3 Health Insurance Mistakes to Avoid
A cut-rate policy could cost you more in the long run.
Whether you're perusing your employer's open-season packet or weighing your options after getting a pink slip, you may be facing some critical decisions about health coverage. Avoid these three common pitfalls.
Focusing on premiums alone. A higher-premium policy with low co-payments could be a better deal than a lower-premium policy. For example, if your doctor is out of network, how much will you pay for each visit? And how many of the medications you take are brand-name drugs? Many insurers are now charging coinsurance rather than fixed co-pays for generic, brand-name and specialty drugs. Your cost for a specialty drug could be as high as 38% of the cost of the medication. So if you take expensive medicines, you may end up paying hundreds of dollars more a year. Your best bet, if you can find it, may be a policy that still charges co-pays for out-of-network visits and prescription drugs.
Skimping on coverage limits. One of the costliest mistakes you can make is to buy a policy with inadequate coverage. These policies may look attractive because they have low premiums and deductibles. But a maximum benefit of as little as $50,000 to $100,000 per accident or illness could leave you with tens of thousands of dollars in out-of-pocket expenses. Also beware of policies with long lists of exclusions and low dollar limits for each type of procedure.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
A better way to lower your premiums is to buy a high-deductible policy with a coverage limit of at least $1 million ($3 million or $5 million would be even better). If you buy a policy with a deductible of at least $1,150 for single coverage or $2,300 for family coverage in 2009, you can also make tax-deductible contributions to a health savings account and use the money tax-free for medical expenses in any year.
Ignoring alternatives to COBRA. If you lose your job, you may sign up for coverage under COBRA, the federal law that lets you keep health insurance under your former employer's plan for up to 18 months. The economic-stimulus plan provides a 65% subsidy for COBRA premiums for up to nine months for people who are laid off between September 1, 2008, and December 31, 2009. But after the subsidy ends, you'll pay full freight. The average employer policy costs $4,700 a year for individuals and $12,600 for families, according to the Kaiser Family Foundation.
If you have health issues, COBRA may still be your best option. But if you're healthy, you may find a better deal on your own. Get price quotes at eHealthInsurance.com or find a local agent through the National Association of Health Underwriters.
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.
-
Eight Easy Ways to Save Money Without Compromising Your Lifestyle
Saving money can be as simple as a quick phone call.
By Kiplinger Advisor Collective Published
-
Five Ways to Save Big On Your Phone Bill When Traveling Abroad
Traveling internationally and want to save cash? Here are five smart ways to save big on your phone bill.
By Kathryn Pomroy Published
-
403(b) Contribution Limits for 2024
retirement plans Teachers and nonprofit workers can contribute more to a 403(b) retirement plan in 2024 than they could in 2023.
By Jackie Stewart Published
-
Roth IRA Contribution Limits for 2024
Roth IRAs Roth IRA contribution limits have gone up for 2024. Here's what you need to know.
By Jackie Stewart Published
-
Four Tips for Renting Out Your Home on Airbnb
real estate Here's what you should know before listing your home on Airbnb.
By Miriam Cross Published
-
Five Ways to a Cheap Last-Minute Vacation
Travel It is possible to pull off a cheap last-minute vacation. Here are some tips to make it happen.
By Vaishali Varu Last updated
-
How Much Life Insurance Do You Need?
insurance Instead of relying on rules of thumb, you’re better off taking a systematic approach to figuring your life-insurance needs.
By Kimberly Lankford Published
-
When Is Amazon Prime Day?
Amazon Prime In 2023 Amazon had two Prime Day events — one in July and another, called Big Deal Days, in October. We expect 2024 to follow the same schedule.
By Bob Niedt Last updated
-
How to Shop for Life Insurance in 3 Easy Steps
insurance Shopping for life insurance? You may be able to estimate how much you need online, but that's just the start of your search.
By Kaitlin Pitsker Published
-
5 Ways to Shop for a Low Mortgage Rate
Becoming a Homeowner Rates are high this year, but you can still find an affordable loan.
By Daniel Bortz Published