Daily Archives: September 2nd, 2008

Cutting Healthcare Costs Without Cutting Corners (Part 2)-Take Out A Health Insurance

At today's healthcare inflationary rates of 12-13%, a smile can turn into a frown if you are not insured

In these recessionary and inflationary times, there are strategies that can be taken to minimise expenditure   related to health without compromising on accessibility and efficacy.

Its a fact…none of us want to get sick or injured. Its also a fact that getting hospitalised can happen to anyone in unexpected ways and the doctrine that it “can only happen to the other person” isn’t often the case. And if you’re uninsured, its a double-whammy once the hospital bill is presented.

If you haven’t yet taken out an adequate health insurance, this is the time. In the US alone, 15% of the population (45 million people!) aren’t covered by insurance or third-party payors(1) This means they have to pay out-of-pocket if they require medical care. In many countries, unless there is some form of social insurance, a significant number of people will be left uninsured. In Malaysia, it is estimated that one-third of those who use private healthcare facilities have to pay out-of-pocket.

Recession or no, the inflationary rate for healthcare will relentlessly increase by 8-12% every year and, in the US, is matched by a corresponding increase  as far as health-plan rates are concerned. The time to take out a policy  is NOW!.

There are some points to note when considering a health insurance plan:

  1. Just because you are covered by a group insurance plan taken out by your employers does not mean you will be covered once you retire or leave the company. What then?
  2. Is the current plan adequate to meet your needs? Make sure you have the right plan. Just in case you didn’t know, a life insurance plan does not include hospitalisation expenses.
  3. Does the plan include office visits (aka outpatient visits) as well? Many plans specify only reimbursement for hospitalisation only.
  4. Study in detail copayments( the percentage of the total hospital bill that you have to pay in excess of your benefits) , coinsurance (the fixed percentage of the  hospital bill you have to pay) and excess clauses (the amount you have to pay before the insurance kicks in).
  5. Know about cooling-off periods. No claims will be entertained if you develop an illness within a specified period of taking the policy.

Its not that the payor or insurance company is always taking you for a ride but, hey , they’re in the business to make money and that’s why they will reject those clients who are at high risk, usually those with a bad medical history. Such private insurance companies adopt the risk-rated model.

In order to provide universal health coverage, countries, including the USA, are striving for a community-rated model where there is 100% coverage for the people. Read here.

If you need to know more about taking a health-plan,  go here if you are in Malaysia; otherwise go here.

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