The “Covered” Illusion
Insurance. What a love-hate relationship that is. It’s a good thing to have when you are in a potentially desperate situation. However, is real coverage just an illusion? It costs a fortune each year for the promise of protection “just in case.” We hand over a huge percentage of our income while secretly praying we never actually have to use it. Of course, if your insurance should lapse for any reason, don’t you know, that’s exactly when something happens that you’ll need it.
It does have a few redeeming qualities. I mean, if your house should burn down to the ground, you wouldn’t lose everything. Or, if you needed a major surgery, insurance might cover the majority. Unless it’s deemed unnecessary, after the fact, by your provider. It’s kind of like playing roulette, with your life and financial stability. It’s a great system… if you’re the insurance company.
The bad reality of insurance is how they twist it to fit themselves in most cases. For example,
- “Acts of God” exclusions, flood? Separate policy. Earthquake? Different one. Mold from that flood? Absolutely not covered. You need four policies to protect one house.
- Replacement cost vs. actual cash value: they’ll pay what your 12-year-old roof was worth, not what it costs to replace it. Spoiler: big difference.
- Rate hikes after filing a single claim. Or after your neighbor filed one. Or after a hurricane happened three states away. Truth.
- Prior authorization: your doctor says you need it. Someone sitting behind a desk with a checklist and no medical degree says otherwise.
- The deductible trap: $450/month in premiums + a $7,000 deductible = you’re basically self-insuring for the first $7k anyway. Cool system. For them.
- “In-network” is a scam. The hospital is in-network. The anesthesiologist working inside that hospital? Out of network. Welcome to surprise billing game of chance.
- Mental health parity laws exist on paper. In practice, your therapist is mysteriously never in-network.
On our own Gulf Coast, we sure have been dealt a few storms that have increased our premiums. Katrina, Sally and Zeta, to name a few. Those lovely ladies that have offered up storm surges and winds that no one should have to endure. Along with years of outrageous costs in order to cover ourselves in the event of another catastrophe, that they likely won’t cover. Ha.
Yeah, did I mention, they fight you tooth and nail to get any compensation for what they are supposed to have covered. My aunt and uncle had never had a claim until Ivan hit, and flooded their first floor and ruined half of their house. And the company that I won’t mention, (but has a friend named Jake), did not want to cover them. Not to mention they were traumatized by the storm, and then dealing with a company that did not want to help them through the horrifying process was enough to make anyone lose their mind! They were devastated. They had lost so much, but the biggest loss was the trust they had in their coverage. It became very clear that recovering damages from these companies can become a battle all by itself.
You THINK you’re covered until:
- storm damage happens
- a prescription changes
- you need a specialist
- your roof is over 10 years old
- water came from the “wrong direction”
Apparently, insurance only covers disasters that occur during a full moon while standing on one foot with proper documentation. If you haven’t experienced this yet, in dealing with insurance, I am thankful and hope you never do. But be prepared. They have very trained staff to ensure you don’t get more than the bare minimum that they can justify. Don’t accept their first offer. Fight until you get made whole. And if nothing else, aggravate them persistently for the sheer joy of making them work for it. I know you probably don’t have the energy to go back and forth and negotiate like a lawyer, at the time you are dealing with a crisis. But it makes a huge difference, and can be the saving grace of your restoration.
Of course, it would be nicer to have a piggy bank big enough to cover your assets in the event of a major issue in life. But most people don’t have that luxury. But year after year, insurance costs increase and coverage decreases. I remember when insurance actually felt more like protection than negotiation. We could choose name-brand medications if they worked better for us, and homeowner’s claims didn’t automatically double your premium afterward. Of course, that is strategic. They don’t want you to use your insurance, so they penalize you for doing so.
Well, it’s a necessary evil, as the saying goes. So, what do you do? Be strategic. At least as much as you can. This can ensure you have the best chance of getting much better result from the company you have been supporting for all these years.
Document your stuff before disaster hits.
Walk through your home once a year with your phone and record everything. Open the closets, show the electronics, narrate what things cost. Save it to the cloud. If something gets stolen or your house floods, you can actually prove what you had — and what it was worth. Insurance companies love to lowball claims when there’s no proof. Don’t give them the chance.
Read the declarations page, not the whole policy.
Nobody has time for 40 pages of insurance jargon and you don’t need to. The declarations page is the short summary at the very front, usually, one or two pages. It tells you what’s actually covered, what the limits are, and what’s excluded. Start there. If the exclusions list is longer than the coverage list, that’s your sign.
Call your insurer and pretend you’re leaving.
Do this every two years. Call them up, tell them you’re shopping around and thinking about switching. Watch how fast a discount appears. Insurance companies give their best rates to new customers and count on existing ones to stay put out of laziness. Don’t be that person. Loyalty is not rewarded here.
Fight every single denied claim.
When a health insurance claim gets denied, most people just accept it and pay the bill. That’s exactly what the insurance company wants. The reality is that 40 to 60 percent of appeals actually win. Write a letter. Ask your doctor to write one too. Reference the exact language in your policy. Be annoying about it. The squeaky wheel genuinely gets paid here.
Learn what an Explanation of Benefits actually is.
After any medical visit, you’ll get something in the mail or online called an EOB. It is not a bill, but it tells you everything; what the provider charged, what your insurance agreed to pay, and what you supposedly owe. Read it. Billing errors happen constantly, and most people throw these away without looking. That mistake can cost you hundreds of dollars.
If you have a high deductible health plan, open an HSA.
A Health Savings Account lets you set aside money before taxes to pay for medical costs. The money never expires, it rolls over every year, and if you invest it the growth is also tax free. When you spend it on qualified medical expenses, that withdrawal is tax free too. It is one of the only truly triple tax advantaged accounts that exists. If your plan qualifies and you are not using one, you are leaving real money on the table.
Check your medication list before picking any health plan.
Every insurance plan has something called a formulary, which is just a fancy word for the list of drugs they will actually cover. If you take a specific medication regularly, look it up on that list before you sign anything. Finding out your prescription is not covered after you already enrolled is a painful and expensive surprise that is completely avoidable.
So now go forth and prosper.
Read the fine print.
Ask questions.
Take pictures before disaster strikes.
And whatever you do… don’t be fooled by illusionists pretending to sell peace of mind. Because these days, “covered” can be a very flexible word.