Health Insurance

What is Health Insurance?

Medical Insurance pays the large expense that can be incurred when you or a family member, see doctors, go to the hospital, or seek other costly medical services. Medical insurance allows you to obtain high quality medical care without severe financial hardship to your family. If you have assets, or intend to have assets, those assets can be largely taken away if you run up large medical/hospital costs. Medical insurance insures your assets and your access to good medical care. Listed below is a brief description of the major types of medical insurance.

Who Needs to Buy Medical Insurance?

If you do not work for a company that provides medical insurance, you should purchase individual medical insurance. Many people assume they will purchase medical insurance later in life, or if and when they become ill. The problem with this approach is that if your health is not good, you might not be approved by the insurance company. Even if approved, you may be subject to pre-existing condition restrictions that will not pay for your previous illness(es). If you have a medical insurance policy, you generally do not have to worry about qualifying in the future, or about preexisting conditions. More importantly, you have coverage in place in the event that you have a medical problem.

If your company is willing to pay most of your medical insurance cost, you should be enrolled in the company’s group medical insurance. If the company does not pay a percentage of your dependents’ cost for coverage, you should compare those costs with the cost of obtaining a private plan. If your dependents are healthy, and your company is not paying a percentage of their medical insurance, you will often find a better price by buying an individual plan for your dependents. Individual insurance can be less expensive because most group insurance plans have to insure everyone, regardless of health, smoking habits, and age. Therefore, one can often insure young, healthy dependents at lower cost by purchasing an individual plan.

Avoid Double Coverage

Generally, you will not need to supplement a good medical insurance plan. Owning more than one policy usually adds unnecessary costs and often does not add any benefit, since the insurance companies coordinate benefits. Coordination of benefits means that if one company pays on a medical claim, the other company often reduces the amount it will pay by that amount. If you currently have a plan that needs supplementing, you should consider replacing the coverage with a more comprehensive plan.

Final Considerations

There is no substitute for a comprehensive medical insurance plan. If you think that you can put a plan together piecemeal by combining several plans, such as a cancer insurance plan, an accident plan, and a hospital plan, you are fooling yourself. You will pay more in premium than you would if you bought one good comprehensive plan. Moreover, you will have several gaps in your coverage and areas of double coverage that may not be double paid since the insurance companies in most cases will coordinate their benefits. Our consultants believe that if you purchase one comprehensive medical insurance plan you will not need other medical insurance coverage.

The one exception to the general rule of no supplemental insurance are Medicare Supplement Plans.