Fixed vs. comprehensive coverage

[submitted_as_experience]

Says Mr Khatri:

"In other words, if fixed coverage limits were good enough, no body would ever purchase comprehensive coverage. Also, fixed coverage is for persons who don't look at the benefits but just at the price."

Narendra Khatri
Herndon VA USA - April 21, 2004 at 07:05:21 PM

Why? Is it wrong to provide good coverage at an affordable price? So what you are saying is "this first plan that we have is all hogwash - it does not provide anything useful. You love your parents a lot dont you? Then fork over all your cash so that we can give you something that is decent and that will actually work for you". In other words capitalizing on the emotional side of people and making them pay sky high for a plan that will actually work for them. Everyone wants a plan that will give them coverage during an emergency. These people are not thugs or con-artists. They are genuine people who panic when disaster hits them. And not all of them are the types that earn gobs and gobs of cash and become millionaries yet cheapen out when buying insurance. They are genuinely shopping for a good price because they are running on a tight budget - and they get severely misled when they see those "no-good" plans that are slightly less priced than the others but which still say "Ohh...$100,000 coverage! No worries". Stop this deception and just give people something that works. Thats what everyone wants and the insurance companies know that.

[insubuy]

No one is pressuring you to buy insurance of any type. We put all the facts in front of you, provide you pricing from different companies, show you the coverages, show you side by side comparison of all the plans, and answer any questions you have. We sell both fixed coverage and comprehensive coverage plans. And it is entirely up to you what plan you want to buy.

As a broker, we work in the best interest of our customers and we are already doing shopping around for you, as you can see on our website. We are honest with people what every plan covers, how much it covers and what it does not cover. We do not talk sweet with people just to sell something to them, we speak practical.

My comments are based on thousands of customers we deal with every month, we get too many calls from people who bought fixed coverage plan simply because that is cheaper, even though we explained them that it is limited. And many of those customers call us that they want to upgrade to comprehensive coverage plan later, because their relatives got sick, got hospitalized and they realized that what they purchased was not enough. But it is too late at that time.

As long as you know what you are buying, what is provides, there is absolutely nothing wrong in buying that.

There is nothing wrong in someone providing good coverage at lower price. But if the price difference between fixed coverage and comrehensive coverage 3 to 4 times, you have to think what you are getting. If both plans provided same coverage, anyone who purchased comprehensive coverage would be foolish.

e.g., Fixed coverage pays $300 for emergency room visit in most $50,000 plans. And which ER visit costs $300 now a days? In last several years, I have taken any of my family member to ER and it has costed me at least $1,500 to $2,000 every time. If you bought fixed coverage, you will have to pay the difference, no matter how high it is.

[submitted_as_experience]

"No one is pressuring you to buy insurance of any type."

Sorry if I sounded misleading - my comment was aimed only at the insurance companies themselves, not at your service. I think you are providing an excellent service by helping people decide on the best insurance. My complaint is at the deceptive bait-and-forget strategies adopted by the companies themselves "hey here's a sucker, lets make quick money off of him by showing him this shiny thing"), the fine-print embedded in their fat policy books and their general attitude of indifference when you ask questions.

Yea you can tell I've been bitten - and no, I was not looking to cheapen out on the insurance. I genuinely believed that I was getting good coverage. Oh, and the insurer was AIG. My father was in the ER for an hour only. Then he was moved into a room for 24 hours. Thats where the math became fuzzy and the insurance hit me hard with their standard "exceeding usual and customary charges" talk and paid 1/4th the total bill. This was NOT the ER bill, this was post-ER. The hospital came after me to collect the rest. It was not a pre-existing condition. Etc etc etc. Anyway, thanks for responding to my post.

[insubuy]

Your second posting contradicts with your first one. Earlier, you were trying to tell that fixed coverage is not as limited as we portray it.

Now, you are saying fixed coverage is indeed limited policy. It is true. What you pay is what you get.

Thousands of agents sell insurance. How do we distinguish ourselves? We tell everyone clearly what is covered, how much is covered and what is not.

It may be that when you bought the insurance from somewhere else, you were not properly explained the details of the policy.

Or it may also be you never looked at the details of the policy, neither asked anyone and just bought as soon as you found something cheap and you thought that fits in your budget. No one can help you in that case.

In your case, let's say you bought $50,000 coverage. If true, you should be paid $300 for ER visit and $1275 per day for hospital room and board, after the deductible of $75. Therefore, you might have got paid $1500. No matter what the bill is, insurance company would pay $1500. And you pay the difference.

Therefore, if the bill is $6000, you would think they paid $1500, which is 1/4 of the bill because exceeding URC charges etc. But that is what they promised that they will pay, no matter what the charges are.
And fixed coverage plans do not have PPO network. Therefore, there is no concept of network negotiated fee in that.

On the other hand, most of the comprehensive coverage that we offer have PPO network. When you go to the doctors in the network (which is good network all across US), you don't have to worry about exceeding Usual, Reasonable and Customary charges at all, bceause they are going to charge you only network negotiated rates. In network, your maximum out of pocket liability is the deductible plus $1,000 (20% of first $5,000 in terms of coinsurance.)

That is exactly what the difference between fixed and comprehensive plans is.

And I don't see any insurance company's fault at all in offering fixed coverage plans. They are offering what people want to buy, cheaper, cheaper.... I have seen most people are comparing prices alone, instead of prices and coverage together. Therefore, there is market for every type of product. And most companies we work with offer both types of products, one fixed coverage and one or more comprhensive coverage. You decide which one you want. For a 68 years old person, if one and same copmany is offering 2 products for $50,000 coverage in both the plans, one for $63/month and another for $185/month, how can they be same? If you think both are same, and buy the one for $63/month and expect that it would work same as $185/month, who is to blame?

Therefore, make sure you don't get dragged or attracted by price alone and spend some time understanding different plans and buy comprehensive coverage.

And if you have any questions or need any help, we are always here to help you.

[submitted_as_experience]

"Your second posting contradicts with your first one. Earlier, you were trying to tell that fixed coverage is not as limited as we portray it."

No it does not. Again, my gripe is at the insurance industry, not at your service. I think I clarified that in my second post.

"Or it may also be you never looked at the details of the policy, neither asked anyone and just bought as soon as you found something cheap and you thought that fits in your budget. No one can help you in that case."

You are again accusing people of buying something just because they thought it was cheap. Please stand corrected on that and dont make such blanet accusations especially since you know very little about my case atleast. I respect your opinions since you have been in this business long enough but do not make sweeping statements like that. There are people who are genuinely mislead. Accept that.

"Therefore, if the bill is $6000, you would think they paid $1500, which is 1/4 of the bill because exceeding URC charges etc. But that is what they promised that they will pay, no matter what the charges are"
And that is where the deception lies! Who knows what is the usual and customary charge for a given service? Does the common man know? Especially in an emergency situation? Do you want people to shop around for hospitals that closely match what the insurance company pays, in a time of emergency?

"Therefore, make sure you don't get dragged or attracted by price alone and spend some time understanding different plans and buy comprehensive coverage."

You can bet I will do that, but not for reasons that you think I bought the plan in the first place - the low price.

Thanks again.
GR.

[insubuy]

I have not made any comments or statements about you. I just said 'May be this' or 'may be that'. Just possibilities. Again, that is based on my experience of how people think while purchasing insurance, what people tell me on the phone.

It is your insurance agent's duty to explain the facts of the policy. At the same time, it is customer's duty to understand what they are buying.

We ourselves would never mislead any customer. I can't comment everyone else in the industry.

You have misunderstood my statement. In fixed coverage plans, insurance company does not care what usual, reasonabe and customary charges are. It can be whatever, it does not matter. They just pay fixed amount for every procedure and you pay the difference. Therefore, no matter which hospital you go to, amount of money they pay is fixed and you pay the difference.
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e.g., insurance company pays max. $300 for ER visit, not because that is what they think is URC, but that is what they promised in the policy!

You are not expected to go around and find out what UCR is for everything, and try to match. That is because even if you do that, it is not going to match, because you purchased fixed coverage insurance.

The problem is not with the insurance company, but in the customer expectation that the schedule of benefits in fixed coverage plan may match the actual charges.

[submitted_as_experience]

"In fixed coverage plans, insurance company does not care what usual, reasonabe and customary charges are. It can be whatever, it does not matter. They just pay fixed amount for every procedure and you pay the difference. Therefore, no matter which hospital you go to, amount of money they pay is fixed and you pay the difference."

Thanks. And thats what was misleading. First of all there was no mention of the plan being "Fixed Coverage". The biggest mistake I made was in thinking that the policy maximum is the ceiling and that any expense under that is covered. Thats how it is in say automobile - you pay your deductible and the rest is borne by the insurance company. Who would expect it to be any different for Medical? Thats what insurance means, does it not? You pay a premium, are aware of your liability in the event of an incident, you pay that liability and expect the insurance company to cover the rest. Only in the medical field can it be so twisted as this: you pay the premium, you know your liability, yet you cannot be sure if you are covered. Even if the policy maximums are listed you cannot be sure if your hospital will charge less than that, exactly that much or siginificantly more than that. I agree that the consumer needs to be aware of the products out there, but a part of the responsibility is also with the insurance companies to educate the user on which policy would be the best. There is absolutely no consumer protection here. In virtually every other business there is some level of consumer interest and welfare. The medical insurance industry seems to lack it sorely. You see my intention was to get the _best_ insurance possible, but the way the product was described and worded mislead me completely. That is what my major complaint is - a well-meaning customer is duped. Instead, my suggestion is make the default product cover the worst-case scenario and let thrifty consumers figure out ways to save money if they want to (by stripping down coverage limits if they want to). The system is the reverse right now, which only hurts a majority of consumers if I can say that.

Sad. Anyways, I guess I have learnt a lot from this which is good. I hope others in the same boat too realize this. Thanks a lot for your input, it was very enlightening.

GR.

[insubuy]

In all the fixed coverage plans I know of (the ones we sell and the ones we don't), the limits are clearly defined in the brochure and policy wording.

I have no idea which place you bought it from (certainly not from us), which company, whether you bought it from US or from India.

But it is possible that you might not have looked the brochure at all, just the overall limit. It is also possible that you called some agent and you were told on the phone that the coverage is limit is $50,000 and price is this. May be you did not ask, may be agent did not tell you details. (If the agent is offering only fixed coverage plan, he may not want to explain what fixed coverage vs. comprehensive coverage is)

Also, many plans purchased from India are fixed coverage plans for ages above 55. And from what I know, most people buy travel insurance in India from their travel agents (Would you buy your car insurance from your car dealer? No. House insurance from builder? No. Then why travel insurance?) They may have limited knowledge, and they may just ask you to sign at some place, pay money and say that you have $1 Lac insurance. He may not tell you and you may not ask. Not your fault but his.


I am not generalizing, but I know that it happens a lot.

That is why it is important to buy from knowledegable insurance broker like us. We have 2 sections clearly marked. Fixed coverage and comprehensive coverage. And ? next to it explain what it means. Also, we have side by side comparison. Therefore, you clearly know what is going on.

And whenever any customer calls our office, we clearly tell them that there are 2 types of plans and explain at least one in each category. Then let the customers decide what they want. That way, it is good for customers, good for us and good for insurance companies. Everyone knows what to expect.

Even after we explain, some people say 'our parents are healthy, no need to spend lot of money on comprehensive'. Well, that is not valid agrument. Even if someone is not healthy, insurance company is not going to pay for it. It only pays for any new medical conditions, sicknesses, injuries or accidents that may occur after the effective date of policy. The difference is that when something new happens, how much you are covered.

As you can see our website contents and our procedure, we do our best to educate our customers.