Running For Coverage In Anxious Times

Free-lance writer Andrea Eagan had no health insurance when she was diagnosed with colon cancer last year. Such news would seemingly make her uninsurable, but she was lucky--she lives in one of the few states, New York, where she could sign up for Blue Cross/Blue Shield under open enrollment.

Other people aren't so fortunate. As premiums soar and benefits get chipped away, health insurance continues to move beyond the reach of many. Joining a big company or marrying someone with a good job is still the best way to get comprehensive, affordable health coverage. But if you've been laid off, are self-employed, or work for a small business without a health plan, it doesn't mean you have to forgo insurance and pray you never get sick.

You do have options, ranging from health maintenance organizations to high-risk pools. Individual major-medical plans tend to be steep--at least $3,000 a year for a family of four, with a $1,000 deductible. But if you're healthy, you can lower the cost more than half by getting the highest deductibles to cover only catastrophic ailments. Much harder is finding coverage if you're sick. But there, too, options exist.

ONE FEE. The trend is toward more cost-conscious managed-care programs. With an HMO, you pay one fee--$123 a month on average for individuals--for comprehensive care from a network of health-care providers (table). The big advantage is that your rates won't rise with greater use of the HMO. But you're restricted to its doctors and facilities.

A preferred provider organization (PPO) gives you the option of using a network of "preferred" doctors and hospitals, often for a small copayment per visit. But you can also pay more and go to doctors outside the network. The rates for this type of health care are only slightly higher than those for an HMO.

Managed-care plans differ from conventional insurance, which works on a fee-for-service basis. That means the insurer decides what's a reasonable fee for each service and pays you some portion of that. Such plans average $145 a month for an individual and $316 for a family.

When shopping for health insurance, the most important consideration is coverage. Hence, major medical is your best bet. It covers any "medically necessary" treatment, including hospital services and doctors' visits. Plans that reimburse only hospital-related costs are limited and may not even be cheaper.

CUT RATES. Don't buy hospital indemnity or dread-disease plans. Although cheap, these usually cover only a fraction of your costs--even if you actually get the dread disease you're insured for.

You also want to make sure your insurance company can't cut you off at the time of greatest need. So look for individual plans that are "guaranteed renewable." They can be canceled only if the insurer can prove you gave fraudulent information or if you fail to pay your premiums.

Group rates are often cheaper, so find out if there's a fraternal organization, union, or professional association that offers a health plan you can join. "The larger the group is, the less critical the insurers will be," says Wayne Lackner, an Ohio agent.

If two plans offer equal coverage, compare out-of-pocket expenses and premiums. Most plans have a deductible, or minimum amount that you must spend before your coverage kicks in each year. And most require you to fork over a copayment of 20% of the bills up to a certain dollar limit, at which point the insurer pays 100%. If that limit is $5,000, your out-ofpocket portion would be your deductible plus 20% of $5,000. Premiums are based on age, sex, and geography. They are higher for women than men and increase as you age. They're also often higher in urban centers.

One rule of thumb: The higher the deductible, the lower the premium. (Annual premiums are often cheaper than those paid in installments.) Since the premium is money already spent, and the deductible is money you're betting you won't have to spend, get the highest deductible you can afford that still gives you good coverage.

Examine what your plan excludes as well as what it covers. Many new policies won't cover ailments you have been treated for in the past six months to two years, known as pre-existing conditions. Coverage for these conditions won't begin until a waiting period passes, often at least six months from the effective date of your policy. Most insurers can also attach a rider onto your individual policy excluding you from ever getting coverage for a chronic condition, such as asthma. Some companies will reject you altogether for conditions such as AIDS.

OPEN SEASONS. From this comes the sad irony that only the healthy can get health insurance. So what do you do if you're already sick and you don't have insurance? If you work for a small business, you may be in luck. Fourteen states recently passed reforms guaranteeing that all small-business groups can buy health insurance regardless of their employees' health. Coverage will remain available even if the employer switches plans or an employee changes jobs. The rules also limit how much insurers can raise rates.

There's no such law yet for individuals. But 13 states' Blue Cross/Blue Shield plans have some form of open enrollment. Another option is one of the high-risk pools in 23 states that accept people who have been rejected by other insurers. Although they have minimum requirements, their coverage is expensive and less extensive than other major-medical plans. But the real drawback is there aren't enough of them to go around. Robert Hunter, president of the National Consumer Insurance Organization, also suggests contacting disease-support groups: "They've come up with innovative ways to get insurance."

If you lose your job for any reason other than gross insubordination, and your employer has more than 20 workers, you and your family can keep your coverage, at the same rates, for at least 18 months under the COBRA Act of 1986--but you foot the entire bill.

When COBRA runs out, in most states, your insurer must let you convert to an individual plan without answering questions about your health. Such plans offer less coverage for more money. However, if you're sick, it may be your only choice.

If possible, don't leave your current coverage until your new coverage becomes effective. And beware: A policy's effective date often isn't the same as when you sign up or pay your first premium. If you do get caught with a coverage gap, companies such as Bankers Life & Casualty and Pyramid Life offer major-medical interim policies. These start almost immediately and last six months. If you're lucky, that will buy you enough time to find the health plan you need.

      League, 815 15th St. NW, Suite 928, Washington, D. C., 20005, (202 
      639-8140)--Tells how to pick an HMO that's right for you
      BUYER'S GUIDE TO INSURANCE ($3) National Consumer Insurance Organization, 121 
      North Payne St., Alexandria, Va., 22314 (703 549-8050)--Offers tips on how to 
      save when shopping for a policy
      CONSUMER REPORTS August, 1990, issue: 'The Crisis in Health 
      Insurance'--Reprints of this article, which includes a survey of 71 policies, 
      are available for $3 from Consumers Union, 101 Truman Avenue., Yonkers, N.Y., 
      10703 (914 378-2430)
      NATIONAL INSURANCE CONSUMER HELPLINE (800 942-4242) Provides general help with 
      choosing an agent or insurer as well as information on medicare and 
      supplemental policies, COBRA, managed-care plans, and disability coverage
      PRO -- Your premiums don't rise just because you get sick or use the HMO 
      services more
          -- No deductibles, usually little or no copayment
      CON -- Must use the HMO's doctors and hospitals
      COST-- $123 a month for individuals, $311 for families*
      PRO -- Usually pretty comprehensive
          -- Patients can go to doctors outside of the network
      CON -- You get reimbursed less for going outside the network
          -- You may need the approval of a primary care doctor to see medical
          -- You may have to satisfy deductible and copayment
      COST-- $137 a month for individuals, $322 for families*
      PRO -- Fairly comprehensive, and you can choose your own doctors and hospitals
      CON -- You need to satisfy an annual deductible, and make co-payments
      COST--$145 a month for individuals, $316 for families*
      *On average
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