Health insurance jargon can be the hardest to understand for consumers. That’s why you have a broker who goes to work for you and explains your policy options with clarity. However, not all brokers work ethically. You may not have an insurance broker who values you and may not elaborate on your policy limitations. The omission of these limits is illegal and should result in the termination of that broker. In contrast, the insured typically doesn’t take legal action, and the broker makes his or her desired commission.
This is not to say that all health insurance brokers operate in this zone of immorality. Just as with any profession, there are good and rotten eggs. Your moral compass and ability to judge a person’s intention is a significant factor – people can typically smell a sleazy salesperson. Below, are the most common limitations obscurely mentioned in health insurance policies. This information should adequately equip you for when you are asking questions of your broker.
Here’s a screenshot from the summary of the benefits of an insurance carrier’s product:
*Note – these limitations do not exist in all policies. Ask your broker.
The list of benefits above is towards the end of the policy summary. Most people are interested in seven factors when it comes to their health insurance:
Deductible/coinsurance/max out of pocket, doctor visits/specialists/urgent care, the network, prescription coverage, preventative/wellness coverage, emergency room fees, and ambulatory services. If your insurance broker goes over those seven things, this is how the policy would look and sound:
- Choice of $500-$10,000 deductible/max out of pocket (1 million in coverage)
- Choice of 70/30, 80/20, or 100/0 coinsurance
- Unlimited $25 copay to doctor, specialist, and urgent care
- PHCS Network (PPO)
- $50 copay for annual wellness/preventative checkup
- ER – subject to deductible and coinsurance
- Ambulatory services (above) – $500 per transport
Most people would agree that those seven things sound fantastic for health coverage. You have all your daily doctor needs taken care of and one million dollars in coverage, right? Wrong, let me show you a scary breakdown if you had an appendectomy while being covered by this policy.
On average, the “Fair Price” for an Appendectomy lies somewhere between $7,000 and $25,000 (may vary due to zip code). If there are complications, it could be upwards of $35,000 or more. Here’s a breakdown of the services and their estimated costs. You can always check on any surgery, and it’s price by visiting Healthcare Bluebook.
- Hospital Services – for a 2-day admission, it’ll cost roughly $9,700.
- Physician Services – the fee for procedure and routine postoperative care costs around $1,400.
- Anesthesia – the price for an average surgery time of 1 hour and 15 minutes costs about $750.
This cost adds up to the lower end of about $11,000 for an appendectomy. If you look above at the example policy, you’ll see that for the entire coverage term an appendectomy will be given a $2,500 coverage benefit. Even though your plan has a deductible, coinsurance, and max out of pocket; there’s a specific limitation for appendicitis. With this knowledge, the insured will be left an $8,500 bill as an out of pocket expense! Keep in mind; these numbers are on the low end with no complications.
Of course, it’s always better to have health insurance instead of going uninsured. With insurance, that remaining $8,500 for the appendectomy may negotiate to a lower bill. Policygenius.com does a great job explaining the functionality of network negotiated rates. Without insurance, you would be paying the almost full retail price for your medical surgery, which is a terrifying thought!
