agents get commissions from insurers for each policy they sell, often calculated as a percentage of a customer’s premiums. These can range from around 3% to as high as 20%, agents and insurance officials say. You want to know if your agent will make more money from selling you a certain plan. Also, commissions can be higher in the first year of a policy, an incentive for unscrupulous agents to “churn” clients, or try to get them to switch policies.
An agent should learn your financial limits and any health issues. One good sign is if an agent asks about your eligibility for government programs or the Cobra subsidy. These make no money for the agent but if you’ve just lost your job, you’re generally better off with the discounted workplace benefit rather than purchasing a plan, says Paula Wilson, an agent in Temecula, Calif.
An agent should help guide you toward the insurer most likely to accept you. Keep in mind that if you are rejected by one carrier, you will probably have to disclose that in future applications. An agent also should help you fill out the application.
Larry Cejka of Silver City, N.M., used an agent to buy coverage for himself and his wife. But Mr. Cejka, who sells equipment to oil refiners, says he was confused by the layout of the form. It asked about breast implants, but Mr. Cejka thought it only referred to devices from the last 10 years. He decided to answer “no,” since his wife’s implant dated from a mastectomy 23 years earlier.
Still, he called the agent’s office and asked for the agent to call him back if he had misunderstood the form. He also sent the form to the agent for review before it went to the insurer.
Then, after Mr. Cejka’s wife had an operation to replace her implant in late 2007, the insurer canceled the couple’s coverage, saying he hadn’t disclosed that she had the device. Mr. Cejka says the agent told him he couldn’t help. Mr. Cejka hired Healthcare Advocates Inc., a Philadelphia firm that represents consumers on insurance issues, and successfully appealed the rescission. But he plans to stop using the agent.