Understand Its Purpose
A medical plan, also known as health insurance or a health plan, protects us against unexpected high hospitalization expenses so that we do not deplete our savings. It offers us the option of seeking treatment at a private facility rather than a government facility, easing the burden on the public system.
Look for Reasonable and Logical Benefits
Most consumers select a plan by comparing which company offers the best or most coverage at the lowest premium. As a result of such consumer behavior, insurance companies offer more benefits (hospital allowances, higher medical limits, medical checkups, no co-payment, etc.) to ensure competitiveness, which sometimes may not be sustainable in the long run.
I would not say they have derailed from their original purpose, but they do need these gimmicks to stay ahead of the competition. We always like to have additional benefits, but unlike a travel package, we might not use these benefits as often. It makes more sense that extra benefits should come at a price.
You might want to check:
- Does the medical plan come with basic coverage, and what is the reason for the additional benefits?
- How often will we be using those additional benefits, and is it worth paying more for them?
Understand How Insurance Companies Operate
If you are new to choosing a medical plan, it is important to know that premiums might adjust periodically due to rising medical costs as a result of inflation, new technologies, and hikes in wages. There are concerns about the sustainability of medical plans due to recent hikes in premiums. Very few know that a poorly managed company’s operations can also lead to price hikes.
You might want to check:
- The history of premium repricing and how much the past repricing was.
- If previous coverage had such repricing after years, would the repricing for this new plan happen soon as well?
Product Design
Poor product design can initiate a negative cycle. For example, allowing clients to claim extra benefits, such as allowances, can lead to overcompensation beyond the actual occurrence. Additionally, using a low cost of insurance (COI) to attract new clients can result in the fund becoming unsustainable in the long run. Waiving copayments can also lead to abuse of claims. Ultimately, the increased operational costs are passed on to the consumer.
You might want to check:
- Compare the cost of insurance (COI) of the older plans with the new plans. If older plans offer lower coverage but higher COI, how is it possible a new plan with higher benefits can sustain with such low COI?
- If the insurance offers higher/additional benefits at a lower premium, what’s the drawback?
Ensure Our Best Interest
Insurance companies are appointed to manage a pool of funds for contributors and compensate those members fairly when they are in need. As a company, it is understandable they are looking to profit. There should be measures to protect our interest as consumers. Discussing policies or company standard practices for claims with the agent will help us know what measures and efforts are taken by the insurance company to manage the fund well to avoid constant repricing, ensuring fairness to consumers.
You might want to check:
- What measures are done by the insurance company to maintain its claims between hospitals and consumers?
As for the agent or financial planner, they not only have to be able to explain the benefits but agents are also representing you in dealing with the insurance company. Such discussions with the agent can also let you know how knowledgeable and experienced the agent is, if you agree with the way they work, and if they are watching out for your best interest.
You might want to check:
- When it comes to a claim, what are the insurance principles and SOP?
- Check with the agent about the exclusions or limitations when it comes to claims.
Summary
Looking for a medical plan is not just about finding the best benefits for the best premium. It is about seeking a partnership between you, the insurance company, and the agent. So it is important that you understand how they operate, not only to maintain a good relationship but also to trust them to manage your policies in the long run, ensuring a win-win situation and maintaining the best interests for both parties. It is also important to make sure if the agent are constantly looking out for your best interest.