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Managing personal insurance under health care reform laws

by Tony Novak, CPA, MBA, MT,   August 24, 2010


Yesterday marked the five month anniversary of the passage of national health care reform. With little media attention this week, some of the most significant provisions of this year's legal reforms will be in force within the coming month. These rules are primarily designed with the intent of making management of health care easier but also have some consequences not considered by the promoters. In particular, the 2010 changes have significant consequences on those who buy their own health insurance.

Freedom Benefits is working with trade groups to ease the transition into these health care reforms. Still, the transition will be confusing and cause problems for some consumers. OnlineAdviser offers these six suggestions to individuals who are shopping for health insurance now in this new health care reform environment:

  1. Do not cancel previous insurance coverage or allow the previous coverage to expire until after the new policy has been approved, received and reviewed by you or your insurance adviser. While we understand that many consumers cannot afford to make an additional payment on their former insurance plan - especially when premiums jump sharply - it is important to be aware of the expiration date and the reinstatement deadline (usually 30 days after the expiration date) in order to ensure that the prior coverage is available as a fall-back strategy.
  2. Use short term medical insurance for immediate issue coverage while waiting for a new policy to be approved. Short term major medical policies are issued immediately online without the need to check medical history because these polices are exempt from the coverage provisions of pre-existing medical policies. As a result, buyers understand the limitations of this simple form of coverage and fewer disputes over claims. See the listing of short term medical insurance plans available in each state by selecting the state from the map on the FB exchange home page.
  3. Collect copies of all of your important personal documents (birth certificate, passport, driver's license, etc.) and all of your personal medical records and keep a secure digital copy available on your home computer. We suggest a passport-encoded PDF. While an insurance company will usually collect its own information, it makes sense to have a copy of these records in the event that a single missing record delays the issuance of insurance coverage. Some health insurance companies like Celtic Insurance, require applicants to provide a copy of their own medical records. Having this information in advance can significantly speed up the application process.
  4. Use limited benefit insurance like Core Health Insurance and supplemental insurance like Value Emergency Room and Value 24 Hour Accident Insurance that is exempt from the new regulations. This insurance is meant to provide benefits in addition to coverage provided by major medical plans but are sometimes used by individuals in a pinch to provide some limited coverage when other insurance is not available or is not affordable.
  5. Consider health insurance to be the most important part of your strategy for personal financial security. Avoid learning the hard way that lack of adequate health insurance planning can be ruinous. The new health insurance reform laws will amplify that message and increase the importance of taking individual responsibility for obtaining high quality insurance coverage.
  6. Take advantage of free OnlineAdviser enrollment support by e-mail or online chat for enrollment in health plans listed on the insurance exchanges. Consider requesting a paid consultation for more difficult situations where the choice of a specific health plan is likely to impact the overall quality of life and your personal financial security.

Insurance buyers who select long term coverage typically change insurance companies every 2nd or 3rd year, according to Freedom Benefits data collected since 1986. A typical health insurance policy, including short term and limited benefit policies, is in force for less than 13 months. Health reform provisions are likely to prompt members to change coverage more often in the next few years and opt for policies with lower levels of benefits. Applying an estimated cost of compliance of about $200 to all long term policies issued, we anticipate that health reform provisions will rate premium rates by an average of about $20 per person per month.

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This web site is independently owned and managed by Tony Novak operating under the trademarks "Freedom Benefits", "OnlineAdviser" and "OnlineNavigator". Opinions expressed are the sole responsibility of the author and do not represent the opinion of any other person, company or entity mentioned. Tony Novak is not an agent, broker, producer or navigator for any federal or state health insurance exchange but may provide uncompensated advice, reviews and referrals to these official resources. Novak is compensated as an accountant, adviser, affiliate consultant, marketer, reviewer, endorser, producer, lead generator or referrer to some of the other commercial companies listed on this site. Information is from sources believed to be reliable but cannot be guaranteed.