What is Bad Health Insurance?
Is there "Bad" health insurance?
Bad Health Insurance? Really, though?
Over the years I have spoken with hundreds and maybe thousands of people all across the United States from numerous backgrounds, incomes and family situations. Most of them were looking for medical insurance for themselves or their families. Folks can be in the market for a new plan for many reasons; changing jobs, moving, marriage, having a child, divorce, etc.
Many of them were pleased with the previous coverage and were looking for something similar, like a catastrophic plan or major medical or even a short-term plan. They were just going through the motions of protecting themselves from potential financial ruin and ensuring they could get treated when needed.
However, more frequently than I expected I would get a call from someone that was quite upset with their coverage. I hear things like "my coverage is terrible", "it didn't pay anything", "I got ripped off." Occasionally there were not-safe-for-work terms and phrases used to describe their experience with the insurance they have.
Though I do sympathize, there is no such thing as bad health insurance. There just isn't. Now, under the Affordable Care Act (enacted in 2010) the federal government did define what health insurance is. But, for some Americans they prefer other options to that program and there are literally hundreds of companies selling health insurance currently.
Because of the myriad of coverage options plans and benefits vary greatly from plan to plan, and for the most part this is why the US Government attempted to standardize health insurance. Keep it simple and make it benefit the consumer. However, with the mountain of options still available it is easy to get lost in your own plan's benefits.
What I have found is that when someone is upset with their coverage it was almost entirely due to one of two reasons. One is that the insured did not understand their plan entirely. Or two, that the plan was explained incorrectly by the agent that sold it to them. Essentially, they were told it did something that it didn't -- like pay for a specific service or have a certain provider in the network.
Insurance companies can't, without major consequences, arbitrarily decide to not pay a claim. That just just doesn't happen. and if it does, then usually they are a sham company and the Feds would likely get involved. This happened recently with a company in Florida.
When I say "explained incorrectly" that does not mean that it was accidental. I mean that the agent was not forthright with all of the facts. I have heard from most of the folks complaining about their coverage that they were told "it was covered". Which to me is misleading if it is not a major medical or comprehensive plan.
Some service or treatment could be partially covered and be considered a covered service. But, that is not always explained to the consumer fully. So when you get that $4000 bill for the MRI you got at the ER, that is likely why. There were limited benefits for that service and the insurance likely paid out the max benefits towards that claim and you are left with the rest.
Sadly many Americans think that "covered" means it's paid 100% by the insurance company. Mostly because we have heard the colloquial phrase "my insurance covered it". Meaning it was paid by insurance. But, that is not the actual definition in modern health insurance plans.
What does this have to do with "bad" health insurance. Well, if the insurance did what you thought it would do when you needed it to, you would think you had a great insurance plan and great benefits and a great insurance agent. But, when it doesn't perform as you thought, then you "got ripped off" or "the plan doesn't pay ANYTHING" and you were "lied to".
If you had a plan with a $3000 deductible and you don't know this, then when you get that $2900 bill you are going to be upset and again think that you have bad insurance and it doesn't pay anything. However, if you were aware of the deductible, planned for it, you would not be be unpleasantly suprised by the bill.
This can go further. You may have a short term plan that lasts for 6 months. You get injured and file a claim and it gets paid as described in the policy. But, 6 months lapse and you renew coverage for 6 months more. You go in for more treatments and you get a bill for the FULL AMOUNT of the claim.
Why? Your injury occurred under the old short term policy and is considered a pre-existing condition and is not covered under the new 6 month policy. And now you think you have "bad" health insurance. But, you don't. You just don't understand your insurance policy and one of the major aspects of a short term plan just kicked your in your financial teeth.
Perhaps you have a "limited benefits" plan with no deductible. It was really affordable, but, when you go for blood work at an out of network facility and get a $400 bill, your blood boils. You were told you could go to any provider and they insurance company would still pay.
Though this is true, the out of network facility is not subject to the contracted rates (discount) provided under your policy. You were charged full price which maxed out your benefits and you have to pay the difference. So, yes you can go to any doctor and the cash payment was the same as in-network benefits, but the rates were much higher and you have to eat the difference.
Health insurance is heavily regulated at the state level and when an insurance company is doing something illegal it is usually getting noticed at the state and federal levels. Many complaints from consumers about surprise bills comes from not understanding their plan AND from being told the plan does something it doesn't. This could be that they have unlimited doctor visits or that their annual check-ups are free only to discover that neither is true.
For the most part insurance does what it is supposed to do. And in most states consumers have what is called a "free look" period from 10-30 days wherein they can review the policy in detail after they have signed up. If they find that it is not what they were told or it is not actually what they need they can get a FULL refund.
Learn how to avoid suprise medical bills in our latest article here.