Beware the Insurance Sales Pitch!

February 5th, 2009 • Related • Filed Under • by Debbie Dragon

By Sid Smith. Sid is a student of MakeMoneyFromWriting.com where he is learning how to establish a freelance writing business.

There you are… you have no health insurance and you have a medical condition, or maybe even multiple medical conditions that are preventing you from getting a major medical plan.

Then, from out of the woodwork pops the smiley faced guy who says that you CAN have quality health insurance, and for an astonishingly low price – but you have to act now! He is the only one offering this plan in your area and he’s leaving tonight.

So you write the check, and several weeks later, discover that you’ve bought a discount card and that no providers in your area honor it.

You’ve been had! So here’s some information and tips to help you:
All Guaranteed Issue Plans from private insurers are either discount cards, or defined Benefit Plans.

A Defined Benefit Plan is a policy which pays a stated amount for services, such as hospital stays, doctor visits, surgery, and diagnostic tests. Regardless of the actual charge made by the provider, these plans will only pay what is listed in the schedule of benefits. For instance, a plan may pay $100 for a CAT Scan, but the actual charge may be $500. You will be responsible for the difference ($400). A plan may pay $500 per day if you’re in the hospital, but the actual charges may be $1,500 per day. You will be responsible for the difference ($1000 per day).

In addition, if the reason for the test or hospital stay has to due with a pre-existing condition, the plan won’t pay at all until you’ve been continuously insured by them for at least a year. If the plan is HIPPA compliant, and if you had credible coverage for at least the past year, the plan will pay immediately (you have to submit a letter from your previous carrier).

Also, be aware that with most of these plans, you will have to submit the bills to the insurer. The paperwork is yours to handle as in the majority of cases, the provider will not recognize your card and will not submit paperwork on your behalf.

If the plan does not provide adequate benefits, you will be left with significant bills, plus you will have been paying monthly premiums for the coverage.

The question is, can you handle the charges left unpaid by your plan? If you can’t, why pay premiums for a plan that will leave you in financial distress anyway?

To add insult to injury, some employers will offer inadequate plans to their employees, and the employees will sign up for them based upon the employer’s recommendation. If you have to pay for a plan, you can refuse to participate. If your employer is paying for the plan, take it, it’s free, but understand that the employer may not give raises in pay due to the cost of the insurance he’s paying for, whether the plan is good or not.

Discount Cards for provider services are generally a very poor bet, I live in a highly populated area and know of no doctors or hospitals that accept them. Before purchasing a discount card program, call around to your local doctors and hospitals to see whether or not they accept them, and what sort of discounts they actually offer.