The quest for care

Millions of Americans who are self-employed, working for small businesses or -- increasingly in this economy -- jobless, are facing the difficult and expensive task of buying health insurance on the open market.

The options are dizzying, with premiums, deductibles and co-payments that vary widely among plans and costs that are not always obvious. People who are older may pay more, as may those who have children and women who are of child-bearing age. Anyone who has needed major medical care in the past might be denied a policy altogether or charged significantly more.

Choose the wrong policy and you could wind up without enough coverage to pay for a lengthy hospital stay or an expensive medicine.

We offer tips on navigating this tangled system and, in related stories, alternatives for those who don’t qualify for private insurance or can’t afford it.

There are seven key elements that consumers must weigh when choosing a health policy. And it’s important to understand the interplay between them, said Shannon Fallick, director of consumer affairs at eHealthInsurance in Mountain View, Calif.


You can get a cheap premium, for instance, but probably only if you choose a high deductible or limited coverage.

“You need to be careful,” Fallick said. “Mistakes can be really costly.”


What consumers must consider

Here are the key elements and what to expect with each.

Premiums, the amount you pay each month for the coverage, can range from $50 to more than $1,000. This vast difference reflects both a policyholder’s age and health -- you’re probably eligible for a really cheap policy only when you’re fresh out of college and in scant need of care -- and the bells and whistles that you choose.

Those who choose high-coverage, low-deductible plans will pay more in premiums. Those who are willing to pay for their day-to-day care out of pocket can spend less on premiums, but they face large costs in years when they use a lot of medical services.

Deductibles are the amount you pay before insurance kicks in. If you’re buying family coverage, you should know that some policies impose both family and individual deductibles. For example, an Aetna Managed Choice plan quoted at imposed a $2,500 individual deductible but a $5,000 deductible for the family. This plan also has a separate $500 deductible for some prescriptions.

However, services may be exempted from the deductible. Some managed-care plans, for example, do not apply the deductible to regular checkups and vaccination expenses. The theory is that if you skip those checkups you’re more likely to become sick and require costly care. Other plans apply the deductible to everything -- and may have multiple deductibles that you need to add up to figure out your real risk.

Co-payments are the charges you’ll pay when getting certain types of care, as designated by the insurer.

Many plans have set co-payments -- anywhere from $20 to $50 -- each time you see a doctor or specialist. Some also have set co-payments for prescriptions.

Co-insurance is a separate issue. Unlike co-payments, which are always a set amount, co-insurance is a percentage of the doctor’s or hospital’s bill that the patient must shoulder.

In other words, a plan that advertises 30% co-insurance expects you to pay 30% of all your medical costs, up to certain limits. That’s often above and beyond the co-payment. Co-insurance could significantly increase your costs if you have a serious health issue. For example, with 30% co-insurance you would have to pay $3,000 of a $10,000 bill, unless your policy has a cap on such expenditures.

Out-of-pocket limits restrict the maximum amount you could pay in co-insurance and deductibles. If you have co-insurance -- and happened to have a major medical issue -- these limits could be pivotal. One Aetna plan, for example, said a family would never have to pay more than $14,000 in covered medical expenses in any given year. Another plan, which had a similar premium, limited annual out-of-pocket expenses to the family deductible amount of $5,250.

Lifetime coverage maximums put a cap on the amount the insurer could be on the hook for if you got cancer or some other chronic and costly ailment that stretched over several years. Most good policies cover at least $1 million and often considerably more. Given that one trip to the hospital could cost $100,000 or more, these limits are too important to dismiss, said Jeff Miles, an employee benefits expert from Marina del Rey.

Limitations and restrictions are the services that your policy doesn’t cover.

Rachael Wheat, a 27-year-old Torrance accountant, became an independent contractor last year and bought a policy for herself and her family.

It had a low premium of just $174 a month, but that was partly because it had a high deductible and partly because certain expensive treatments were specifically excluded. For example, the plan does not pay for maternity care, which Wheat says she doesn’t need.

But other restrictions may not be as simple or clear. Some plans limit payouts to doctors who aren’t in their network, applying not only higher co-insurance amounts but dollar limits on how much care could be covered. You could be on the hook for the rest. Other plans may deny pharmaceutical coverage if you get anything besides generic drugs.

You need to get past the marketing brochures and look at the statement of benefits to figure out what’s not covered, Miles said. That’s because if you get uncovered services, the amount you spend for them does not count for your deductibles or out-of-pocket limits. Naturally, that could have a dramatic effect on your health costs.


Getting the biggest bang for your buck

Before you start to compare policies, pull out your past medical records to see how many prescriptions you fill each year and how many times you go to the doctor or hospital. Create a grid to compare policies side by side so you can clearly see what each will cost you if you use medical care as you have in the past.

Also consider what would happen if you had a really bad health year. A study by the Kaiser Family Foundation noted that it’s common for people to have limited healthcare use for many years, but then have a year or two of extraordinary costs.

How much risk would you shoulder if you had one of those terrible years? To figure that out, look at both your family deductibles and your annual out-of-pocket limits.

Finally, consider what you can afford. Would your finances be devastated if you hit the topmost limits of what you’d be forced to pay for two or three years? If so, you might want to choose a policy with lower annual out-of-pocket maximums.

Before you decide that what you need is a policy that covers everything, realize that the premiums for Cadillac coverage can sometimes be more than you would pay for your care each year in cash.

The trick is insuring only what you can’t afford to risk.

“Use the premiums as a guidepost,” Miles said. “If you look at the low out-of-pocket plans and it’s $1,000 a month, but the high-deductible plan is $400 a month for your family, that leaves you $600 a month to pay medical expenses.

“Is your family consuming more than $7,200 a year of medical expenses? Highly unlikely. You want to get the most bang for your buck, so be practical about what you need to buy.”

But what if you have young children who see the doctor frequently? There are still good options with managed-care plans that waive the deductible for checkups but apply the deductible if you go in when you’re sick.

Another important issue to consider is whether the plan you’re considering restricts the doctors and hospitals that you can use.

If you don’t care about whether you keep your existing doctors, you can choose any plan. But if you’re attached to your current medical providers, you should find out whether their services are covered under the plans you are considering. In some cases, out-of-network doctors are covered at a lower rate. In others, the plan can further restrict payments for these providers by declaring monetary limits on out-of-network care.

Make sure you check with your doctors and the plan provider about any restrictions to coverage if you intend to go out of network for care.


Shop online or with an insurance agent

Now that you know what you want and need, it’s time to start shopping. You can shop with a health insurance agent, shop online or do both.

There is a vast array of websites, but not all of them are particularly helpful. At, for example, you’ll need to give your name, address and phone number, as well as a few other pertinent details about what you’re looking for -- individual or family coverage, for example -- and the ages of the applicants. With that, you’re supposed to get a list of policies that you could apply for.

Instead, however, you’ll get a listing of companies with whom you could apply, but the site says the details will have to be quoted by an agent. Conveniently, only seconds after you hit “send” on your computer, the designated agent is likely to be calling you. If you want to shop without an agent -- at least for a while -- you’ll have to screen your calls.

The shopping is better at, where the same group of questions will result in half a dozen options offered by the likes of Aetna, Anthem and Blue Cross. If you click on the “more details” button on any given policy, you can see the coverage limits and restrictions.

However, that site also appeared to immediately shoot a user’s name and phone number to at least one agent and potentially several more, who then called to get more information and provide advice.

The one website that offered true online shopping was, where at least two dozen policies popped up in answer to our sample request. In addition to a button offering “plan details,” the eHealth site also offered a “find doctor” button for each policy, which would be convenient for anyone who was attached to their current medical providers.


Advice on applying for health coverage

Once you find a policy that meets your needs, either by electronic shopping or by talking to an agent, you need to formally apply for coverage. You’ll need the medical records that you just dragged out to evaluate your needs to fill out the application, which asks for details of your medical history.

Make sure you fill it out completely and accurately, said Kansas Insurance Commissioner Sandy Praeger, who heads the National Assn. of Insurance Commissioners’ managed care committee. Omissions on the application can be used to deny coverage later if you have a recurring ailment that wasn’t previously disclosed.

“It’s really important to answer the questions honestly,” she said. “If you have questions about the terminology on the form, call your physician and ask what it means and whether it’s something you need to report.”

If you get accepted for coverage, you need to do one last thing before writing a check: Make sure your insurance carrier is licensed.

There are no figures on the number of potentially bogus health policies being peddled, but experts believe today’s environment is ripe for a huge upswing in fraud.

The only way to determine that your insurer is legitimate is to call your state department of insurance and ask. Also ask if the company has a history of complaints and regulatory actions, suggested James Quiggle, a spokesman for the Coalition Against Insurance Fraud.

Don’t be fooled just because your agent is licensed, he added. The company must be licensed too.

“The agent is simply an intermediary who sells the product,” Quiggle said. “The fact that the agent is licensed doesn’t mean that the product is real or valid. Agents can be duped into selling fake coverage because they didn’t do their own due diligence or they could have signed on with a wink and a nod because they want the commission.”

Ensuring that your insurer is real can be a life-or-death decision, Quiggle added.

“If you can’t get timely medical care, your life could be on the line,” he said. “And you don’t want to end up having to be bankrupted by paying major medical bills on your own, when you thought they were covered by insurance.”