Buying health insurance online
If you’re looking to purchase health insurance on your own, whether due to self-employment, a job transition, or other reasons, you can save significant time and potentially money by researching and comparing policies online. Numerous websites are designed to provide quick quotes for various types of insurance, including health coverage, allowing you to estimate your costs and coverage options efficiently. For those exploring federal options, HealthCare.gov offers a step-by-step guide to enrolling in Marketplace plans, including tools to preview plans and estimate costs.
These platforms streamline the process by presenting multiple plans side by side, helping you make informed decisions without needing to contact each insurance provider individually. However, based on my personal experience over the past year, there are important pitfalls to watch out for when using an online insurance broker, particularly in terms of delays, communication issues, and unexpected costs.
As a self-employed individual responsible for securing health and life insurance for my family, I faced a significant challenge when relocating from New Jersey to North Carolina in 2004. I knew two key things going into the process:
- I needed to find a new health insurance provider that offered coverage in North Carolina. Since health insurance plans are often state-specific, my existing New Jersey plan wouldn’t transfer, requiring me to start fresh in a new market.
- I expected lower rates in North Carolina compared to New Jersey. Based on preliminary research, I anticipated that insurance costs in North Carolina would be roughly half of what I had been paying in New Jersey, with the added bonus of slightly better coverage in some areas.
Several weeks before the move, I began exploring options through a well-known online insurance broker. The process seemed straightforward: I entered my information, received quotes from multiple providers, and selected a plan that appeared to meet our needs. The broker sent the necessary paperwork about ten days before our move, which, in hindsight, was cutting it close. Preparing for a cross-state move consumed much of our time, so I packed the paperwork with my personal belongings and didn’t complete or submit it until a week after arriving in North Carolina. This delay was my first lesson: starting the insurance application process earlier would have reduced stress and given me more time to address unexpected issues.
Working with the online broker initially seemed convenient, but I quickly realized it added an unnecessary layer of complexity to the application process. For a deeper look at the challenges of online brokers, the California Health Care Foundation’s report on purchasing health insurance online highlights potential pitfalls like delays and privacy concerns.
After submitting the paperwork, the broker sent an email confirming receipt and stated they would review the documents before forwarding them to the chosen health insurance company. Over the next few weeks, communication from the broker was sporadic and vague, consisting of updates like:
- “We are currently reviewing your application.”
- “Your application has been sent to the insurance company.”
- “The insurance company has your application and will review it within about a week.”
- “Due to a high volume of applications, the insurance company is experiencing delays.”
- “Please do not contact the insurance company directly; we will keep you updated on your application’s status.”
These messages were frustratingly unhelpful, as they provided little clarity on the actual progress of our application. The broker had initially promised that the insurance company would review and approve our application within two weeks, but this timeline proved overly optimistic. Follow-up calls and emails to the broker revealed ongoing delays, and when we finally contacted the insurance company directly (despite the broker’s instructions not to), we discovered they had trouble locating our application. It turned out the broker had sent the paperwork to the wrong department within the insurance company, further slowing the process. This misstep highlighted a significant drawback of using a middleman: brokers can introduce errors or inefficiencies that wouldn’t occur if you dealt directly with the insurer.
Another issue arose with the cost of the plan. The initial quote we received through the broker’s website was appealing, but it wasn’t accurate. After the insurance company reviewed our application, they factored in pre-existing medical conditions for my family, which increased the final premium by just over 20%. While we understood that the quoted rate wasn’t guaranteed, such a significant jump was disappointing and made us question our choice. Had we known the final cost upfront, we would have explored other providers or plans more thoroughly before committing. This experience underscored the importance of understanding that online quotes are often preliminary and may not account for factors like pre-existing conditions, which can substantially affect your final premium.
The entire application process dragged on for ten weeks, from mid-October when we submitted the paperwork to mid-December when we finally received official approval and confirmation of coverage. During the final weeks, we contacted the insurance company directly multiple times to check on our application’s status, as the broker’s updates were unreliable. Even then, the insurer couldn’t guarantee approval, stating only that coverage would begin “pending approval.” This uncertainty was stressful, especially since we needed to cancel our New Jersey health plan by the end of the year to avoid overlapping coverage and unnecessary costs.
Reflecting on this experience, I realized we could have approached the process more effectively. Here are my recommendations for anyone shopping for health insurance, particularly if you’re considering using online tools or brokers:
- Use online comparison tools wisely, but verify quotes directly. For unbiased advice on comparing plans and avoiding unexpected costs, check out Consumer Reports’ Health Insurance Guide, which offers tips on understanding coverage and managing out-of-pocket expenses. Websites that offer insurance quotes are excellent for getting a general sense of costs and coverage options. However, if you or your family have pre-existing conditions, the quoted prices may not reflect your final rate. Use these tools to narrow down your options, but always follow up with the insurance companies directly to confirm pricing and coverage details.
- Contact insurance companies directly after narrowing your choices. To learn more about selecting the right plan, NerdWallet’s step-by-step guide explains how to evaluate plan types, networks, and costs directly with insurers. For an insurer’s perspective, Cigna’s guide on buying health insurance offers questions to ask about premiums, deductibles, and coverage details when dealing directly with providers. Once you’ve identified two or three promising plans through an online broker, bypass the broker and reach out to the insurers directly. Brokers act as intermediaries, which can slow down communication and increase the risk of errors, such as misrouted paperwork. Dealing directly with the insurer streamlines the process and gives you clearer insight into your application’s status.
- Apply well in advance of your desired coverage start date. Insurance applications can take longer than expected due to delays, lost paperwork, or the need for additional information (e.g., medical history reviews). In our case, the ten-week process was far longer than the promised two weeks. To avoid gaps in coverage or rushed decisions, start the application process at least two to three months before you need coverage, especially if you’re transitioning from another plan or moving to a new state.
- Be prepared for adjustments to your coverage start date. In our case, the insurance company approved our coverage effective on a specific date, but we were able to adjust it to align with the cancellation of our New Jersey plan. This flexibility was helpful, but it required proactive communication with the insurer. Make sure to clarify timelines and confirm that your new coverage aligns with the termination of any existing plans.
In the end, securing our new health insurance was a tedious and eye-opening experience. The convenience of online brokers is appealing, but their role as middlemen can lead to delays, miscommunication, and unexpected costs. I’m not advising against using online insurance quote platforms entirely—they’re still valuable for initial research and comparison—but I strongly recommend supplementing them with direct contact with insurance providers. By doing so, you can avoid the pitfalls we encountered and secure coverage that meets your needs without unnecessary stress or surprises.
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