People often ask why a carrier won't cover them, and what are they to do when they turned down? Why do insurance carriers charge so much? What if they don't care about covering a certain preexisting health problem? What if the cancer was over five years ago, the heart attack more than 15 years ago? Why, what if, why not....
The insurance industry is just that: an industry. Private
business. Companies who make a profit by covering people when they
are healthy - or in reasonably good health - and "betting" that those
won't get sick and require the carrier to pay out more in their behalf
than they collect. It's like any other business. If I own an appliance
store, and I pay $200 for a Brand X washer, and sell it for $300, then
I make a $100 profit. If I put it on sale for $250, I make a $50
But if Brand X just isn't popular, I may mark it down to $175 and
take a loss. If I have to do that often, I will go out of
(or have to raise the prices on everything else to compensate)!
Insurance is no different: premiums collected must exceed claims in
order to stay in business. As of 2011, 80% of every dollar collected by
cariers must be paid out for claims. The Congressional Budget Office
(CBO) has indicated that the average health carrier makes a 5% overall
profit. The average self-employed person could not live on a 5% profit.
Sometimes insurance becomes Brand X at its worst, and carriers do take a loss. Hopefully, there are enough healthy people still on that insurance company's plan to carry the cost of the claims of the not-so-healthy. Often there are so many people with claims that the carrier has no choice but to raise its rates to compensate. When it does, depending on how that carrier rates, it will do so if it raises those rates for all customers in specific age bracket/geographic categories (for example, everyone in the age 30-34 age bracket in Pima County on that same plan) - this is called "composite rating." This method allows the carrier to spread the risk across a greater group of people and therefor not have any one customer get hit with a major rate increase. Very few carriers "experience rate" - this is where a carrier can raise the client based on his or her claims and not spread it across a greater group - these carriers can drop a 75% rate hike on less healthy customers in one fell swoop. (I personally work with none of these types of carriers and am not familiar with any in AZ who still do this.) Fair to the healthier customer - yes. But how about to the customer who had a major heart attack and maybe can't work as much (if at all) and thereby doesn't earn as much income as he did before?
We as a nation have been used to working for large companies and obtaining group insurance, which didn't seem to care how healthy we were. And when we left that large company, we found that perhaps, through a program called COBRA, we could keep our benefits another 18 months. So many people didn't bother to start looking for insurance on their own until the COBRA was about to expire. And then they found that no one wanted to cover them because of medical conditions which occurred while they were on COBRA - until a law passed in 1996, called HIPAA (very expensive). Or if they could get coverage, they were often charged higher rates for that coverage.
We encourage everyone who leaves a group policy to obtain private health insurance for themselves as quickly as possible. There are two reasons for this. First, because the company was probably paying a good portion of that employee's premium every month, and because group insurance tends to be more costly than insurance obtained individually, the premiums are usually pretty expensive on COBRA and individual insurance will be less expensive - 95% of the time. Second - and more important - if a serious problem should occur while someone is covered by COBRA, then they have a preexisting condition when COBRA goes away and either have no coverage or will have very expensive coverage (up to four times more than they normally would).
I hear customers say how grateful they were to have had COBRA, that the spouse had only been on it six months when he had a heart attack. But 12 months later, when COBRA ends, that man isn't able to obtain coverage. And the couple is frustrated because no one advised them this could happen. Had that couple taken a private policy at the end of his employment, no one could take that coverage away, regardless of the number of heart attacks he had. Individual insurance doesn't have a shelf life (unless the company goes out of business, which can - but rarely does - happen).
What we have found is that many people don't want to be bothered with taking a look at insurance if COBRA is available. They don't believe anything is going to happen to them in the next 18 months. Consider: no one who ever had a heart attack or stroke, or who was diagnosed with diabetes, MS or cancer, ever planned it.
It has been estimated that by the year 2012, more than 55% of the population will be employed in a business of their own. That means a lot of people who have been on group health insurance will be seeking private coverage.
In the last 19 years, our agency has covered more self-employed people than any other group. Perhaps that's because - as agents - we, too, are self-employed, and recognize the need for services which specifically address our health interests.
Without a doubt, the self-employed are the easiest to provide health insurance. At least, in Arizona. And it has nothing to do with illegally posted signs proclaiming cheap coverage for those people (those carriers will decline people with preexisting conditions just like any other carrier). There are several comprehensive plans available which have virtually no underwriting requirements - preexisting conditions and all, we have placed better than 95% of the self-employed people who have called our office, and at reasonable competitive rates.
In assisting a customer to secure a good health plan, the first thing we do is encourage everyone to obtain a copy of their health records. It is amazing how many medical files contain incorrect or out-dated information (over 20%). One of my earliest customers, a gentleman in his early 50's, was refused coverage because his records showed he had cancer of the uterus. And I've had more than one customer turned down because the records of someone with the same or a similar name got mixed up in their file (or Tom Smith, Sr's file was sent to the carrier instead of that of Tom Smith, Jr). We have customers swear that their doctor told them a certain condition would not recur, it was "cured" and should never be a problem.... then they get their records and see that what the doctor wrote and what he told them were not exactly the same.
Know what is in your medical file. These are your medical records; get a copy. And if you need to provide a carrier with a copy, make an extra set.
Individual insurance is not as expensive as many people
We work with several plans which will cover people with health problems. And, if you are self-employed and healthy, you have many choices. If you are self-employed and have health problems, you have less options - but still very good ones.
Our agency works with the healthy and the not-so-healthy, the self-employed and the otherwise-employed. We try to find plans which will work for everyone who calls. It is not easy to place everyone with whom we talk, but we try. If we hit a wall, we refer to the social agencies who work with various medical conditions and who may be able to offer assistance of some sort. Sometimes we simply act as a referral source. Whatever it takes.
"Twelve Questions to Ask Your Agent" is available on this website. If a customer just needs to find out their options, we will try to assist them. If they're looking for dental, or optical, or need assistance with prescriptions, travel coverage, Medicare - it is all available. And if they just want a quote over the phone, that's fine, too.
The self-employed are our most easily-placed customer. You DO have choices, and you CAN get coverage.