Saving Your Money and Your Health: Part III

I was going to do some serious work, but after a 10-hour day at school, I just can't focus. Maybe I'll get some energy back after procrastinating/resting. May as well procrastinate in a quasi-productive way, namely blogging.

In my corporate law class today, the prof said that one of the first expenses flagging small businesses would cut is insurance: they either downgrade to less coverage (hence smaller premiums) or nix the policy altogether. It is very problematic when an incorporated, uninsured mom-and-pop joint is negligent and hurts a customer. If the corporation is in such bad shape that it's judgement-proof, the victim is out of luck; the business owners's/shareholders' assets are safe. The story is quite different for individuals. A lot of people skip health insurance when they are short on money, but in doing so, they are exposing themselves to much greater risks. Individuals, unlike corporations, don't have the benefit of limited liability short of bankruptcy. We'd like to think that we're healthy, and that it's unlikely for anything to happen to us. But what if something does happen? The consequences can be dire. You might be saving hundreds, or even a couple thousands, a year, but you're playing chicken with *hundreds* of *thousands* of potential medical expenses. Your state might foot the bill for indigents, but you're in trouble if you don't qualify.

I'd like to think I live a fairly healthy lifestyle--I eat balanced meals, I'm fairly active, hardly ever get sick, had no need to go to the doctor for years. All of a sudden, I was involved in a freak accident. "It'll never happen to me" just happened. Even with a pretty good insurance policy, with most of the costs footed by my former employer, I had to shell out quite a bit of money. This happened a couple of years ago, and from then on, insurance coverage was high on my list of priorities. When I was about to go back to school, I decided to quit my job at the beginning of August instead of the end of July just so I could eek out another month of coverage. That bought me some time to shop for insurance, since my school's catastrophic insurance policy was expensive and useless.

Shopping for insurance is tedious, but it has to be done and done soon. Get new insurance within 63 days after your old policy lapses. Otherwise, if you have a preexisting condition, insurance companies would make you wait 6 months before they'll start paying for costs incurred by that condition. Also, even if you're healthy, the underwriting process is a lot longer if you do nothing until Day 64. However, don't rush to get insured without doing your homework. First, think about your needs. Are you generally healthy, or do you need to go to the doctor often, or do you need medication regularly? Do you engage in dangerous sports/other activities? How much can you afford to pay each month? Once you figure that out, make a list of major insurance companies, then visit each company's website for plans and rates. Knowing exactly what each plan covers, and how much, is crucial. Read the short overviews first to narrow down the plans you want. Since I'm all about being cheap, price is the first thing I look at when I slim down the list. It's important to read the rate tables carefully, since premiums cost more in in certain geographic regions. However, be flexible with your minimum price (more on this coming up).

After you get information about plans that you like, it's time for another elimination round. Price isn't everything--even if you get a cheap plan, it won't do you any good if it doesn't suit you. See if the cheapest package gives you enough coverage, then think about what you're willing to trade off or pay more for--is it worth paying $20 extra a month if you can get prescription drugs on a $10 copay, or would you rather save your money (because you hardly get sick) and risk paying a lot for meds? Could you afford to pay $30 more a month so that your deductible goes down by $1000? Would you rather have lousy drug coverage but better professional services discounts? Once you've gotten the list of candidates down to 2-4, read the fine print for each policy. When you're sick or hurt, you're not just paying the doctor--there are lab tests, physical therapy, and obviously, prescription drugs, and it'll be nice if those things are at least partly covered.

Generally, prices are directly proportional to the amount of coverage, but just because a plan is more expensive doesn't mean it's the best for you (see the trade-off discussion above). Comprehensive HMO's are going to be expensive, so it's out of reach for most people. Cheaper (but not the cheapest) plans tend to be PPO's with really high deductibles; when deciding how cheap you want to go, one thing you might want to think about is how much is in your savings account at any given moment, in case you need to fulfill the deductible in a single moment. Personally, I'd rather pay a little more just so that I won't get slammed with too huge a deductible. If you can afford to pay the extra $10 (or however many dollars) to bring down the deductible to a manageable level, then I would recommend doing that. High deductible plans, in my opinion, are much better than the cheapest bare-bones catastrophic plans. For an extra $20 or so per month, you get at least a small discount for office visits even before hitting the deductible, and most likely some drug coverage. Catastrophic plans are for disasters, which are rare to begin with, so I feel like I'm not getting my money's worth; I'd be paying a whole lot of money without getting any discounts for occassional doctor's visit, which is more likely to occur.

Unfortunately, health insurance is inherently expensive and it's hard to get discounts on your own. If you're a student, the first place to turn to is your school (but then again, the one offered through my school really sucks, so it might not be the best option). If you're not a student but you're in certain organizations (such as alumni associations), ask whether group insurance plans are available. They might not be the best, but collective bargaing probably works better than prices you get when you're on your own.

Finally, I'll end with a note on billing. When you're billed more than you think you should, don't just take it--ask for an explanation. Your doctor's office or insurance companies may make mistakes, so that's why it's important to know the fine print of your insurance coverage. Recently I got overcharged simply because the medical group screwed up with a very simple thing. I knew my bill couldn't have been right because the dollar amount was so high. My insurance company was of no help--the rep gave me an explanation for the charge, but I was directed to call the medical group to fix it. The medical group's billing rep told me that my insurance company's rep didn't know what she was talking about. If I had just accepted her explanation, I'd be stuck, frustrated, and might even go along with paying more than I should. Instead, I decided to fight. I was literally arguing with billing rep before she checked my records throughly and acknowledged that I was right (clearly, she didn't do a good job of it when she first started talking to me). If you know your plan inside and out, it'll be easier for you to explain your situation, and argue if necessary. Also, keep tabs of these mistakes. Chances are, the same screwups will happen again, so it'll save you time if you can tell them how they screwed up and how they can fix it.

Oops...I thought this would be short, but clearly I'm wrong. That's why I'm not in the psychic business.