2014 marks the biggest change in health insurance since Medicare. For the first time ever, health insurance is mandatory for most Americans under age 65. The biggest change is that those people with pre-existing medical conditions will now be able to buy quality health insurance without fear of being declined, or facing a surcharge or a waiting period for pre-existing conditions that won't be covered.
The second biggest change is that those who earn less than 400% of the federal poverty level -- $45,000 for individuals or $95,000 for families of four -- will now be able to qualify for premium discounts on health insurance costs. The requirement to qualify for the discount is that insurance must be purchased on one of the new health insurance exchanges, aka marketplaces.
1. Work with a knowledgeable health insurance agent.
Eliminate about 80% of the difficulties of buying insurance online. A good agent can help you navigate the exchange site, help you determine whether you qualify for a discount and, if you do qualify, help you choose from among the various plan options and even help you enroll. They will be able to answer your questions as they come up. Best of all, having an agent help you doesn't cost a dime extra.
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2. Don't buy insurance on an exchange if you don't qualify for a discount.
Insurance companies that participate in the exchange in most cases offer many more options for qualified health insurance beyond what they make available on the exchange. You can go to individual insurance company websites to see what each company has available. Or, you can have your agent do that for you (see Tip 1).
3. Work with an insurance agent to plan health coverage for your family if dependents aren't covered adequately by your employer plan.
If you have dependents covered under your group health insurance plan at work, unless the employer is paying for some of the cost, work with an insurance agent who will help you determine if you can get better coverage for less money on your spouse and/or children. Chances are if you have employer paid group insurance on yourself, you won't be eligible for an individual plan. But that doesn't preclude your spouse and children from having one, especially if the employer doesn't contribute anything toward dependent coverage costs.
4. Before choosing a health plan, be sure the doctors are "in network" and you can see specialists without a referral.
Less costly plans often don't let you see specialists without a referral from your primary care doctor.
When you are considering plans, don't just choose the cheapest. Pay attention to who is and is not in network. About 90% of the time, it probably won't make a difference. But, that 10% can be a life-and-death situation.
In Minnesota where I'm from, the gold standard of choice is the Mayo Clinic. I won't pick a plan myself or recommend a plan that doesn't include the right to go there without begging for a referral.
5. Hire an expert insurance agent or consultant to audit your insurance program.
Look for someone to make sure that all the major risks in your life are well-protected for risks such as major lawsuits, major damage to or destruction of your residence, premature death, long-term disability and, of course, major medical expenses.
An expert can help you identify where the gaps are and recommend custom endorsements to plug those gaps. I have done several hundred audits over the years and typically find at least 15 to 20 coverage shortfalls or inconsistencies.
6. Protect your income with long-term disability insurance.
Some employers provide it. However, benefits that you receive while disabled usually are taxable income. So, if the benefit is 60% of your salary, you will be lucky to yield 45% after taxes.
Unless you can live on that 45%, contact your employer. Request that the company include the premiums it pays you for long-term disability insurance in your taxable income. By doing this, you will have paid income taxes on the relatively small premiums so that if you become disabled, you can collect those benefits tax-free.
If your employer can't or won't do that for you, buy a supplemental individual policy that will cover at least the income taxes that you will have to pay on your group benefits.
If you don't have coverage at work, talk to a knowledgeable agent to help you qualify for and buy a privately owned long-term disability insurance policy. Because you're buying this policy with after-tax dollars, benefits will always be tax-free to you!
7. Buy an umbrella liability policy to cover insurance gaps in your primary policies.
All umbrella car or homeowners insurance policies cover lawsuits. Typically, these policies will provide a base layer of coverage, usually $300,000 or $500,000 per claim. Then, if you're sued for more than those limits, an umbrella policy will pay excess amounts up to the umbrella limit of $1 million or more.
The real advantage of an umbrella policy is that it will defend and pay some judgments against you from personal lawsuits not covered by your primary auto or homeowners policies.
Never worry about the price of an umbrella policy. Instead, focus on whether it is broad enough to cover those uncovered risks in your life not covered by auto or homeowners insurance.
Here are just a few examples of lawsuits not covered by auto or homeowners insurance that can be covered by the right umbrella policy:
- Damage to rental cars in the U.S. or abroad.
- Injuries you cause to a water skier while renting a powerboat on vacation.
- Liability that you agreed to in a contract such as a wedding reception contract, making you responsible for all injuries and/or property damage caused by wedding guests.
- Injuries you cause to a co-worker while driving a company-furnished car.
8. For a townhouse or condo unit, be sure you get the "deductible assessment coverage."
The rates for condominium master policies have been on the rise. To keep the premiums affordable, many associations have opted for higher deductibles of $5,000, $10,000 or even $25,000. Not only does that keep the premiums affordable, it also minimizes the number of claims made against the master policy, which helps keep the rates low.
Here's the problem: If the loss is caused by you from, say, a kitchen fire or dishwasher overflow, or is confined to your unit, most associations will require you to pay the deductible on the master policy.
"No problem," you say proudly. "I have loss-assessment coverage on my homeowners unit-owner policy." Virtually all laws on assessment coverage limit deductible assessments to $1,000. If that wasn't enough bad news, it also requires that the assessment be against all unit owners.
The bottom line is that you will need to get a relatively new coverage -- separate coverage -- called "deductible assessment" coverage. Find out what your association master policy deductible is and buy deductible assessment coverage for that amount from your insurance agent.
9. If your home is for sale, watch out for vacancy exclusions.
With the housing market in the dumpster the past few years, this common problem has arisen. A couple buy a new home before their existing home sells. They move into the new house, leaving the old house empty. Three months later, vandals break into the old home, have a wild party and completely trash the place, causing $50,000 in damage, and the owner has no coverage.
Homeowners policies exclude glass breakage and vandalism damage if the house has been vacant, that is without enough furniture to be lived in, for 60 days or more. There are high-risk policies you can buy to cover a vacant house, but the coverage is watered down and the premiums are three to four times greater than what you've been paying for homeowners insurance.
The better way to keep your homeowners policy and still have vandalism coverage is by keeping enough furniture in the house so it can be lived in, such as a kitchen table, a couch and a lamp in the living room, and one bed.
10. For all of your insurance needs, pick an insurance agent with great expertise.
What most people don't realize is that you can get an insurance expert for the price of an intern. Since all agents work on commission, an agent with a lot of experience costs exactly the same as a less knowledgeable agent.
The biggest mistake that people make when they buy insurance is that they shop based on price and end up with the agent who gave them the best quote, often with very little expertise. In fact, they would be much better off coverage-wise and price-wise if they shopped for the expertise of an agent first, then had the expert design insurance coverage with the right specifications and had the expert shop for that coverage.
Shopping for the best price first leaves you with a good deal but the wrong coverage. Shopping for expertise first leaves you with a competitive price for the right coverage.
When you have a serious claim, which choice would you make?
Copyright 2014, Bankrate Inc.