What are my options for insurance?

July 15, 2009 3:39 PM

What are my options for insurance?

I'm starting grad school this fall in Texas, after a few years at a startup. If I were an RA or a TA, I'd automatically be enrolled in the staff insurance plan, but I'm not eligible for that because I'm on a fellowship. I can keep my current insurance through COBRA but, at $600/month, it's a bit expensive. The plan is really nice (no co-pay for a lot of things, $200 annual deductible and maximum out of pocket, no maximum benefit for health or perscriptions, etc.), but it's way beyond anything I need.

The student insurance plan is ~ $160/month, but it has a maximum benefit of $100k. I could handle a plan with a $100k deductible, but $100k maximum benefit means it would only cover relatively minor problems that I could afford without insurance, leaving me with most of the bill for anything catastrophic. Maybe there's something I don't understand about insurance, but this plan seems completely pointless. There's an option to increase the maximum benefit to $500k for an extra fee, but that's still an order of magnitude lower than the maximum benefit for the BCBS plans I've looked at.

BlueCross BlueShield of Texas has various plans ranging from $40/month to $200/month. The $160/month plans look much better than the student insurance plan, and if I'm willing to take a $10k deductible, I can get away with only paying $40/month. If I don't have a pre-existing condition, is there any reason I should prefer group coverage to individual insurance? Are there other insurance providers I should be looking at? I found this list (http://www.tdi.state.tx.us/health/lhiah_lst_incl.html) through a previous post, but since I know absolutely nothing about any of these companies, I might as well go with BCBS if I'm just going to randomly pick a company off that list.

So my options are (roughly in order of preference):
1. BCBS insurance. Only $40/month!
2. Defer my fellowship for a semester, get an RA or a TA, and then pay $300/month to get the staff insurance through COBRA.
3. COBRA. $600/month.
4. ???. Is there something I could do that I don't know about?
5. No insurance
6. Student insurance.

Other than the large deductable, is there any reason I wouldn't want option 1?

Also, do I actually need dental insurance? It seems like insurance only ever covers half the cost anyway, and I doubt anything really horrific will happen if I skip getting a cleaning for a year.

posted by suncoursing to work & money (9 comments total)

Honestly, unless you really can afford to continue the COBRA (maybe that's a really nice fellowship) you're probably best off with the student insurance. Yes, 100k maximum is lower than others you've seen, but there are an awful lot of terrible things that can happen to you that cost less than 100k. With a serious form of cancer, you're in financial trouble no matter what kind of insurance you have. If you suddenly find you have an auto-immune disease in grad school, or you get in a car accident, or you need your appendix or gall bladder removed, you will be well covered by the student plan. Yes, maybe you could cover a lot of that out of pocket, but when you're sick or injured you want to know that you're taken care of.

The thing about self-insuring, buying the $40/month plan from BCBS, is that with all of their exclusions and pre-existing condition clauses, there's a good chance that if anything ever did happen to you THEY WOULD NOT PAY. They could even cancel your plan for failing to disclose that you once went to a dermatologist or something equally silly that you could simply forget when filling out their form--It's called rescission and it's currently standard business practice. The only way to avoid it, currently, is to be part of a group plan, like your student insurance.

Honestly, though, as a grad student who had a fellowship and briefly faced a similar thing, I think you should approach your Graduate School Student Affairs office and point out to them that they are actually discouraging students from excelling and receiving fellowships. That's really dumb policy. Rather than them having to support you, you've gotten a fellowship to support yourself. That's better for your career than a TA or RA and it makes them look good, too. They ought to reward you for your fellowship, not penalize you by withholding insurance. Students at my university have appealed such policies previously and been successful, so it's worth a try.
posted by hydropsyche at 4:42 PM on July 15

Now, rereading your question again, I'm thinking maybe you don't entirely understand health insurance. You said I could handle a plan with a $100k deductible, but $100k maximum benefit means it would only cover relatively minor problems that I could afford without insurance, leaving me with most of the bill for anything catastrophic. Maybe there's something I don't understand about insurance, but this plan seems completely pointless.

A $100k deductible means you have to pay $100,000 before your insurance company pays a cent. Maybe you are independently wealthy, and if so that's great, and you should just pay the $600/month for the COBRA. I personally know a whole lot of grad students and I don't know a single one who has $100,000 to pay medical bills or anything else.
posted by hydropsyche at 5:00 PM on July 15

there's a good chance that if anything ever did happen to you THEY WOULD NOT PAY.

I've been on BlueShield here in California and I'm reasonably happy with their paying. They have a weirdo $1700 annual deductible plan for $200/mo that fits my needs.
posted by @troy at 5:13 PM on July 15

Check out what the student clinic situation is like. For many students the clinic will take care of basic needs like stitches or getting a scrip for antibiotics, and then you get a catastrophic care plan with a high annual deductible in case you get cancer or have some horrible injury.
posted by caddis at 6:28 PM on July 15

Quoting:
you should approach your Graduate School Student Affairs office and point out to them that they are actually discouraging students from excelling and receiving fellowships. That's really dumb policy. Rather than them having to support you, you've gotten a fellowship to support yourself. That's better for your career than a TA or RA and it makes them look good, too. They ought to reward you for your fellowship, not penalize you by withholding insurance. Students at my university have appealed such policies previously and been successful, so it's worth a try.

Good luck with that, although I also wish you would do this too. Our school said it was not the fact that we had fellowships or whatnot, it was the fact that we were students and we had to be kept completely separate from the employee plan. They said it was some sort of legal requirement. THis was in the state of NY, so YMMV...and perhaps my school's administration was particularly vague (i.e. lying). I realize that my paragraph here makes no sense but that's all the explanation we could ever get for why our student health insurance sucked so much compared to employee health insurance...

On the other hand, any student who secured any kind of outside funding, be it R01 or T32 grant, was given a bonus on their stipend. Like a significant chunk. Which could pay for you to go and get whatever insurance you want or help with just continuing your COBRA. Maybe that would work out for you?
posted by Tandem Affinity at 7:37 PM on July 15

I think it's true that they can't put grad students on employee insurance, but have to go through student insurance, instead. My understanding of the poster's situation was that RAs and TAs got the student insurance paid for by the university, but students on fellowships had to pay for the student insurance themselves.

That situation briefly happened at my university, until we successfully made the argument that they had instituted a ridiculous policy that actually discouraged students from getting fellowships.
posted by hydropsyche at 4:17 AM on July 16

Everything is a gamble. It really depends on the level of risk you are willing to deal with. Over the past few years, how much have you paid in medical bills? Do you go to the doctor when you have the flu, or are you more likely to stick it out at home? If you got hit with $10k in medical bills, how would you cope?

IMO, I'd go for the mid-level private insurance (maybe the $160, depending on the other benefits), maybe not the $40 a month unless I was super-healthy and didn't engage in many risky behaviors. $10k is a big gamble. But I'd also hate to have a cap on benefits. I got something similar in the limbo year I have between undergrad and grad school.

As far as dental insurance goes, unless you have horrible teeth (like everyone in my father's side of the family does) I'd not worry about getting it. For people like me (I had my first root canal at age 19) it is useful, but a lot of people I know can go years between cleanings and still never have even a cavity.
posted by Tooty McTootsalot at 6:47 AM on July 16

My opinion is that $100,000 is a pretty low maximum benefit. It's probably not that likely that you'll have a major medical issue that would exceed that while you're still young and in school, but the whole point of insurance is to guard against low-probability high-cost outcomes.

Of course, the other major issue with student health insurance is that if you did get very very ill and started racking up major bills, chances are you wouldn't be able to continue attending school. I would guess that one reason the lifetime benefit is so low is because anyone who becomes very seriously ill (leukemia, cancer, etc) while on a student plan probably only stays on the plan for a maximum of 12 months--if you're not a full-time student, you wouldn't be eligible to renew the plan in the summer/fall, and then you're REALLY stuck, because good luck finding insurance that will cover a highly expensive ongoing illness. You might want to check with your school about this--would you be able to use COBRA to continue coverage if you dropped out of school due to illness? If you could get something like that, then I'd recommend going for the student insurance with the extra rider for a higher lifetime benefit. $500,000 lifetime limit isn't awesome, but it's much more in the realm of acceptable coverage.

If you wouldn't be able to continue coverage through the student plan if you left school, I think you might be better off in an individual plan as long as it's guaranteed renewable and there is some sort of limit on how much the premiums can jump from year-to-year. (If you get sick, and then when renewal time rolls around you can't afford premiums that jumped 400%, you're back in the same boat as student health insurance.) Check also to make sure that the high lifetime benefit for BCBS isn't paired with any sort of per-event / per-illness limits of $100,000.

It's kind of a toss-up. The main thing you're gaining with a group health plan through the university is stable premiums, even if you get sick. In the individual market, where companies may be able to do medical underwriting (that means they can adjust your premiums based on your health status over the past year, and how much medical care you used), you run the risk of having your premiums jump to an unaffordable level once you get sick--which for all intents and purposes can be the same as losing your insurance, unless you happen to have family or major savings that could jump in a cover thousands of dollars a month in extra costs. (Worst-case scenario, but that's kind of what you're worried about, after all.) The main thing you may be losing with university insurance is a nice, high lifetime benefit and, more critically, the ability to stay on the plan past the June/July/August renewal period if you are forced to leave school.

Bonus tip: If you're looking at buying through the individual market, there's better ways than just picking the name you recognize. For example, you could check out the number of justified complaints and complaint ratios for health insurance companies licensed in Texas last year. (A ratio of 1.0 is average--note that BCBS had 163 justified complaints in 2008, for a ratio of 3.43, which is above average.) If you can find a comparable policy with a company that has a lower complaint ratio you'd probably want to seriously consider it.
posted by iminurmefi at 9:20 AM on July 16

Oh, and one other note: I hope your list of options in order of descending preference accidently flipped "no insurance" (#5) and "student insurance" (#6). I feel you about the stupidly low lifetime benefit for student insurance, but it's seriously a mistake to go without insurance at all, if for no other reason than even crappy coverage lets you get access to big discounts on physician and hospital charges. If you went into the hospital tomorrow for an appendectomy with no insurance, you could get a nice bill from the hospital for $15,000 (full charges); if you went in with insurance that didn't actually pay you a dime in reimbursement, you'd still probably only be responsible for the insurer's negotiated rates, which would run at least 40-50% cheaper.
posted by iminurmefi at 9:29 AM on July 16