Finding affordable health insurance

May 20 — Our recent survey found these financial problems concern women most: living within your means, affording health insurance, getting rid of debt, buying a home, and saving for retirement. We looked through our viewer email and found five women who have these money problems. “Today” financial contributor and Money magazine editor-at-large Jean Chatzky has advice on how to obtain affordable health insurance for the family.

— Kim W., Owensboro, Ky.

THE LEADING CAUSE of personal bankruptcy is not wasteful spending or reckless investing but unpaid medical bills. That’s surprising, but only until you consider that at any moment some 40 million Americans are without health insurance and another 40 million have experienced a gap in coverage sometime over the past two years.

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WHY IS THIS HAPPENING?

With the slow economy, some employers — particularly small ones — are faced with a choice, they can cut jobs or they can cut benefits. Many, for understandable reasons, opt to cut the latter. If you are laid off, you can often maintain your health coverage for up to 18 months through your former employer’s plan under a law called COBRA (the Consolidated Omnibus Budget Reconciliation Act). But at an average $600 a month, it’s also expensive. The good news is, if you’re in reasonably good health it’s getting easier to find affordable health insurance on your own — particularly online.

FINDING AFFORDABLE HEALTH INSURANCE

Start on the web

According to comparisons from eHealth Insurance.com, the online market leader, a healthy family of four (thirty-something parents and school-age kids) can get a major-medical plan — with a $1,000 annual family deductible and co-payments of $30 per doctor’s visit and $10 for generic drugs — for about $400 a month.The price falls to $200 a month with a $5,000 deductible. A healthy 30-year-old single male can pay about $160 a month, or $50 with the higher deductible. You’ll have to go through medical underwriting, answering health questions and opening up your medical records. Depending on what’s there, an insurer may want to charge a higher rate or exclude existing conditions. In such cases, COBRA might be the best deal after all.

Consider short-term coverage

If your employment prospects are good, you may want a bridge for, say, six months. Short-term policies are cheaper because they exclude coverage for existing medical conditions and reimburse a smaller percentage of your costs. Besides eHealthInsurance.com, go to Fortis Insurance (Fortishealth .com), the leader in this part of the market.

Take your web quotes to a pro

An agent can assess your needs, explain complex policy riders and sometimes get you a better deal. (Some insurers aren’t in online databases.) You can search for agents in your area through the National Association of Health Underwriters at nahu.org.

Check out association coverage

Many institutional and professional groups, including alumni associations, offer well-priced coverage to members. But don’t assume that your group has chosen a good company. Before signing up with any insurer, see whether its customers lodge a lot of complaints: go to “Consumer Information Source” at www.naic.org, the National Association of Insurance Commissioners site. Check quality ratings at www.ncqa.org, the National Committee for Quality Assurance site. And before using an insurer based out of state, ask your state’s insurance department whether you’ll be protected if the company tries to raise your premium but not those of other policyholders.

And finally...

In the Wall Street Journal last week, there was a front-page story on health insurance policies that are very cheap ($10 a week) but only cover up to $1,000 of expenses. The story noted how easy it is for these policies to leave you stranded if you have a serious health problem. Instead, you’ll be better off not skimping but rather buying the broadest coverage you can afford. Cut costs, if you must, by raising your deductible but not by curtailing coverage for such things as outpatient hospital services, which can easily cost tens of thousands of dollars.

Some feel very strongly that this country needs a national health plan. 40 million people are without health insurance, and something has to be done.

Some financial experts agree, but in the meantime people are going to have to take care of themselves. There are many sorts of policies out there — short term, long term, Cobra for people who get laid off — hopefully the eHealth site can help people find a policy that works for them.

Jean Chatzky is the financial editor for “Today,” editor-at-large at Money magazine and the author of “Talking Money: Everything You Need to Know About Your Finances and Your Future.” Information provided courtesy of Jean Chatzky and Money magazine. Copyright © 2003. All rights reserved. For more financial advice, visit the Money magazine Web site at: Money.com