Texas Health Insurance Buyer’s Guide

for Individuals, Families, & Self-employed
By Richard Cantu President, Texas Health & Life


Shopping for Texas health insurance can be a daunting task and the research to find the right plan can be quite tedious. This guide will help you better understand the important aspects of the Texas Health Insurance market and help you feel more confident in making the best decision and avoid the various “gotchas” and outright scams for which people tend to get propositioned.

Who needs Individual & Family Texas Health Insurance?
The simple answer is any one who can’t get Texas Health Insurance through their employer. However, there are some Specific Scenarios with corporate health plans to consider:

Your company-provided health Insurance is too expensive …

• For you – companies are only required to pay for 50% of an employee’s coverage (some companies may pay more or even all of your cost) and depending on the average age and overall health of your fellow employees even your half can cost hundreds of dollars a month. Also, corporate health insurance plans tend to have lower deductibles and stronger coverage than you might want to pay for. If you find yourself in this scenario, it might make sense to explore Individual Texas Health Insurance on your own. Keep in mind that individual Texas health insurance can exclude coverage for pre-existing health conditions and does not cover maternity in Texas.
  
• For your dependents (wife, husband, child(ren)) – While an employer will pay anywhere from half to all of the cost of your corporate health insurance plan it is becoming increasingly rare in Texas for an employer to cover any part of the cost of covering your spouse and/or children on the plan. It’s not uncommon to have to pay $300-500 a month for each member of your family on your corporate plan. In this scenario it definitely makes sense to explore individual or family Texas health insurance outside of the corporate plan for your dependent(s).

My company doesn’t offer health insurance to employees … Health insurance benefits are typically offered by larger more established and profitable companies to ensure employees are well taken care of and to keep them from looking for another job. If your employed by a company that doesn’t yet have the resources you will need to cover yourself with Individual or Family Health Insurance. You might even hit your boss up for a monthly allowance for health insurance if you consider yourself of value to the company.

You own your own business or am self-employed … You are responsible for covering yourself first and then your employees. One of the leading causes of bankruptcy is medical bankruptcy. If you have employees, the biggest benefit you can provide them is job security and if you don’t have health insurance you put yourself in a position to lose your business and their jobs. In this scenario you should absolutely cover yourself with individual or family Texas health insurance first and when the time is right cover your employees with group health insurance.

COBRA … when people leave a company, in certain situations, they are often offered, by law, the ability to continue their corporate coverage but at their own expense. This means they will need to pay full price for their plan. This is usually an exorbitant amount that doesn’t make sense to pay if you’re in good health. If you are in good health and are offered COBRA you should absolutely consider individual/ family health insurance on your own.

Short-term … Sometimes you know you’re going to be covered by another plan in a few months. A common example is when you start a job and aren’t allowed to join the health plan until after 90 days. This is a perfect situation for short-term health


What are My Options for Individual and Family Texas Health Insurance?

Co-pay Plans – This is the most common type of health insurance plan for individuals and families. It has a catastrophic portion to the plan for major medical expenses but also, in most cases, offers co-pays for Dr’s visits, medication coverage, and annual preventative benefits. There are some limitation of these plans including separate deductibles for drugs, limitations on preventative care, and some plans will limit the number of available copays ( i.e. 2 Dr’s co-pays per year) and may exclude preventative benefits all together.

Catastrophic/ Major Medical Plans – these plans are typically lower in cost than co-pay plans because they are generally more profitable for the insurance companies. These plans do not cover any medical expenses (no co-pays, preventative benefits, or medications) until you meet the selected deductible. Before you consider this type of plan you should also think about the psychological aspects of having this type of plan. You will have to pay for most of your medical expenses so could be looking at $100 for a doctor’s visit and full price for your medication. Some feel it’s almost like not having health insurance unless something major happens and “knock on wood” it’s rare that people have large medical expenses. Some prefer this but others, especially those with children, might be better off considering a co-pay plan for the co-pays for Dr visits and drugs and preventative benefits.. This type of plan is ideal for someone who is generally healthy and/or doesn’t mind paying out-of-pocket for medical expenses as long as they’re protected from the “catastrophic” medical expenses.

• HSA-qualified plans – this plan works just like a catastrophic/ major medical plan but with the option of opening a specific type of financial account (Health Savings Account) in which you can put away pre-tax dollars to cover any out-of-pocket expenses. My experience has been that most people who take these plans either never open the financial account or do but never contribute. So, before you consider this type of plan to determine if you are OK with paying for upfront medical expenses out-of-pocket or if you feel you would take the time to open the financial account and contribute to it on a regular basis. In most cases, you’ll realize that you won’t and you should opt for a co-pay or traditional catastrophic plan.
  

SCAMS/ GOTCHAS - What plans and offers should I stay away from or be concerned about?

In any industry and with any service-offering there are always unscrupulous individuals or companies that are solely interested in the almighty dollar and think nothing of their client’s financial or physical well-being. Here are some things to look out for.

High Pressure Tactics – A bit of a “no-brainer” but if someone is trying to get you to make a decision immediately without allowing you to see a proposal with details of the plan, or ask for an expensive application fee – STAY AWAY! Common tactics include telemarketers telling people that they have a group plan that the prospect can take part in but they have to order right then as there are only “x” number of spots left or that the plan has no co-pay and no deductible and allows them to go to any doctor they want. These are typically discount plans that very few medical facilities will accept and are missing the most important parts of an insurance plan (see Top 10 Things to Consider In Searching for a Plan … General Rule is if someone wants to charge an application fee and wants you to make a decision right then – Hang Up IMMEDIATELY and try another broker!

Agents Pushing for Face-to-face Appointments – I realize this might sound counter-intuitive. Why wouldn’t you want to have someone come to your house to go over plans? A good agent will often be willing to sit down with you if you ask. However, 9 times out of 10, if a person is pushing for an appointment they are either representing 2nd tier companies (NASE, UA) or plans with serious deficiencies and want to use a personal approach and a “pitch” to put a spin on their plan that tries to put them in an ideal light versus other companies. Meeting with you face-to-face also increases their chance of “closing” before they leave.

Agents that only represent one or two companies – agents that only offer one or two companies are often representing plans that have deficiencies in either pricing or, and more importantly, coverage. These agents will often verbally misrepresent their plans in order to sell it and are often more interested in money than your best interest. Always compare plans, do your research, ask for advice, view a proposal. Try to stay with one of the major insurance providers and work with a broker that represents and has evaluated plans from different companies.

Plans that Accept Everyone without Underwriting – At the time of this writing (2007), there are no health insurance companies in Texas that do not go through an underwriting process to determine your coverage ability. If you’re being offered a health plan that takes everyone and has no underwriting then you are being offered a discount plan and despite what they might promise you you should absolutely stay away from these plans as most medical facilities do not recognize them and, if they do, will not offer much of a discount. More importantly, these plans do not offer a limit on what your medical expenses might be and all medical expenses are due at time of treatment. Stay away from these plans unless you can’t find coverage elsewhere. 5 If it sounds to good to be true or you’re being pressured to make an immediate decision or are asked to pay a high application fee (in excess of $30) or are told it is guaranteed issue without having to go through underwriting or are being propositioned for a face-to-face pitch – you should have your guard up. However, these plans might make sense for you if you are not able to get insurance through regular channels due to such things as serious pre-existing health conditions or just simply can’t afford health insurance.

Top 10 Things to Consider in a Texas Health Insurance Plan:

1) Maximum Out-of-pocket (AKA Coinsurance Maximum, AKA Stop Loss) - DO NOT BUY A PLAN WITHOUT CONSIDERING THIS FEATURE FIRST. - this is the dollar amount that indicates the most you could spend on medical expenses in-network within the calendar year should something catastrophic happen. Despite all of the nice bells & whistles a plan might have this feature is THE most important feature. There are countless sad stories of people who lost everything or didn’t get the care they needed because they didn’t know to look for this feature and signed up for plans without a Maximum Out-of- Pocket but with a lot of other nice co-pays and other features. This dollar amount consists of the deductible and coinsurance, if any. In plans that have coinsurance, your maximum out-of-pocket is usually $2-3000 over the deductible in-network.

2) Lifetime Maximum (No Annual Maximums) – Most companies have adequate lifetime maximums which is the maximum they will pay for medical expenses during your life as long as you’re on the policy. Anything over $3 million lifetime maximum is usually sufficient. BE AWARE of companies that also include a much lower annual maximum. There is a company that goes by 4 names (which is scary in and of itself) – Fortis. Time. Assurant. John Alden. – that, among other plans, offers a plan with an annual maximum of $100,000. This would normally be sufficient but should you need cancer treatment or a transplant or some other expensive procedures within the year you may end up owing BIG.

3) Price – We all have budgets. Once you have determined what type of plan makes most sense for your situation and preferences you should comparison shop. A good broker can help you quickly shop apples-to-apples between the major insurance providers. You can also use online quoting and comparison systems such as those found at www.texashealthandlife.com. You may find huge differences in pricing for comparable plans offered by different companies. No one insurance provider, at this time, is the low cost leader for every situation.

4) Network – The 2 main types of networks in Texas are HMO and PPO.

• HMO (Health Maintenance Organizations) - There are very few HMO companies in Texas and none available statewide for individuals & families. HMO’s can offer better benefits for comparable pricing to a PPO. What you give up in return is freedom to go to any doctor you would like at anytime and usually have to get referred to specialists, etc. 6 Also, if you find yourself needing non-emergency medical attention outside of your HMO area you would likely have to pay the entire bill yourself without reimbursement from the HMO.
  
• PPO (Preferred Provider Organization) - This is the most prevalent type of plan in Texas at this time. These networks are typically much larger than the HMO networks and allow you to go to any doctor you would like but the insurance company will pay more if you go to one of the medical facilities that will take that particular insurance company. If you stick with mainstream companies such as Aetrna, Blue Cross Blue Shield (BCBS), Humana, Unicare, and United Healthcare (Golden Rule), you can rest assured that 80% + of the doctors in Texas will take most of, and in most cases all of, these companies.

5) Reputation – research the company. Check TDI, check Google using the name of the insurance company and the word “complaint” or “scam” or “ripoff”. Every insurance company has complaints against them but you can determine the serious violators pretty easily with a little research. Part of the reason people complain about insurance (other than price and coverage) is that they do not understand how their coverage works when they first buy and think the insurance company is not paying what they should. A good broker will always ensure you fully understand the benefits and limitations of your chosen plan.

6) Underwriting – waiver, riders, exclusions, rate increases, declines – Each insurance company has different underwriting policies and this could be a top 3 most important factor in some cases. If you have a heart condition you might find one company would decline you, another might cover you but not the heart condition, yet another might just charge a little rate increase but will cover you and the condition. It would be pretty obvious which company would be the best to choose. Your broker should be able to determine these things before you even apply.

• Being Declined/ Ineligible - You might find that you are not eligible for coverage from any of the individual health insurance companies due to your pre-existing condition(s) and treatments. First off, don’t think that this means the underwriters think you’re on your death bed. Their decision is not based on mortality but on whether or not they have a likelihood of being profitable. If you take multiple medications or have a possibility of needing surgery or other expensive treatments you could be declined by one or all of the individual health insurance companies. Due to HIPAA regulations, the State of Texas has made health insurance available to individuals who are otherwise declined by insurance companies or don’t have other means for getting covered. You can visit the Texas Health Insurance Risk Pool at www.txhealthpool.org for coverage options and associated pricing.

7) Drug coverage – drug deductible, maximum allowable – If you prefer a plan with drug co-pays there are a few important things to consider.

• Drug Deductible – most companies are going to have some type of drug deductible. Some companies (currently Blue Cross Blue Shield and Humana) have an overall drug deductible ranging from $200 (BCBS) to $500 (Humana) for each person applying meaning you will have to spend that much on medications before you can pay co-pays. Others (Aetna, Unicare, and United Healthcare/Golden Rule) only apply the drug deductible ($100-$500) to name brand drugs so you can pay a co-pay from the start for generic medications. This is helpful since many medications have generic alternatives at this point. United Healthcare has the lowest drug deductible at $100 for name brands.
  
• Annual Maximum – Most Texas health insurance policies are going to have a limit on the retail value of outpatient medications they will cover per year. Typical annual maximums are $2500-3000.

8) Preventative (Wellness) Benefits – Most co-pay plans (not all) will have some level of preventative benefits. Many times these plans have a limit of $300 per year to be used toward preventative benefits. An important thing to understand with this benefit is that the money can only be used towards certain benefits:

• Women – benefits can typically only be used to cover cost of pap smears and after age 35 (or younger if family history) mammography’s for women. Any blood work or other labs or tests are typically out-of-pocket.



• b. Men – the benefit is usually limited to PSA (prostate screening) tests and

9) Dr’s co-pays – Most co-pays are in the $25-35 per visit range so this feature shouldn’t be a primary deciding factor in your decision. However, when considering co-pay Texas health insurance plans understand that some plans (Unicare Saver 2000 and United Healthcare Golden Rule Saver plans) offer only a couple of copays per person per year where most other copay plans offer unlimited Dr’s visits per year.

10) Financial Rating – ability to pay claims is very important and a company’s Financial rating is the primary indicator of the insurance company’s ability to pay. You should only deal with A-rated companies.

How to Search for the Best Plan

Online Quoting Systems –Nowadays you can get pricing for various plans right online from a number of websites including www.texashealthandlife.com. Websites such as this one will show you plans and the associated preferred pricing from the major insurance providers. Some things to understand as you’re reviewing pricing:

1. Pricing for plans are identical – Insurance plans, by law, are the same price for same plans no matter what website or broker you use. The pricing you’ll see on the websites will be the same from site-to-site and there is no ability to negotiate a better price or for the insurance company or broker to charge you more unless there are medical conditions that effect the rate in underwriting
   
2. Underwriting determines final pricing – The pricing shown on the broker websites and the pricing on the insurance company websites show preferred pricing and may not be final pricing. Once you select the right plan you will need to complete an application and your medical history will be considered to determined final rate, whether or not there would be a waiver (not cover) of a pre-existing condition, or if you would even be approved for coverage. If there are no or just minor medical conditions you would likely get the preferred rating shown on the website.

Working with a good insurance broker can ensure you make the best decision – An honest and experienced broker can help you make a decision on the best plan or help validate your thoughts on plans. The surprising thing to many people is that, by law, there are NO FEES of any type to work with an insurance broker. The broker only gets paid if you run the application through them. If you run the application directly through the insurance company the insurance company is just more profitable.

A good broker will also help with any issues, changes, re-evaluations, or other matters, through the life of the plan. As a broker, I tell my clients to think of me as their personal HR person for health and life insurance benefits. If you ever have any questions or want to make a change or re-evaluate your Texas health insurance or life insurance just call or email me any time.

In Conclusion

I hope this guide was helpful to you in being able to make a more educated decision on which health insurance plan is going to be best for you and/or your dependents. If you would like personal, honest, and experienced assistance in finding the right Texas health insurance plan please do not hesitate to contact Texas Health & Life.

About Texas Health & Life – www.texashealthandlife.com – Texas Health & Life is a full service Texas-based health insurance agency offering free support to individuals, families, self-employed, small business owners, and Medicare recipients, to understand options for Texas Health Insurance coverage.

About Richard Cantu – I’m a husband, a father, a son, a brother, a small business owner, a Texan, and a contributor to my community and profession. Basically, I’m just like my customer’s. I have the same needs, wants, and concerns. I focus only on Texas health insurance and life insurance and combine my considerable experience with my desire to help others help my clients understand their best options for health insurance or life insurance. I appreciate my clients and will always treat them as I would treat my own family.