Consumers shopping for individual insurance can trim premiums with coverage concessions

More than one way to trim health coverage premiums

Skyrocketing premiums have stunned some consumers who buy their own health insurance policies. People in several corners of the country are facing increases of 20 percent or more from some insurers.

Congress has asked the largest health insurer, WellPoint Inc., to testify about rate hikes of up to 39 percent for its Anthem Blue Cross plans in California, and President Obama wants federal oversight of rate increases. Insurers say rising medical costs are to blame for the price hikes.

There are steps consumers can take to shrink their payments while all this haggling takes place. Here are things to consider:

Q: What’s an abnormal rate increase?

A: That depends on your age or how expensive your plan is. But generally, rate increases above 20 percent or 25 percent would fit the definition, said Colleen King, an independent insurance agent in Northridge, Calif.

Q: What’s the first thing to do if you see a new premium that makes your hair stand up?

A: Find out when it goes into effect if your insurer doesn’t spell that out. Some provide a couple months notice depending on the state.

Then ask your insurer what can be done. You may be able to raise your deductible to lower the premium. Many insurers will offer alternative plans to keep your business. But keep in mind a higher deductible means higher out of pocket costs when you use the plan.

Q: Should I look outside my insurer?

A: Definitely. Call an independent insurance agent for help or look at Web sites like www.eHealthInsurance.com to get a sense for prices. Many agents also have Web sites.

Independent agents can be helpful if you have pre-existing conditions that will affect your rates or an insurer’s decision to accept you. For instance, an agent might know which insurers are more lenient on their underwriting for people with back problems.

Q: Health insurance involves so many variables like deductibles, premiums and out-of-pocket maximums. How should I compare policies?

A: First, find a premium you like.

Then look at the policy’s annual deductible, its coinsurance (which is the percentage a patient pays for a medical service generally after a deductible is met), and the annual out-of-pocket maximum.

That maximum is how much you have to spend on co-pays, coinsurance and other costs before the insurer takes over and covers the majority of your remaining expenses for the year.

“That’s the number that keeps you from going broke if something big happens,” said King said.

You should also check whether your doctor is in the new carrier’s coverage network.

Q: If I see a low annual premium, should I be suspicious?

A: You should try to understand why the premium is low. The insurance may come with a high deductible, which means you pay a few thousand dollars out of pocket before coverage kicks in. It also may not cover doctor visits or provide limited coverage for hospital stays. Some individual plans exclude maternity coverage.

Q: Are there certain coverages I can live without in order to get a better premium?

A: If you use few or no prescription drugs, you may want to cut that coverage and buy from discount drug programs offered by Wal-Mart or other big stores. Chiropractic coverage is another item that may be worth skipping.

Q: Can I drop my old coverage while I look for new insurance?

A: No. Something could happen during that lapse in coverage that makes you ineligible for future coverage. For instance, if a woman becomes pregnant, an insurer will not cover the birth or prenatal care for an individual plan if there is a gap in coverage.

Q: What does underwriting mean?

A: This is basically how your insurer decides what kind of risk you represent and what health conditions you have. The process involves an application, and sometimes a phone interview and medical records check.

You have to go through underwriting if you look for coverage from a different carrier or if you upgrade your insurance through the same carrier. If you have a pre-existing condition, the insurer may reject you or raise your rate.

Q: Will I wind up doing this search again in a year or two?

A: That depends on your age, how fast costs are rising where you live and whether your policy already stretches your budget. It also may depend on whether Congress passes any kind of health care overhaul and how that affects rates.

Westfield, Ind., resident Lou Herchenroeder covers his family with individual health insurance, and rate hikes have forced him to change plans three times over the past seven years. He said a key for him was finding an agent that understands his needs and becoming savvy about how insurance works.

“If you don’t become an expert you get eaten alive,” he said.