How to Choose a Health Insurance Company

Low Complaint Ratio
The primary purpose of a health insurance policy is to protect policy holders from large catastrophic claims. For this reason it is important to research an insurance company's complaint ratio to determine how reliably a company pays claims. Generally, complaint ratios are consolidated in two places, the state department of insurance website and the National Association of Insurance Commissioners website.

Clearly, a lower complaint ratio is better because it indicates the insurance company is paying for claims as the policy holder expects they should. An average complaint ratio is about 1.00 per million dollars of premium. A policy with low premiums and a complaint ratio much higher than 1.00 may offer peace of mind, but it is contrary to the purpose of health insurance in providing financial security. It is better to pay a little more for a policy with a company that has a low complaint ratio.

Many companies at the state level have seemingly exceptional complaint ratios of 0.00. This can be a good sign, but in most cases it's not very informative because it simply means the company doesn't have very many policy holders in the state. Insurance companies should be collecting close to $30 million in premium per year before this statistic can be thought of as significant.

Large Network
The second factor in choosing a health insurance company is the size of the network. The vast majority of health plans pay lower benefits out of their network. Preferred Provider Organization (PPO) plans can pay out of network benefits, but often at a much lower benefit scale. By contrast, Health Maintenance Organization (HMO) plans most often don't offer any out of network coverage except for emergency services. The result of a small network for the policy holder can be high out of network expenses or time consuming searches for fleeting in network providers. The easiest way to get a sense of a given network is to visit the insurance company's homepage and perform a localized provider search for primary caregivers, specialists, and hospitals. Large networks will penetrate 75-95% of primary care givers and 80-100% of hospitals and facilities.

Long Term Stability
Most policy holders develop health conditions as they age, and become less desirable or even ineligible as applicants if they decide to change insurance companies. Consequently, it is important to choose a company with long term financial viability. An insurance company should be chosen as if it were a lifelong decision, because it very well may be. Insurance companies that use high pressure sales tactics and limited time offers are usually successful in the short term, but falter over time. Understanding that an applicant's attractiveness to an insurance company decreases over time, it's vital to choose a company with an established history of stability and predictability. Good indicators of an insurance company's long term strength are its age in the industry and its current financial rating.

As an independent broker, I came to the conclusion that Blue Cross Blue Shield (BCBS) is the health insurance company that offers the highest value per dollar of premium. BCBS has the largest network in the United States and in each region their complaint ratio is very low. BCBS is established as a long term force in health insurance and as a consequence is not prone to the short-sighted deceptive practices some insurance companies use. This is demonstrated by the relative simplicity of BCBS health insurance contracts, their lack of unexpected loopholes, and the proven long term stability of the company.To summarize, when choosing an insurance company, it's vital that they pay claims, have a large network of providers to visit, and have a focus of long term stability.
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