Saturday, November 22, 2008

Comparing Different Health Insurance Policies

The most useful comparisons entail first estimating your future healthcare needs and then reviewing the major features of each policy item by item.

Estimating Your Future Healthcare Spending

To compare different health insurance policies, you have to first make assumptions about your future healthcare needs. If you haven’t had a major illness recently, the best way to do this is to look at what you spent on medical care last year. After you have prepared this list, think carefully about the health of each family member and estimate what you might spend next year.

You should be able to come up with your exact out-of-pocket expenses for healthcare last year (including your health insurance premium) and an estimate of next year’s spending (assuming you keep your current health insurance).

Comparing Policy Features

Once you have estimated what you may spend next year, you need to collect the following basic information for each policy you are considering. All of this information should be readily available in any brochure or web site describing an individual/family policy. Once you have the information, make up your own worksheet similar to the one shown here.
TIP: There is no way to financially compute the lifetime max amount you will need, since very few people ever come close to using this much money in healthcare. Ultimately, buying insurance (protection) is more about purchasing peace of mind than about securing a financial return; only you can value the peace of mind you get from having a given lifetime max on your health insurance. In general, if you don’t expect to keep the policy for a long time because you are over age 60 and approaching Medicare eligibility, a lifetime max of at least $1 million should be sufficient.

1 comment:

  1. Is comparison shopping really helpful ? I am dealing with insurance policy the very first time in my life so is unaware about what to do and how to do. From your blog I learnt a lot about various insurance policies and how to shop for it.
    small business insurance


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