Open Enrollment: Stay Calm, Think, and Do the Work.

The beginning of open enrollment for health insurance feels a lot like shopping on Black Friday. It tends to be frenetic, anxiety-inducing, and overwhelming.

We get it.

Of all the health insurance purchasing advice available to you right now – and there’s plenty of it to be sure – perhaps the most sound is to summon your consumer mindset, stay calm, and do the work.

Thinking like a consumer and doing the work are really important. A stunning open enrollment survey conducted by Aflac shows that 80% of employees spend less than one hour researching their plan options, with 57% spending less than 30 minutes. And 93% of employees simply choose the same benefits year after year with little or no research.

Whether you are choosing an employer-provided plan option or shopping on the open exchanges, do some work ahead of time. Stop and think, and take control. If at all possible, the driving question you should ask yourself is, “What do I need?” or “What makes sense for me?”, rather than, “What can I afford?”.

For example, let’s say you are evaluating 3 plan options: Bronze, Silver, and Gold. Start by looking at the premium and maximum out-of-pocket costs for each option, and then add those two numbers together. Those sums are your worst-case scenarios! Compare them. What is the likelihood that you will reach your maximum out-of-pocket cost in a typical year? It’s not very likely in most cases. Which option offers you the most favorable maximum out-of-pocket expense? Given that we most often do not reach the maximum out-of-pocket number anyway, is the higher monthly premium (that’s normally needed to achieve a lesser out-of-pocket maximum) really worth it?

To be clear, the example above is arbitrary and fictional. YOUR decisions should be based on YOUR needs and circumstances. Nobody – and we mean nobody – can decide what’s best for YOU, all things considered. Only YOU can do that. And, it takes some effort. So, stay calm and think.

For more help with making a decision regarding open enrollment/health insurance, read the last chapter – Spend on Care, Not on Coverage – of our free eGuide, 5 Steps to Better Healthcare at Lower Cost. And if you do nothing else to prepare for open enrollment, be sure to at least scan over the chapter – we strongly believe it will help!

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A Perspective on Short-Term Health Insurance

Let’s remember: healthcare and health insurance are not the same thing. To be sure, we need both. But, it’s important to keep in mind that both your healthcare and your health insurance should be personalized and tailored to fit your unique needs and objectives. One size does not fit all.

Your healthcare decisions – beginning with choosing the right primary care physician – should be fundamentally driven by your health and health goals. What health providers (including primary care and others) give you the best chance of optimizing your health and well-being?

The same kind of thought process applies when researching, evaluating, and selecting health insurance. How much coverage should you have and what kind of coverage should that be? How can you insure yourself against a medical cost catastrophe without over-insuring or breaking the bank? What kinds of insurance plans and options are accessible to you? Are alternative options – like Medical Cost Sharing plans – a reasonable possibility for you and your family?

You get the drift. One size of health insurance does not fit all.

The U.S.’s recent changes to short-term insurance policy

Many of the millions of us who do not have access to employer-provided health insurance are keenly aware of the Affordable Care Act (ACA/Obamacare) and the exchanges and mandates that go along with it. We are also keenly aware of subsidy restrictions and rising premiums. The term “affordable” simply does not apply for many of us.

The U.S. Departments of Health and Human Services, Labor, and Treasury have recently announced that the rules for short-term health insurance will be expanded, loosened, and adjusted. That’s welcomed news for many. The removal of the individual mandate, which taxes those who did not maintain an ACA type of health plan, may also be good news for many, but not everyone.

Short-term health plans are nothing new. They’ve been around for a while, mainly in the form of indemnity plans. Prior to the ACA, short-term indemnity plans were offered in 3 month, 6 month, and 1 year increments. The ACA capped short-term plans at 3 months and then mandated the purchase of ACA coverage.

That changed earlier this month. The new plans – available as early as October of this year – will allow people who do not have employer-provided insurance to purchase short-term health insurance at prices that may be considerably less than ACA coverage. Considerably less.

Some of the positive highlights of the new health insurance changes:

    There are NO narrow networks, which is typical of indemnity plans. There are no contracts with specific doctors or hospitals, enabling you to seek medical attention wherever you please.

    Premiums are predicted to be much, much lower. This will be particularly beneficial to younger (healthy) consumers, healthy people of any age, healthy people who have been unable to afford insurance in the past, and perhaps people who are between jobs and need a little coverage until their next gig.

    There is NO enrollment period. This is a big change. You may sign up at any time unlike most insurance plans (including those offered by Obamacare) where enrollment periods are strictly regulated.

    Coverage begins almost immediately.

Sounds great, right? It may very well be for some of us. If it works for you, fantastic! Take full advantage! But remember, one size does not fit all.

Health and Human Services (HHS) does not claim that these plans are the same as those offered on the exchange. In fact, James Parker, a senior advisor for health reform at HHS, recently stated on a conference call with reporters, “We make no representation that it’s equal coverage.”

Some things to be aware of from the policy changes include:

    Pre-existing conditions will likely disqualify you. Practically any chronic condition (cancer, diabetes, high blood pressure) will work against you. So will a history of unhealthy habits like smoking and excessive alcohol or drug use.

    The Affordable Care Act mandated that insurance providers cover what the government determined to be essential benefits. That does not apply to these short-term plans. These plans won’t cover things like maternity care, mental health, preventive exams, prescription medications, vaccinations, or tests and screens. Be aware.

    The ACA included regulations to protect consumers. Those consumer protection regulations do not exist in these short-term plans. Rescission – or, retroactively rescinding coverage at the whim and whimsy of the insurance carrier – is an example. Again, beware.

    There are no limits on out-of-pocket costs or lifetime costs.

    While these short-term plans are available to people for up to 3 years, you have to reapply each year. They are not renewable from year to year.

So, generally speaking, it will be the younger, typically-healthier people who will likely benefit most from this new policy. It’s really good news for them – and some others of course – and they will likely abandon the ACA individual marketplaces in droves. While it remains to be seen, this transition may mean that an older, less healthy group will be left behind. That’s bound to have an effect, right?

What should you do next?

Research and evaluate options. Be aware and informed. Make the best possible decisions available and accessible to you. And remember (dare I say it again?), one size does not fit all.

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Couple talking to pharmacist about their prescription

Try This to Save Money on Prescription Drugs

In the spirit of nothing ventured nothing gained, activate your healthcare consumer mindset and try this the next time you have a prescription filled:

    1. Fill the prescription.
    2. Determine the amount of your copay for that prescription.
    3. Simply ask, “What would this cost me if I paid for it out of my pocket instead of using my insurance coverage?”
    4. Do the math and go the cheapest route.

It seems counter-intuitive, but it may be that the medicine actually costs less than the amount of your copay. At least part of the time.

Med City News reports that according to a recent study conducted by Dr. Karen Van Nuys and her colleagues at the University of Southern California Schaeffer Center for Health Policy and Economics, “…customers overpaid for their prescriptions 23 percent of the time, with an average overpayment of $7.69 on those transactions.”

How is this possible?

It has to do with “claw backs” executed by pharmacy benefits managers (middlemen like Express Scripts, CVS Caremark and OptumRx to name a few.) Again according to the Med City News article, here’s how it works: “After taking your insurance card, your pharmacist says you owe a $10 copay, which you pay, assuming that the drug costs more than $10 and your insurance is covering the rest. But unbeknownst to you, the drug actually cost only $7, and the PBM (pharmacy benefits managers) claws back the extra $3. Had you paid out-of-pocket, you would have gotten a better deal.”

It may be that your pharmacist will refuse to give you the information you seek. They are not being dishonest or rude – they may be prohibited from answering your question by “gag clauses” embedded in some insurance plans. That’s outrageous. In fact, 6 states have enacted laws to remove these “gag clauses” from insurance plans and 22 other states have similar legislation in process.

The bottom line: Ask the question. Nothing ventured nothing gained.

Thank you for reading. Be sure to subscribe to our mailing list for more healthcare insights, tips, and news! We’ll keep you informed, but we won’t annoy you.

Mother with abby

Rethinking Your Health Insurance

Is your health insurance really helping you?

Healthcare and health insurance are not the same thing. Healthcare can make and keep you well. Health insurance cannot. That’s an important distinction.

Health insurance is not, of course, unimportant. It is not the enemy. Health insurance is, however, complicit in the ever increasing cost of healthcare. It is not the only culprit. Unnecessary procedures being performed, the overall rise of chronic illness (asthma, heart disease, diabetes) and obesity in this country, and the lack of visibility and communication among healthcare providers also contribute heavily. But health insurance companies share in the blame.

This stands to reason. Health insurance companies are middle men. Their revenue model requires them to collect more money than their cost of reimbursing medical expenses. On top of medical expense reimbursement, they have significant administrative costs to cover. Many of the largest insurance companies are also for-profit entities, meaning they exist to make a profit.

Additionally, the interaction between healthcare providers and insurance companies – or billing – is excruciatingly complex and requires massive administrative effort on both sides of the equation. All of that administration is expensive. The reported numbers are not highly consistent but as much as 30% of every dollar paid on a medical bill in the individual marketplace goes to administrative cost. It has also been reported that for each patient seen by a primary care physician, about 13 minutes of administrative coding and billing for reimbursement is required. An average primary care physician sees about 25 patients per day to make the economics of their practices work. That means roughly 5.5 hours per day must be spent on administrative stuff alone. That’s expensive.

This complexity of reimbursement not only increases administrative costs but also reduces the ability to determine and communicate the cost of medical services. This lack of visibility limits a patient’s potential to be a good consumer and decide which services are better values or even worth doing. Most of us who have families can remember getting a medical bill and thinking, “if I had known it cost that much, I would not have agreed to do it!”

So, what can you do about it?

For starters, begin to think differently about health insurance. Begin to think more like a consumer. For example, liken health insurance coverage to automobile insurance. You purchase car insurance to cover extensive damage – things that happen that would cost you more out of pocket than you can afford or are willing to pay. Think about how much auto insurance would cost if you filed a claim for every ding, tire rotation, or oil change. Why should health insurance be any different? Purchase health insurance for hospitalizations and major medical expenses – not for allergies, the flu, or your annual physical.

Stepping away from a comprehensive plan and opting for a major medical plan can save you a lot of money. If you haven’t already been pushed to a high deductible health insurance plan, consider major medical plans if you have some savings to manage paying for minor medical issues. Many practices, labs, and diagnostic services providers will provide very attractive rates for cash-based payment if the payment is prior to service. By you paying up front, they save the administrative costs of billing you and the insurance company.

Another step you can take is to combine common sense health insurance decisions with good preventive care and a physician who aligns with your financial and health goals. Research direct primary care physicians in your area! They typically charge a monthly cash price to cover a wide range of medical services along with helping you improve your health and prevent major medical costs.

It is not easy. But by being an engaged healthcare consumer, you can take control of your healthcare and see your overall costs decrease.

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