Buy individual health insurance early?

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Should one buy individual health insurance even if one has access to group insurance through employment?

Yes, buying individual insurance early provides a safety net
5
24%
Yes, buying individual insurance early provides a safety net
5
24%
No, too expensive
11
52%
 
Total votes: 21

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frose2
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Buy individual health insurance early?

Post by frose2 » Wed Jul 04, 2007 3:57 pm

An idea which is floating around is buying individual health insurance early, say by age 45, even though one has employer provided group insurance. The rationale would be that if one is subsequently laid off/downsized or simply wishes to retire early, one might not be able to qualify for individual insurance at that time. I am wondering what the Diehards think of this idea.

dbr
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Post by dbr » Wed Jul 04, 2007 4:09 pm

One thing that will happen is that both insurances will ask you if you have other coverage and the terms of coverage in both cases may be affected. I would think you could create a perfect scenario for both companies to deny payment claiming the other is primary. I suggest consulting an insurance expert (not salesman) before doing this.

A movie everyone needs to see is SICKO by Michael Moore. This is an interesting documentary about the health care system and not a slasher movie. You can agree or disagree with the message. Don't assume that just because you bought a private plan at age 45 that that coverage will not be cancelled if something happens to you later. I think provisions in law make this harder to do for group coverage.

As an aside even spouses having alternative plans available but not elected at their place of employment may have different terms of coverage (such as higher deductable) on their spouses plan.

Quinton
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SICKO

Post by Quinton » Wed Jul 04, 2007 4:27 pm

I just saw SICKO, and came away thinking about the same thing i.e. supplemental medical insurance in addition to my employers insurance.

I highly recommend the movie SICKO. It will evoke emotion. Sad, funny, angry. I left the movie thinking; "I can't believe this stuff is legal". "I can't believe we allow this".

Quinton

dcd
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Post by dcd » Wed Jul 04, 2007 4:29 pm

I've recently come to the awareness that this applies to me with respect to my 14 year old daughter. I retired 3 years ago and continue to carry the family group coverage with my former empoyer. I will be switching to medicare in three years at which time I can carry a medicare supplement plan with my former employer that covers me and my wife but not my daughter. If my daughter were to become uninsurable during the next three years it looks like I would have a problem when she is no longer covered by my current policy. As a result, I am in the process of placing her on her own indivudual policy which will begin August 1(and dropping her from my current policy). Turns out the premium will be lower as well.
Denny

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dm200
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Don't think so ...

Post by dm200 » Wed Jul 04, 2007 4:30 pm

Most (not all) employer based health insurance has some continuation provions. So, it seems to me the key is to understand what rights you may have, make choices (if you have any) while employed to maximize later choices, and keep track of everything.

Most employers offer COBRA if you leave the employer, and it is almost always the best option. Most employees are HIPPA eligible and you can get guaranteed insurance (at a higher cost) without a pre-existing condition exclusion. My former employer had employee coverage cancelled for non-payment of premiums, and I scrambled and got individual HIPPA coverage. I would almost certainly not have been eligible for underwritten coverage.

Some states (not mine) have provisions for being guaranteed coverage individually.

dan

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magellan
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Re: Buy individual health insurance early

Post by magellan » Wed Jul 04, 2007 5:39 pm

Frose2,

Your idea is worth considering, but there are a ton of variables and some decent risks as well. Rather than try to give you advice, I'll go through what my experience was in the hopes it will help. DW and I retired in our 40s and now do mostly volunteer work. We have no dependents and considered ourselves in excellent overall health (nonsmokers, good blood numbers, good weight, everything working).

Online price quotes indicated we could get an HSA policy that covered both of us with a $5k annual deductible and a $10k annual out of pocket max (worst case) for around $250-$300 per month. I applied for policies at 3 companies 8 weeks before my Cobra ended. Without going too far into details, one or the other of us was rejected by Assurant for what we thought were minor things in our histories. Blue Cross would only give us the standard rate. The rating was for things like a foot injury from running (all healed), removal of a suspicious mole, and some other stuff along those lines. Celtic still hadn't decided on us 6 or 7 weeks into the process.

We ended up doing 2 individual Blue Cross HSA policies that each had a $5,000 deductible. With the standard rating, they cost $250 per month each ($500 total). The good thing about the Blue Cross HSA is that it covers a physical per year, pap test, and mamogram. All and all it was around 66% more expensive than the quote we got from BCBS before we applied.

Some takeaways:

1) If you have much of anything in your medical history more serious than the flu or a few stitches or you're taking prescription medication other than thyroid pills, it's pretty likely you'll end up with the standard rate or worse.
2) If I had applied around 4 years earlier (in late 30s), it would have been before all of the things that caused the rating for us saving us $2400 per year (indefinitely).
3) The standard rate that we're paying is just a few dollars less than the rate for the high-risk pool rate in our state (which is subsidized). In other words, it really couldn't have gotten much worse (in my state).
4) Although I used COBRA, it wasn't a great value at $989 per month. Granted, that included dental and lower deductibles, but with hindsight, it would have been better to get the individual policies earlier and not use Cobra.

One final thought. A friend did his application through a local agent and I wish I had done the same. His agent negotiated with Assurant to get a rejection reversed with a few precondition clauses/waiting periods. I tried doing the same and they wouldn't do it for me.

Anyhow, I hope this is helpful...

Jim

HearDoc
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Post by HearDoc » Wed Jul 04, 2007 6:28 pm

Sicko might be many things but it is NOT a documentary. Good for the debate on health insurance, but having lived in a few countries where national health service is the norm, I'd rather deal with a tweaked system here.
By the way did you see that Cuba's (lauded by Mr. Moore) national health was twenty points or so below the US ? So much for fact. Hey I got some active managed funds with only a 3% load and ER of 1.23 .... much better than do it yourself index funds...........

disclaimer (I'm a health care provider, working for the government.. I have no financial interest in private or public healthcare plans)

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Quasimodo
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Post by Quasimodo » Thu Jul 05, 2007 4:34 pm

You'd have to really be careful to ascertain the companies wouldn't react punitively when they learned of the other insurance because they suspected you of trying to scam them so you could make money by using medical services. Finding this out in advance would be very difficult, I imagine. Just asking the question would evoke scowls of skepticism from agents and companies.

If you could get an individual policy that would pay for expenses charged just about anywhere so you weren't restricted to "in network" choices, as you are in HMOs, that would be optimal. (Our son was covered on my health insurance, but we had to go out of network to find a doctor who could successfully treat his chronic head pain, so we had to pay out-of-pocket for the treatment in addition to the substantial premiums we paid for his "coverage.")

Then there's the premium. How wealthy would you have to be to buy two health insurance policies, when even one policy is hard to afford, even if you were convinced you needed insurance against losing your insurance?

I think an inefficiency in the present system is that a big part of the health insurance premium dollar goes for insurance company claims staff whose job it is to justify requiring someone else to pay for the medical care.

Personally I don't think it is realistic to try to buy an extra health care insurance policy as a back up to your group insurance in case you lose your job. There are too many tricky coverage issues with coordination of benefits, acceptable health care providers and whether coverage will apply in another state you decide to move to, to make it practical even if you could afford the double premium.


John
Many wealthy people are little more than janitors of their possessions. | | Frank Lloyd Wright, architect (1867-1959)

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tc101
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Post by tc101 » Thu Jul 05, 2007 4:46 pm

Get a high deductible policy in your 40's just in case. It won't cost you much. If you are between jobs it might save you paying for cobra, which can be expensive.

I only had minor health issues while working, but I only used my work insurance, even though I had the high deductible as back up. When they asked if any other insurance covered me I just checked no. If they had called me on that I would have said I thought it didn't cover me because of the higher deductible.

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docneil88
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The Individual Health Insurance Game

Post by docneil88 » Thu Jul 05, 2007 11:34 pm

The Individual Health Insurance Game
frose2 wrote:An idea which is floating around is buying individual health insurance early, say by age 45, even though one has employer provided group insurance.
Besides the risk of each insurance company claiming the other is primary, there is another problem.

My experience with two individual health insurers (Trustmark & Assurant) over about 12 years is that the initial premium is reasonable, then, a few years later they discontinue selling your particular plan to new customers (even though they continue to service your policy and continue to offer very similar plans to new customers). Those who exit the original plan tend to be more healthy than those who exit, since the healthier ones are more mobile and likelier to get a job and replace their individual coverage with group coverage. Also, it's harder and more costly for the less healthy ones to get new individual insurance. Now, the yearly premium for any particular plan changes based on the claims records of all those with that exact plan. So, eventually you're looking at premiums for your plan that are significantly higher than the cost of very similar plans that are currently being offered. That causes more defections by the healthy people from your plan, and the rate rises so far that the differential vs. the rate for a new policy with no pre-existing conditions becomes enormous and ridiculous. (Luckily I've been relatively healthy, so I've been a defector...once I figured out what was going on.)

I think the insurers intentionally developed this system to get around regulations that prevent them from dropping coverage or raising the rate of a particular person just because that particular person is suddenly hit with a costly health problem. Sicko indeed. :twisted: Has anyone had a similar experience with individual health insurance? Has anyone seen this insurance company strategy exposed in the media? (I have not.) Thanks in advance for any responses. Best, Neil

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RiskAverse
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Post by RiskAverse » Fri Jul 06, 2007 5:14 am

HearDoc wrote:Sicko might be many things but it is NOT a documentary. Good for the debate on health insurance, but having lived in a few countries where national health service is the norm, I'd rather deal with a tweaked system here.
It's a Michael Moore film, and so its made for the purpose of promoting MM's viewpoint and not objectively documenting its subject. Like any Film, every single thing you see is chosen by the director.

So MM includes various cock-ups from the US health system while contrasting that with the glowing sucess of nationalised healthcare systems.

It would be very possible to produce the same film in reverse, showing happy people with private healthcare in the US, and unhappy people in UK/CAN dieing in overcrowded waiting rooms.

You did not see long lines of people waiting in British/Canadian health systems, nor the effects of health rationing, nor the lower average quality of healthcare, nor the heavy cost to both governments to subsidise the whole system.

Plus the US subsidises the whole world when it comes to drug/medical device development. That's a big part of what keeps health care costs lower in RoW.

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RiskAverse
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Post by RiskAverse » Fri Jul 06, 2007 5:26 am

Quasimodo wrote: I think an inefficiency in the present system is that a big part of the health insurance premium dollar goes for insurance company claims staff whose job it is to justify requiring someone else to pay for the medical care.
That's because of the Huge agency cost conflict between the Insurco, health provider and Assured.

E.g The Assured wants to consume as much healthcare as possible (given the fixed cost to him)

The Provider wants to bill as much as possible for the healthcare

The Insurco wants an underwriting profit.

---------
Owing to problems of $10 asprins etc, the insurco's are very senstive to cost inflation.

Also, I think people forget how much of healthcare is like a call option. E.g recently my father went to the emergency room when he got an attack of Bell's Palsy.

There is whole lot of equipment that is kept on hand (MRI machines, neurosurgury equipment, neurosurgeon, radiologist, blood products, trauma surgeon/nurse) but usually insn't needed. So its cost gets ammortised over the client base.

This is one reason you see more outpatient clinics/imaging centers, because of the alignment of assets/fixed costs and client base.

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Post by Valuethinker » Fri Jul 06, 2007 8:26 am

RiskAverse wrote:
HearDoc wrote:Sicko might be many things but it is NOT a documentary. Good for the debate on health insurance, but having lived in a few countries where national health service is the norm, I'd rather deal with a tweaked system here.
It's a Michael Moore film, and so its made for the purpose of promoting MM's viewpoint and not objectively documenting its subject. Like any Film, every single thing you see is chosen by the director.

So MM includes various cock-ups from the US health system while contrasting that with the glowing sucess of nationalised healthcare systems.
I don't disagree with the viewpoint of MM as a polemicist, but it is certainly the case that no country with a national healthcare system is seeking to duplicate the American one.

I should add that I never expect to see the US go to a *single provider* system. These are quite rare: primarily the UK, Sweden and Canada. And even Canada doesn't really count.

What the US will do is go to a *single payer* system, as has every other developed country.

The US private employer health insurance system is an anachronism, brought about originally by WWII and the need to attract workers, and then a political gridlock with the trade unions.

It would be very possible to produce the same film in reverse, showing happy people with private healthcare in the US, and unhappy people in UK/CAN dieing in overcrowded waiting rooms.
But empirically you cannot show that is true. Both countries have superior health outcomes to the US (infant mortality, life expectancy). A study of middle aged Brits showed them to be in much better shape than a similar group of middle aged Americans (the difference was not healthy lifestyle choices-- you'd be hard pressed to find a western country that eats worse, exercises less or drinks more than the Brits). A study of waiting times in Canada showed that for critical operations, it was not higher than the US. UK was much worse, but has caught up.

As I said, no one is rushing to emulate the US model.

The reality is the spends 15% of GDP on healthcare, v. 10% for Canada, France, Germany and a bit less for the UK (about 9% I think). It also has a higher GDP per capita.

The net result is the US spends *twice as much* per person on healthcare as one of those countries. Yet you can't show it gets better healthcare results *and* 20% of Americans have no health insurance.

So if you took the US healthcare spend, on the Canadian system, you would have universal coverage, and a system comparable in what it did to the American system.

The big source of cost in the US is administration. About 4 times as much as Canada, proportionately (4% of GDP v. 1%). *that* is a huge cost to pay for playing 'pass the parcel' on health cost and risk.
You did not see long lines of people waiting in British/Canadian health systems, nor the effects of health rationing, nor the lower average quality of healthcare, nor the heavy cost to both governments to subsidise the whole system.
See above re queues. Actually US *government* healthcare spending is more or less the *total* cost of the Canadian system.
Plus the US subsidises the whole world when it comes to drug/medical device development. That's a big part of what keeps health care costs lower in RoW.
When I used to cover the pharma industry, drugs were only 10% of healthcare costs. Equipment much less.

So can you quantify this 'subsidy'?

Remember that:
- US private insurers don't pay drug costs out of whack with what the Canadian hospital system pays -- it's US private individuals and US government agencies (which are prohibited by law from driving prices down) which do

- some of that subsidy would take place anyways. The US is the world's largest market so therefore economies of scale exist.

Of course, in European markets, companies don't have huge drug advertising budgets. In the US, that marketing is to create 'demand pull' for drugs, but in Europe, the medical agencies design on the appropriateness of treatment methodologies.

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Post by Valuethinker » Fri Jul 06, 2007 8:35 am

HearDoc wrote:Sicko might be many things but it is NOT a documentary. Good for the debate on health insurance, but having lived in a few countries where national health service is the norm, I'd rather deal with a tweaked system here.
And yet none of us are anxious to emulate your system. Too many horror stories, from friends on vacation, from American colleagues, from those of us with family in the US.

FWIW the Canadian system has seen my parents and relations through some major illnesses including open heart surgery, and I have no complaints. Ditto the UK system.

There's also an ethical question here. Is it right to deny healthcare coverage to 20%+ of your citizens, and in particular to *children* given one is a rich enough country to do something about it? Even if the benefit is that some other people might have superior healthcare?

ie should your access to healthcare be determined by the cocktail of factors (genetic, inherited wealth, effort) that determines success in other parts of life? Does Paris Hilton have a greater right to healthcare than some ghetto kid? Do 20% of Americans not have healthcare entirely because they are feckless and lazy?

Like all ethical questions, your answer is entirely dependent on your ethics. But it's a question the rest of the developed world has asked itself, and come to a different conclusion than the USA.
By the way did you see that Cuba's (lauded by Mr. Moore) national health was twenty points or so below the US ?
You know that, though, begs the question. Cuba is a very poor country, kept there in part (maybe in large part) by an active US Embargo and policy of encircling the country.

For a country which is so poor, Cuba has a very good healthcare record.

Where Moore elides, is that it's widely known (and my family can attest to) that the quality of healthcare in Cuba is truly excellent *if* you can pay in US dollars.
So much for fact. Hey I got some active managed funds with only a 3% load and ER of 1.23 .... much better than do it yourself index funds.........
Argument by false analogy :?

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frose2
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Thanks

Post by frose2 » Sat Jul 07, 2007 7:09 pm

Thanks to those who responded here. The possibiity of the kind of policy changes advocated by Michael Moore actually being attempted is just one more uncertainty here.

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