Group and Private Insurance

1. Myth: Group insurance costs less than private health insurance
2. Myth: COBRA costs less than buying health insurance on your own
3. Myth: You can wait until you are pregnant to get maternity insurance
4. Myth: Insurance companies make obscene profits
5. Myth: You can’t be turned down for insurance if you’re currently insured
6. Myth: A high deductible plan is a waste of money
7. Myth: All health insurance policies cost about the same
8. Myth: Any pre-existing condition will keep you from getting health insurance

Myth: Group insurance costs less than private health insurance

Individual or private medical insurance plans almost always cost less than group insurance in Connecticut. This may or may not be true in your state. However, in Connecticut, when a a company offers group health insurance they cannot refuse to cover someone based on their health status. This is not true for individual and family plans. This means that more claims are filed on group insurance plans. This makes the prices higher.

Myth: COBRA costs less than buying health insurance on your own

COBRA merely gives you the right to continue your group insurance. For the reasons outlined above, COBRA health insurance rarely costs less than a health insurance plan you can buy on your own.

Myth: You can wait until you are pregnant to get maternity insurance

Health insurance companies are set up to accept risks, not to accept near certainties. A woman who is pregnant is not likely to pay more in premiums than she is to receive in benefits. Insuring a woman who is currently pregnant is a money loser for the insurance company. None of the private health insurance plans offered in my state will accept a woman who is pregnant. Be sure that you have an insurance plan that covers pregnancy in place before you conceive.

If you want to conceive while covered by COBRA. There are two things that you should be aware of. First if your due date is after your COBRA expires, you may get stuck with a big hospital bill. Second, your baby may not be eligible for insurance for very long after he or she is born. If your baby has a significant medical condition you may not be able to find coverage for him or her after your COBRA runs out. Purchasing a family health insurance policy that covers maternity expenses or waiting until you have another job that offers you health and maternity insurance will probably put you in a better situation.

Myth: Insurance companies make obscene profits

This is only half a myth. Big insurance companies do make tremendous sums of money. However, they don’t make a lot on each policy. In fact, if you took the insurance companies’ profits away and reduced the cost of health insurance premiums by that amount people would barely notice. A good health insurance company will pay about 80 percent of the money it receives in premiums to cover their policy holder’s claims. When you take the other expenses into consideration, health insurance companies profits are typically well under 10 percent.

Myth: You can’t be turned down for insurance if you’re currently insured

This is not true in every state, but in most states health insurance companies will ask medical questions and use other methods to determine your health status. If they feel that you are likely to cost them too much in claims, they are unlikely to insure you. You may qualify for a state sponsored program, but these plans are likely to be very expensive. Most people in Connecticut are unwilling or unable to pay the premiums for the state’s high risk pool.

Myth: A high deductible plan is a waste of money

Health insurance policies with high deductibles will typically cost much less than a similar plan that has a low deductible. If you take the difference in the premium into consideration, you will probably come out ahead by buying the higher deductible plan. If you invest the money that you save when you buy a lower cost health insurance policy and only take from those investments when you have an uncovered medical expense you will probably have a good sum in your account when you decide to retire. You can in effect be your own insurance company for the small stuff.

Of course, you don’t want to be your own insurance company for the big stuff. Decide how much risk you can comfortably take on yourself and take a long look at heath savings account compatible high deductible health insurance plans. These plans work well for a lot of people.

Myth: All health insurance policies cost about the same

Medical insurance plans have wide variances in regards to price and quality. In fact, in many instances some of the worst companies have the highest prices. It pays to work with an agent who works with several companies. His or her opinions are likely to be less biased and you may be directed to a high quality plan that has a reasonable premium.

Myth: Any pre-existing condition will keep you from getting health insurance

I often have clients who think that their asthma, high blood pressure or high cholesterol will keep them from getting coverage. Sometimes one of these conditions will be severe and prevent a client from getting coverage but not in most cases. In fact, many people who have cancer in their medical history can be approved, if enough time has passed since their last symptom or positive test result. It pays to have a frank talk with your agent before deciding that your preexisting health issue will prevent you from qualifying for coverage.