Misconceptions of Insurance

I have been speaking with clients, prospects and others for many years and I have found that you can’t help people that don’t want to be helped.  Still, people feel the need to explain why they don’t want help.  Rather than saying “not interested” we get answers like, “I gave at the office” or “I have to check with my wife.”  I’ve done it, too, but I have gotten better since I began to listen to others giving me the “excuses."

But I still believe that there are some people that give those answers truthfully so for those, allow me to dispel some of those myths.

“I have health insurance so I’m covered”

I hear this a lot when someone finds out I’m in the insurance industry.  It is OK if you don’t wish to listen to what I have to say but since you mentioned it. 

• Major medical insurance only covers medical expenses.
• You still have out of pocket expenses such as deductibles & copays
• If it is a serious injury or illness you may have travel costs for treatment that is not local.
• You could even lose a large portion of your income if you can’t work and in a dual income household it is possible to lose both incomes if one spouse needs to care for the other
• In fact, a 2007 joint study by Harvard Law School, Harvard Medical School and Ohio University found that 62% of all bankruptcies were due excessive medical expenses; most were well educated, owned homes and had middle class occupations and 75% had health insurance

Here is myth with a really simple answer.  It is based on math.

“Co-Pays are always better than coinsurance”

Co-Pay            vs.                     Co-Insurance

$30            Office Visit           20% of $125 = $30           

$500                ER              20% of $2,000= $400

What scares people is that the cost of medical service is unknown so people feel that they are going to pay a much larger amount than what they will actually have to.  Will an office visit be $125?  The best way to find out is to call your doctor.  will an ER visit be $2,000?  There is no way to know.  It depends on the nature of the health issue.  

With everyone shopping on-line and many times getting good deals, the following myth can be discovered at the worst time.

“I will get a better rate by shopping online”

Insurance rates are regulated by the state, therefore rates cannot be different

• When comparing identical plans from the same company.
• if the same personal information is used.

The problem is...

Many people that buy on-line buy based on price and do not fully understand how the plan that they selected works. 

It may fit their budget but not their needs.

The next one is one of my biggest pet peeves.  I have yet to find someone that didn’t feel like they were taken to the cleaners when they needed their plan to step up.

You’ve seen the signs in the ground when you leave your neighborhood or in the local flyer.  It says “Affordable Health Insurance…No Pre-Existing Conditions, No One Turned Down”.

Is this good insurance?  Think about this for a second….If this was so good, why would it be advertised at an intersection or in the local flyer?

Those plans are typically a Limited Benefit plan.  It pays on a reimbursement basis (you file claim form) based on Reasonable & Customary (defined by the insurance company).  You might be “Balanced Billed” if the charges are greater (and they usually are). 

These plans have a purpose but they are not Major Medical insurance.

Let me know if you have any other Myths that you would like me to address.