Limited Benefit Health Insurance
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Limited Benefit vs. Traditional Health Insurance
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Limited benefit health insurance plans offer coverage that is significantly lower than traditional insurance plans. A traditional health insurance policy typically has a maximum coverage benefit of at least $1 million, and many have even higher limits. A limited benefit plan may cap its coverage as low as $10,000, and the cap "per incident" may be less than that. Limited benefit health insurance might offer some coverage for preventive services but will not be as comprehensive as a traditional health insurance plan.
Qualifying for a Limited Benefit Health Insurance Plan
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Because the insurance company has very little risk with a limited benefit plan when compared with a traditional health insurance plan, the underwriting guidelines for limited benefit plans are typically more relaxed than traditional health insurance plans. A person with a poor health history may still be approved for a limited benefit plan because the insurance company knows that it is liable for only a small amount.
Warnings
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Because of the low coverage limits on a limited benefit health insurance plan, you run the risk of being responsible for a large medical bill should something happen. A limited benefit insurance policy may pay only a small portion of the bill if you are admitted to the hospital. An emergency room visit can quickly cost more than $1,000, and hospital stays can be more than that per day, even if you don't have a surgical procedure. Limited benefit plans usually offer a coinsurance instead of a copay for things like prescription drugs and office visits, meaning that you will pay a percentage of the bill instead of a fixed dollar amount. In most circumstances, out-of-pocket medical expenses will be much higher.
Alternatives to Consider
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If you are looking for a lower-cost health insurance that still offers more traditional coverage, ask your health insurance agent about a high-deductible health insurance plan or a health savings account plan. With a high deductible plan, you may have more up-front medical costs, but plans like health savings accounts limit your out-of-pocket risk. The higher the deductible for health insurance, the lower the premium will be. If you have pre-existing health conditions that prevent you from obtaining individual health insurance, contact your state insurance department about the high-risk pool offered in your state.
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