Pitfalls to avoid when buying health insurance online
Letter to online searchers.
Indication that Utah has fewer regulations is correct.
(1) This allows carriers a wide
girth to decline for various "health conditions". I have seen many web
sites ESPECIALLY out of state websites try to elevate their limited
understanding that "Utah has few
regulations" and profess to be experts about Utah underwriting. When in
fact they put many potential insured's at risk by publishing incorrect information
on their web site. If a Utahan with moderate health conditions does not know how to wisely go about
seeking approval they will get declined. Once declined, it is a black mark
that follows you for two years minimum. IT IS EXTREMELY difficult to get
approval anywhere even "with no name insurance carriers" (carriers you
haven't heard of).
(2) SO....to go a little deeper here,
one would have to understand
an "oligopoly" and how it works. Basically an "oligopoly" is a group of
competing industries that watch market trends which they influence,
coordinate & control between each other in a sort of "unspoken" manner.
They don't get together in a meeting and decide how they are going to do
business and make bundles of money because that is now illegal (Anti Trust
Monopoly Laws). They adopt a understanding of how a
"unspoken sorta monopoly hybrid oligopoly child" comes to be.
Or a oligopoly comes about by one company that has more market control which
forces smaller competitors to be subordinate. It (Oligopoly) can be a bi-product of governmental regulation
It is a natural law that we "Economist" title it. Basically how it works is
what one business entity does what the dominate company does "mimic". Eventually a unique market
formed that controls market demand, pricing and service mechanisms. This control is usually
established between an average of 3-4 competing companies that are the strongest and
most dominate in THEIR INDUSTRY.
How does this relate to the insurance carriers in Utah? Lets look at the
individual policies issued in this
state. What I am covering here does not apply to employer sponsored group
insurance. I need to point out that employer group insurance has dual governmental regulations from
Federal and State levels. This causes common confusion among Utahans and
this is where out of state online insurance sites further misinform and
misrepresent because they don't understand.
Getting to my point of an "oligopoly"....lets use one very simple common & unfortunately example....Lets say
you have a insulin dependent diabetic seeking insurance coverage in Utah.
One carrier (Carrier A) decides they will "decline" applicants that have
this condition BECAUSE the state allows it. Carrier
A makes this decision based upon increased profits following fewer overall
diabetic claims and gets approval from the state. Carrier A has major influence in the medical provider
world of hospital and doctor contracts. This sets Carrier A above the rest
of the competition (1st of three Strongest carriers). (Carrier B) decides to
"fall into step" and decline applicants that are insulin diabetic. Carrier
B can do this because the state allows. Carrier B
must fall into step because they wouldn't want to take on losses of declined
diabetics from Carrier A. Carrier B is a close rival to Carrier A in market
strength (2nd of three Strongest carriers). Carrier B is an non-profit (lower
expense ratio...they hold fast to paying claims) and has name recognition
goes back to the early beginnings of health insurance in the United States.
(Carrier C) is not as strong as Carrier A & B but is in the third slot for two
1st reason > Their provider network of hospitals and doctors (Mountain View
Health) competes against Carrier A's CONTROLLED provider network of
hospitals and doctors. 2nd reason > they are stock owned
by a non-domiciled insurance
carrier which compels them to compete for
market share. Therefore to compete for market share (% of Utahans insured)
they must also FALL INTO STEP and decline diabetics.
This micro example
at this point and should be expanded to the macro of various
health conditions that A, B, C carriers decline coverage for individual
insurance policies in Utah. They do have a "medical condition list" of
automatic declinations for health conditions or certain histories.
insurance agencies that do not operate in this state on a local basis find
it hard to keep up with changes and underwriting standards. More and
more we see people that come to us that have been underwritten improperly,
given bad advice by these "out of state" insurance agencies and have even
been declined. Unfortunately, we usually can't help these individuals. One common item that is always commented on is that
they recognize the legal judicial barrier present that actually protects
them. Meaning....They can set up a policy hap hazardly and if the Utah
client wants to bring legal suit against them they have to ultimately fight
judicial barriers....meaning they have to ultimately go to the home state of
the insurance agent and file in that agents judicial legal courts.....very
expensive.....low success rate for Utahans.
(3)Some Utahans go to A, B, C carriers on their own without representation
in seeking coverage. This is not recommended because of the many problems one
can fall into without "know how" knowledge. I compare this to someone going
to court without an attorney. Some Utahans believe that they can save money
or fees by dealing directly with carriers A, B, C.
They don't understand that LOCAL Utah agents & agencies are licensed and contracted by
A, B, C carriers to complete field underwriting applications, service and
provide policy explanations at
no additional charge.
Some Utahans fall prey to "NO NAME" insurance carriers. As previously
described about the "Oligopoly" affect in the Utah insurance market, you
have "bottom feeders / no name" carriers. First understand that these
carriers do not understand the market in Utah because on a whole it is
unique when compared to the other states. Texas as an example, fosters
competition vastly because of how insurance laws are wrote in that state.
Therefore, any insurance carrier can open shop and pay state fees (usually 1
million dollars) to market insurance with a predictable return.
However, when these "bottom feeders / no name" carriers come to the Utah
market they pay a "rental fee" to Carriers A (see description of
these carriers in point 2a)
use their doctor and hospital network. This is not a cheap fee. Usually
accounts in many cases upto a forth of the premium they charge you.
This is how they earn the title of "bottom feeders
/ no name". Rising medical costs and
trends really apply pressure to profits for insurance carriers. Because
these carriers are paying a high "rental fee" that eats up 1/4th of their
premium factor they usually are VERY SLOW to NOT PAYING claims at all. Keep
in mind they have to factor in % costs to cover prescriptions, surgeries,
office visits, pediatricians, well baby, physicals (not usually covered),
emergency room (highest cost factor), and the list goes on. WELL they also
have to make money. So someone gets squeezed somewhere. TOO many
times I have seen people with horror stories.
Here is the
Top 3 list and what they (online guys) don't want you to know:
1) Mega Life and Health. We deal with
Mega Life and Health outside of Utah because they have great worker comp
alternatives but they are not an experienced health insurance company in
Utah. They have left many
Utahans holding the bag several times by dropping coverage.
2) NASE / Association plans for the self employed.
Another good article to read if you found this helpful >
Top 5 things you should know