Rising Co-Pays: Five Signs That Your Health Insurance Is Worthless

Published: Fri 19 Feb 2010

Donald Chase

You might think having any health insurance at all is preferable to the risk of being uninsured, but that is not always the case. It is possible to have a health insurance policy that offers no more protection against financial disaster than having no coverage at all.

The fact is, almost any health insurance plan, even the so-called "good" plans, can leave a policyholder high and dry in times of need. However, the plans that are almost guaranteed to fail you typically have five distinct characteristics. With these plans, you might find out the hard way that you've been paying for coverage that is essentially useless to you.

If you are in the market for a health insurance policy, watch out for the following five features that may spell disaster down the road.

1. Medical plans without out-of-pocket limits. When you review a potential health insurance plan, always verify what your maximum out-of-pocket expenses will be. A good policy will tell you exactly how much of your medical expenses you'll have to pay before your coverage kicks in 100 percent. If you can't find a limit in the plan, choose another policy or another insurer.
2. Hospital benefits begin on day two of your stay. This might not sound like a problem at first blush, but the majority of hospital expenses occur on the first day: surgeries, diagnostic tests, emergency room visits, etc. Walk away from any health insurance policy that doesn't offer hospital coverage that starts on your day of admission.
3. Limits on particular types of care. Be wary of limits placed on certain types of medical services. For example, if your policy places a $1,000 daily spending limit on hospital services and you need to have three different surgeries after a car accident, you will leave with a massive bill. Caps on services like rehab, mental health, and home health are common, but avoid policies that limit inpatient or outpatient hospital care, diagnostic tests, prescription medications, and outpatient visits to your health care provider. Also look for annual and lifetime spending caps on specific services. Once you hit the lifetime limit for a medical service, you will no longer have coverage for that kind of care.
4. Selective benefits. Health insurance companies are not always required to cover certain services by law, and they sometimes can also exclude policyholders from coverage on the basis of preexisting conditions. The problem is that preexisting conditions are the problems for which you're most likely to need coverage, so find a policy that will offer the benefits you need.
5. Bargain-basement premiums. A cheap plan might be enticing, but bargain-basement medical policies are usually cheap for a reason. Ultra-low health insurance premiums almost always translate into very poor coverage with selective benefits. Try researching different health plan options online to find out what a fair price is for the policy you want.