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Wednesday, February 06, 2013

Individual Medical Insurance: Making the Right Choice

Beginning on January 1, 2014, most Americans will be required to have individual medical insurance. For those who are not currently insured and for those whose employers decide to drop their health insurance coverage, they will need to decide how to pick an insurance company that best meets their personal and family needs. 

One feature that is helpful to look for is whether the health insurance company allows you to lock in the rate for an extended period of time (e.g., one to three years). This is important, because insurance companies can raise their rates during the year. The trade-off is that you are paying a modest amount more initially to lock in the guaranteed rate. Another useful feature is whether the plan offers supplemental cancer coverage and critical illness coverage which can both help protect you from expenses that are not covered by the primary insurance company. Thus, it is very important to understand the annual coverage limits of the primary insurance company when signing up and if you have the option of buying more coverage if needed. It is also important to know if the insurance pays for prescription drug coverage and diagnostic testing.

Lastly, it is also important to understand the distinction between an HMO (health maintenance organization) or a PPO (preferred provider organization). In an HMO insurance plan, you will receive all or most of your care from a provider contracted with the insurance company and it is required for a primary care physician (PCP) to coordinate your healthcare by making referrals to other in-network providers. In a PPO, the insurance plan contracts with a network of health care providers from who you can chose, it is not required to select a PCP, and you can make appointments with specialists without a referral (unless the specialist has a policy requiring this). In a PPO, you can chose a provider outside of the network, but this will likely cost more. Generally speaking, PPOs are the better option due to the added flexibility they provide.

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