Questions to Ask Before Buying Health Insurance

Before anything else: what type of coverage is this?

"Health insurance" covers several different product types that behave nothing alike. Establish which one you are being shown before you discuss price. If this question is not answered plainly, nothing else on the page is worth doing.

• Is this ACA-compliant major medical, or is it something else? There is no shame in the answer being no — but it has to be said out loud.
• If it is not ACA-compliant, what is it exactly? Medically underwritten major medical style coverage, fixed indemnity, ERISA or association coverage, short-term medical, membership-style guaranteed-issue coverage, and supplemental plans are all different products with different rules.
• Is this one policy or two? Some designs pair a day-to-day plan with a separate catastrophic layer. That is a legitimate structure, but you should know you are buying two things and see both documents.
• Is it a supplement to other coverage, or is it meant to be your only plan? A gap plan or an accident plan is not a replacement for major medical.
• Who is the carrier, and what is the exact plan name? Not the marketing name — the name that will appear on the policy.

Questions about the network and your doctors

A plan is only as good as the providers who take it. Never accept "most doctors take it" as an answer.

• What is the network name? Ours include PHCS PPO, PHCS Extended, MultiPlan PHCS, First Health PPO, Aetna PPO, Aetna Open Choice PPO, Cigna PPO and Blue Cross Blue Shield (BlueCard). You want the specific name, because you will search it.
• Is it a PPO or an EPO? An EPO generally pays nothing out of network except in an emergency. See PPO vs HMO and private PPO vs ACA networks.
• Are my doctors in this specific plan's directory? Check them by name, in the directory for that plan, before you apply. A network can be national and still not include your cardiologist.
• Which hospitals in my area participate?
• What happens out of network — a reduced benefit, or nothing?
• How are emergencies handled if I am travelling?

Where to find it: the network name is on the schedule of benefits and the ID card; in-network versus out-of-network payment levels are in the schedule of benefits; "emergency" is defined in the definitions section.

Questions about what the plan actually pays

This is the section people skip and later regret. You are looking for the shape of the benefit, not just the deductible number.

• What is the deductible, and does each family member have their own?
• What is the coinsurance after the deductible, and what is my out-of-pocket maximum?
• Is there an annual or lifetime maximum on what the plan pays? ACA major medical does not impose annual or lifetime dollar limits on essential health benefits. Many other products do. Get the number.
• Are benefits paid as a percentage of the bill, or as a fixed dollar amount per service? Fixed-dollar indemnity benefits pay a set amount whatever the bill says — which is why they are usually paired with a catastrophic layer.
• Are there per-service or per-day caps? For example, a specified-disease catastrophic layer we use pays up to $1,000,000 per person per year after a $5,000 deductible; that is the kind of specificity you should be able to get for any plan.
• How are outpatient surgery, imaging, labs and mental health treated?
• Is maternity covered? On underwritten plans it often is not, or only on certain levels. Ask before you need the answer.

Where to find it: the schedule of benefits, sometimes called the benefit summary or outline of coverage. It is the single most important page in the document.

Questions about exclusions and waiting periods

The exclusions and limitations section is where a plan tells you the truth. Read it before the brochure.

• What is excluded outright?
• Is there a pre-existing condition limitation, and how long does it run? Some non-ACA products apply a lookback period and will not pay for conditions traceable to before the effective date.
• Are there waiting periods for maternity, surgery, or specific procedures?
• If my application is approved with an exclusion rider, what exactly does that rider exclude, in writing? A rider naming a condition is very different from one naming an entire body system.
• How does the carrier define a pre-existing condition? Definitions vary and they decide claims.

Where to find it: "Exclusions and Limitations" for the list, "Definitions" for the words that decide it, and any rider attached to your approval letter.

Questions about prescriptions

If you take a regular medication, this can matter more than the premium. It is also the question most likely to be answered vaguely.

• Is there a formulary, and can I see it? Ask for the document, then look up your own drugs by name.
• What tier are my medications on, and what is my cost at each tier?
• Is there a separate prescription deductible or an annual cap on drug benefits?
• Are specialty and brand-name drugs covered, or is the benefit generic-heavy?
• Is the pharmacy benefit part of the plan, or a discount card? A discount card is not insurance.

Where to find it: the prescription section of the schedule of benefits, plus the carrier's formulary, which is usually a separate document. See prescription coverage.

Questions about what happens if your health changes

You are buying the future version of this plan, not today's. Underwritten coverage in particular deserves these questions up front.

• Can the carrier cancel or non-renew me because I got sick?
• Is renewal guaranteed as long as I pay, and on what terms?
• Can my individual rate go up because of a claim, or only across the whole block?
• If I need to change plans later, will I have to answer health questions again? On underwritten coverage the usual answer is yes, which is a reason not to treat coverage as something you drop and pick up.
• What are my options if I am declined? Guaranteed-issue coverage exists — Enrollment First SelectMed Bronze Pro accepts everyone — but it is membership-style coverage with narrower benefits, not ACA-compliant major medical.

Questions about total annual cost

Compare plans on what a realistic year costs you, not on the premium alone. Work the arithmetic yourself before anyone quotes you.

• One honest note on the comparison. If your household qualifies for a large premium tax credit or a cost-sharing reduction on the exchange, that subsidy is very hard to beat and the exchange is likely your better deal. Private coverage tends to win for households that get little or no subsidy. Real premiums for two of our plans are published on private health insurance cost.

1. Multiply the monthly premium by 12. If the design has two layers, add both premiums.
2. Add the deductible you would realistically hit in a normal year.
3. Add expected copays and coinsurance for the visits, labs and prescriptions you actually use.
4. Add anything the plan does not cover that you know you will need — dental, vision, a drug that is not on the formulary.
5. Now compare that total against the same total for the exchange plan you qualify for, after any subsidy.
6. Ask what the plan would cost you in a bad year: the out-of-pocket maximum, plus any amount above an annual benefit cap.

Questions to ask the agent, and the red flags

The way a question is answered tells you as much as the answer. These are red flags in our own industry, and naming them is the point of this page.

• Pressure to decide today. Underwritten private coverage generally has no annual enrollment window, so there is rarely a real deadline. Manufactured urgency is a warning, not a service. See when you can apply.
• Refusal to put the carrier and plan name in writing before you apply.
• Vagueness about whether it is major medical. If you ask twice and still do not have a plain yes or no, stop.
• No brochure, no schedule of benefits, no formulary — or documents only after you give contact details.
• "It covers everything." No plan does.
• Being asked for payment before you have seen a written approval and effective date.
• Being told to cancel your current plan immediately. Never cancel until the new policy is approved and effective.
• Guaranteed savings claims, or a quoted price that never mentions underwriting.

Fair questions to ask about the agent

Are you licensed in my state, and what is your license number? Which carriers can you actually offer, and which ones can you not? Are you paid a commission by the carrier? Will you tell me if the exchange is a better fit for me? Any agent worth using answers all four without flinching.

Documents to read before you sign

The carrier brochure, the schedule of benefits, the exclusions and limitations section, the definitions, the formulary if you take medication, and the completed application itself — check that your health answers were recorded accurately, because a mistake there can void a claim later.