CAUSEY: Review coverage for major illness

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The last thing most of us want to do is conjure up the prospect of having a major illness or accident over the next few months. Or ever.

Nor do we want to dwell on how we would pay the medical bills if we were hit with cancer, a stroke or the need for open-heart surgery.

But between now and Dec. 14 (the last day of the current federal health plan open season) you need to think long and hard about what a worst-case-scenario event would do to you and your family next year.

Could you pay major medical bills without spending down your 401(k) plan or being forced to sell your house or pull the children out of college?

There is a solution, and the two magic words are: catastrophic coverage.

That is protection against massive bills that could break your personal bank. Huge and never-ending medical bills are one of the primary reasons people go bankrupt and lose their homes.

All of the above means you need to find a health plan that - after your out-of-pocket bills have hit a certain limit - will take over and pay the rest of your bills for medical treatment. In some cases, they can easily run into six figures.

During the annual federal health insurance open season, many people typically focus on two things: One is how big their premiums are going to be in the upcoming year, and second is specific benefits for their medical situation.

Both are important. Very important. Paying the highest premium doesn’t guarantee the best coverage. However, picking a plan simply because it has the lowest premiums is not the way to get the most comprehensive coverage.

Walton Francis, author of Consumers’ Checkbook’s Guide to Health Plans, agrees that catastrophic coverage is the No. 1 factor. He has written the popular guide for more than 30 years.

Mr. Francis says all of the federal health plans offer catastrophic-coverage ranging from good to excellent. He says it’s important because there is a 5 percent chance that all of you reading this (including me) will have a medical event (illness or accident) next year that will cost more than $25,000. Who pays what and how much is based on your insurance plan.

The older you get, the more likely that you will incur much higher medical costs.

Mr. Francis said people below age 55 will have total costs (premiums and out-of-pocket expenses) of less than $1,700 on average next year if they enroll in health maintenance organizations (HMOs) offered by Kaiser, MD-IPA or CareFirst Blue Cross.

The same people with a fee-for-service plan in 2010 will, on average, shell out more money than with an HMO. Those who pick the Blue Cross basic plan or the Foreign Service or GEHA standard plans will pay out a total of about $1,700 to $1,900 on average.

The total costs for an “average” medical year in 2010 is more than double in many cases for older workers and retirees, even if they have Medicare coverage.

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