7 Common Mistakes People Make When Buying Health Insurance

September 05, 2012

We have all done it, you probably did it today. No, not waste time on Facebook at work, I’m talking about making a mistake. You know, like thinking you can be a major league pitcher with a low 80’s fastball, or rooting for Michigan (more of a crime than a mistake, really) or thinking (insert celebrity couple’s) marriage would last.

It’s okay, everyone has a list of mistakes, some longer than others. Some deeply profound person once said, “it’s not about the mistake you made, it’s about how you handle yourself after making it.”

The same can be said about your health insurance. Just because you have made the mistake in the past doesn’t mean you have to keep doing it. Here is a list of seven common mistakes people make when shopping for health insurance.

1. Wanting too low of a deductible

The number one mistake everyone makes is trying to buy a plan with a ridiculously low deductible. Add up the extra money you would spend each month for that dream deductible, tell me it doesn’t almost cover the cost of that higher deductible? Make your insurance company earn that extra cash. You are better off saving it if you can, the insurance company isn’t going to give it back if you don’t meet that low deductible.

2. Demanding Copays

Regular readers should be very familiar with my distaste for people’s copay expectancy. Just like a low deductible, there are very few circumstances that justify spending the extra money for this benefit. If you think you need copays, try going without them and see how much money you save. I bet you realize pretty quick that you don’t need them.

3. Not paying attention to your out-of-pocket max

Again, this is not a foreign topic around these parts. Outside of your monthly payment, this is the single most important thing you want to concern yourself with when buying health insurance. There is nothing more important than knowing how much money you could potentially have to pay for a serious medical procedure.

4. Buying a plan you can’t afford

If buying too low of a deductible is the number one health insurance mistake, buying a plan you cannot afford is a close second. If you make the first and second mistake on this list you will almost assure yourself of making this one. Be realistic with what you can afford and what benefits are most important to you.

5. Not buying insurance because you can’t afford the plan you want

This mistake is commonly achieved after you have successfully made mistakes 1-3. You have looked at your options, of plans you think you should have, and discovered you can’t afford them. If you made all or most of the mistakes on the list so far, this will not be a problem.

6. Believing something is too good to be true

If you have ever had a hard time getting approved for a health insurance policy, you undoubtedly have come to this point. There is always a health insurance company with a suspiciously fake sounding name, normally something like Healthy Choice Benefits Group. They promise that you will be able to have your cake and eat while riding on a unicorn. The unfortunate truth for people dealing with pre-existing conditions is that there are no magic formulas. At least until 2014, if you are uninsurable you are uninsurable.

7. Not working with an independent agent

Can you buy adequate health insurance without the help and guidance of an independent agent? Absolutely. Why would you want to? I don’t know. This isn’t on the list to protect my own interests, rather to illustrate the value independent agents can add throughout the lifespan of your policy. If you could receive valuable insight, have your pick between all the major companies and be reassured each year you are paying the best rate, all for no extra charge, wouldn’t you?

Your insurance agent does not get paid until you purchase a plan, at which point they are paid a commission directly from the insurance company. Health insurance prices are fixed by law, that means you will pay the same rate for that health insurance no matter where or who you buy it from.

Are you guilty of one or more of these mistakes? Have you since corrected them?