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Mar 30, 2011 7:10 PM

Health Insurance: Are You Really Covered?

Once upon a time, having health insurance meant security. If you got sick, your care was covered. At least that's what we all thought.

But a 2009 study published in The American Journal of Medicine found that in 2007, 62% of all bankruptcies in this country were related to medical expenses. And three out of four people with medical debt had health insurance.

The difference between a good and not-so-good health insurance plan makes a huge impact on both your health and finances. So, how can you tell which kind you have? Start by doing the math. Look beyond your monthly premium, and add up out-of-pocket expenses in the form of deductibles, co-pays, prescription costs, and co-insurance (the portion of medical bills you pay once the deductible has been met and insurance coverage kicks in).

Know Your Maximum Exposure

Also, figure out what your maximum financial exposure is in a worst-case scenario. How much money will you have to lay out before your insurer picks up 100% of your costs? Any health plan without a maximum limit on your out-of-pocket expenses puts you at risk for a whopping bill in the event of a major illness or injury.

The same is true for plans with dollar limits on hospital stays. "These plans can be tricky and misleading," says Candy Butcher, chief executive of Medical Billing Advocates of America. The monthly premiums may be low, but they cover only a fraction of the costs associated with an inpatient stay, the most expensive form of care. For example, "catastrophic" or "hospital-only" plans might give you the impression that you're covered if you become very ill. But some only pay for certain diagnoses, Butcher says.

Does your health plan exclude care for certain health conditions (maternity care is a common one), or require a waiting period for pre-existing conditions (something that will go away when health reform goes into full effect in 2014)? If the answer is yes, you're essentially uninsured if you need to receive care.

"The best place to look for that information is in the list of excluded benefits found in your summary plan description," explains Tracy Watts, health and benefits partner with the consulting firm Mercer. Your best strategy is to go back to the basics. Boring as it may be, "Review your policy book from front to back," Butcher advises.

Getting the Most Out of Your Insurance Plan

Health plan expert Candy Butcher offers these tips for getting the most coverage out of your health insurance.

Watch it. If you're having surgery at an in-network hospital, make sure every health professional you see while admitted is in your network as well. Surprise bills have been known to show up for out-of-network anesthesiologists, radiologists, and pathologists a patient didn't agree to see while hospitalized. Note: Health plans cannot charge you higher fees for out-of-network emergency services.

Insist on it. Insurance plans with caps on services, such as lab tests and X-rays, often stop processing your claims with the in-network discount once you've reached your limit. Examine all bills carefully and make sure you're not being charged the full, out-of-network amount.

Check it. Speaking of bills, as many as 80% contain inaccuracies, according to Medical Billing Advocates of America. If you don't understand the explanation of benefits (EOB) from your insurance company, pick up the phone.

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