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Time to dump your health insurance plan?

Before you leap to new coverage, take a good look

As frustrating as it can be to obtain affordable, quality individual health insurance, it’s not uncommon for policy holders to find themselves further frustrated after they’ve secured coverage.

The sad truth is that any number of factors can change with your health coverage after you’ve enrolled, and you shouldn’t hesitate to consider a change in coverage.

Is it time to burn your old health insurance policy?

A substantial premium hike is one obvious reason for you to consider dumping your old coverage for a new plan. Your hike could be part of an across-the-board hike by your carrier – sometimes as much as 30 percent in the individual market. OR you could see a premium increase when you renew your policy because of a medical issue that has required tests or treatment. (You may even be denied renewal entirely.)

But even if your premium isn’t rising, you may be face a reduction in benefits because you’re overlooking an increase in your cost sharing through co-pays or deductibles. (So pay close attention to annual policy changes.)

The discovery that your preferred provider is no longer within your carrier’s network may be an equally distressing reason to consider a switch. Or you may wish to see a new provider who’s not currently in your carrier’s network, but you know that going out of network would mean an increase in your cost sharing through copays or deductibles.

Ready to switch? Not so fast.

How to look before you leap

When you consider switching to a new health plan, make sure you take stock of your needs. Look back at services you have used most, but also anticipate care and services you’ll likely need going forward.

At the same time, carefully scrutinize the “fine print” of any new prospective coverage. Consider the plan cost-shares, deductibles, and the plan’s provider network comparison to provide the best comparisons possible.

Do your homework:

  • Gather the facts on your current coverage, including your annual premium, deductible, and coinsurance requirements. Then, keep a copy of your current insurance policy handy while comparing new options. This will be especially useful when comparing a traditional plan to a high-deductible health plan.
  • Make a list of any medications that you or your dependents are taking and their annual cost. If these are covered under your current health insurance plan, add separately your co-pay is and calculate how much it would cost without your insurance.
  • List your routine doctor visits and their costs annually. Add up those co-pays if they are currently covered and calculate the cost of visits without insurance.
  • Consider possible costs of unplanned medical appointments. For example, the common cold or flu. Calculate an average cost per year.
  • Have a medical condition that requires you to rent or purchase medical equipment, such as oxygen or a wheel chair? Tally those expenses with coverage and without.
  • Consider for yourself, how much you can afford “out of pocket” for coverage and deductibles.

Overcoming cost hurdles

As you’re looking for a better policy, there’s always the chance you’ll be less than happy with your search results.

This is particularly true if you have a pre-existing medical condition that requires ongoing treatment – or even if treatment in the future is likely to be needed. As a result, your new policy may come with a hefty premium increase over your current coverage.

Just as worrisome? Folks with pre-existing conditions may face a waiting period for coverage for the specific condition. Insurers impose these requirements to reduce their claims costs as pre-existing condition treatment is often very expensive. If the Affordable Care Act is upheld by the Supreme Court, insurers will no longer be able to restrict coverage due to pre-existing conditions, effective Jan. 1, 2014.

If a carrier won’t renew your coverage because of a pre-existing condition – or an insurer denies you coverage – those rejections can be used to gain enrollment in a state high-risk insurance pool. Thirty-five states currently have high-risk pools for persons unable to gain coverage in the individual health insurance market. The Affordable Care Act created a federal Pre-existing Condition Insurance Pool (PCIP) that also provides those with pre-existing conditions access to coverage, but with different enrollment requirements.

You might also consider a high-deductible health plan (HDHP) paired with a health savings account (HSA). High-deductible health plans offer savings through lower premiums when compared to traditional individual plans. And if you enroll in a qualified HDHP, you can pair it with an HSA and see tax savings. The higher deductible usually means the health plan premiums are lower, but you use the premium savings to pay more out-of-pocket before the plan pays anything toward the cost of most care.

A final bit of good news for folks dissatisfied with their health insurance coverage: if the Affordable Care Act’s health insurance exchanges are established as planned, you’ll be able to make an even easier side-by-side comparison between health plans, starting in 2014.

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