“… Deck the halls with boughs of holly…”
“…’tis the season to be jolly…”
Fall ushers in the festivities and grand anticipation of the holiday season. For most of us, it is a fairly joyous time. But, along with pumpkin pies, holiday gifts and egg nog, it also heralds another season in which many of us will rejoice; to which some of us will be entirely oblivious; and to which others will gnash our teeth.
That season is known as “open enrollment”.
For those of you familiar with insurance plans and how to obtain them, you know that this is the traditional time of year during which you can change your employer-sponsored plan, purchase a separate individual plan, keep what you already have… or ignore it altogether.
If you are someone who finds this entire process to be daunting and unpleasant, you are not alone. Millions of Americans feel just as harried by the process, as terms like “deductible”, “co- insurance”, “prior authorization”, “in- and out-of network” and preferred provider”, among others, reinforce the fear that this endeavor will come at great expense; but may have little value for them in the year to come. Many share the foreboding sense that the insurance industry has made it impossible for them to win at this game; and that the entire process is designed to bilk them out of their hard-earned cash, while delivering little value for what they are paying. Worse yet, many feel that there is nothing much that they can do about it.
And if you believe that, I cannot tell you that you are wrong. Nor can I tell you that you are right.
What I can tell you is that if you fail to become an educated, and therefore empowered consumer, you will get exactly what you may be anticipating… which is the short end of the stick.
It is believed that as few as 14 percent of Americans, from ages 14 to 65, understand the most basic elements of their health plans.
Below is a simple guide, designed to answer questions that are frequently asked, but are often sources of confusion. It also includes a glossary of commonly used terms. It is my prayer that you will walk away from this article with information that will help you to select the best option for yourself and your family. I also hope that the information provided will serve as a solid foundation for your choices in the years to come, as open enrollment is here to stay.
Let’s start with the basics:
I. Why does open enrollment exist? What is it?
- Open enrollment is “…the yearly period when people can enroll in a health insurance plan. Open Enrollment for 2017 runs from November 1, 2016 to January 31, 2017. Outside the open enrollment period, you generally can enroll in a health insurance plan only if you qualify for a special enrollment period. You’re eligible if you have certain life events, like getting married, having a baby, or losing other health coverage. Job-based plans may have different open enrollment periods. Check with your employer. You can apply and enroll in Medicaid or the Children’s Health Insurance Program (CHIP) any time of year.” (healthcare.gov)
- According to Carrie McLean, Director of Consumer Care for EHealthInsurance.com, “…you have one time during the year to shop, compare and actually pick a health insurance plan. If you lose track of time and don’t get a plan, you have to wait a whole other year to get insurance (through your employer), which is not a good thing if something happens to you.”
II. What does insurance really cost? Who pays what?
- “The employer typically makes a substantial contribution towards the cost of coverage. Typically, employers pay about 85% of the insurance premium for their employees, and about 75% of the premium for their employees’ dependents. The employee pays the remaining fraction of the premium, usually with pre-tax/tax-exempt earnings. These percentages have been stable since 1999. Health benefits provided by employers are also tax-favored. Employee contributions can be made on a pre-tax basis if the employer offers the benefits through a section 125 cafeteria plan.” (Wikipedia)
III. What does it mean to be under-insured?
- A scenario that I often see in practice involves a woman who has insurance and is able to come in for preventive care examinations and occasional sick or urgent visits. However, if she requires an elective surgery, her insurance requires that she pay a deductible of about $5000 before they will reimburse any expenses related to her operation. She will be expected to pay that $5000, either in whole to one provider or in part to the hospital and the many providers who will deliver her care. If she is unable to meet that entire $5000 obligation, her surgical date will be removed from the hospital’s schedule.
- The Patient Advocate Foundation has this to say about it: “…underinsured is defined as having some insurance coverage but not enough, or when one is insured yet unable to afford the out-of-pocket responsibilities not covered by his or her insurer”.
- Being under-insured means that you are protected as long as you do not require extensive and/or expensive elective care.
IV. Terms that you need to know:
- Self-funded Plans:
- Self-funded insurance plans are also known as Administrative Services Only (or ASO) plans. In such plans, the employer provides health benefits to its employees with its own funds. This is in direct contrast to a fully-funded plan in which the employer contracts with an insurance company to cover its employees and their dependents.
- What can be very confusing to consumers is that with both plans, the insurance coverage can appear to be provided by a large commercial insurer, for example, Blue Cross Blue Shield. In the fully-funded plan, Blue Cross Blue Shield is actually covering the cost of services for its members. In the self-insured plan, the employer covers these costs, but the administrative responsibilities are overseen by Blue Cross Blue Shield, which becomes known as the Third Party Administrator (or TPA).
- What is the advantage to an employer covering the costs of health benefits? One of the largest advantages is transparency of information as it relates to claims and expenditures, as well as spending patterns. Having ready access to this information allows the employer to shift purchasing patterns in order to control costs. Other advantages include having access to PPOs, plan flexibility and monetary savings.
- Your premium is what it will cost for you to open and maintain this policy. In other words, this will be your monthly bill, and, typically, it will be a fixed cost. Any delinquency in payment of this bill will result in a termination of services, which means that you are no longer covered. Ordinarily, if you have coverage through your employer, this fee will be deducted from your paycheck prior to you receiving it.
- Fully-funded Plans:
- In a fully-insured or fully-funded plan, the employer contracts with a health care insurer, i.e., Blue Cross Blue Shield or Aetna, to pay for benefits and services for its employees.
- The company pays a premium to the insurance carrier and the premium rates are fixed for one year, based upon the number of employees enrolled in the plan each month. This premium is only subject to change during the year if the number of enrolled employees in the plan changes drastically.
- The insurance company has a duty to collect all premiums and to pay the health care claims based on the covered benefits outlined in the policies.
- Outside of your premium, your deductible is what you MUST pay in healthcare costs BEFORE your insurer will pay any claims on your behalf. This is a non-negotiable cost, and also tends to be a fixed amount. Generally speaking, the higher your premiums are, the lower your deductible will tend to be and vice versa.
- If you are unable to pay your deductible all at once, the amount that you pay in expenses to providers will accrue over time. It is your responsibility to make sure that any office visit fees, outpatient or inpatient bills paid, get reported to your insurer for credit towards your deductible. Often times, the provider to whom you paid the fee will report the payment to your insurer, but there is no guarantee. Therefore:
- Keep your receipts;
- Read your Explanation of Benefits (EOBs);
- Check with your insurer periodically on the status of your deductible.
- Deductibles are decided for a given calendar year. Once you have paid the entire deductible, you no longer have to pay towards that until December 31st of that year. In January, a new deductible year begins, and you start over from scratch. One strategy often used is that consumers will get costly medical procedures done closer to the end of the year when their deductibles are more likely to be paid up.
- This, too, is a fixed dollar amount that you must pay for health services, and is distinct from the deductible. (This means that it DOES NOT count towards the deductible.)
- You will find that this is due at most provider visits, and will vary based upon whether you are seeing a primary care provider or a specialist. Generally, co-pays for specialty visits are higher than those for primary care. The definition of “specialist” in this regard may vary from insurer to insurer, so check with your insurance company before scheduling a visit. Co-pays often range from $5 to $60 per encounter.
- Your provider MUST collect these funds from you at the time of the visit. They have signed a contract with your insurer indicating that they will do this. Their failure to collect these funds are tantamount to insurance fraud. Therefore, PLEASE DO NOT ATTEMPT TO NEGOTIATE YOUR WAY OUT OF PAYING YOUR CO-PAY. This is a non-negotiable obligation.
- Keep your receipts. They can be used to document use of FSA or HSA accounts.
- You often will have co-pays for prescriptions as well. The amount will vary widely depending upon whether the drugs being prescribed are formulary versus non- formulary and generic versus branded.
- Co-Insurance is another cost to the consumer, which is NOT a fixed amount, but is a percentage of the allowed amount for that visit. This must be paid, much like a co-pay, and is due at the time that the services are rendered.
- Common co-insurance obligations are 80/20. This means that your insurer will finance 80% of the allowable amount, and you will be responsible for the remaining 20%.
- Explanation of Benefits (EOB):
- The Explanation of Benefits, (EOB) is a statement which will be provided to you once a claim has been adjudicated or settled. The purpose of the EOB is to inform you of which services have been billed to the insurance company and how those fees were settled. It will typically indicate which portion of the claim has been paid by the provider, how much you owe the provider and which portion of the fee has been written off due to the provider’s agreement with the insurance carrier.
- This last portion exists because, typically, 100% of the fees that a provider sets are not covered by insurance. The provider will have a contract with the insurance company which will have an allowable amount for a specific service. This allowable amount should be uniform for any patient who is covered by this insurer and who seeks this particular service from this provider.
- The allowable amount is the fee that the provider has agreed to accept from the insurance carrier for a specific service, and falls under the heading of “reasonable and customary fees”. It consists of the portion that your insurer pays as well as any co- pays, coinsurance or deductible that you have paid. It is illegal for you to be charged with the non-allowable portion of the fee. The amount of non-allowable money must be written off without penalty to you.
- Non-Covered Amount:
- The non-covered amount is not to be confused with the non-allowable amount.
- The non-covered amount refers to a service that you may have received from your provider, which is not covered by your insurance carrier. This list of non-covered services are based upon pre-negotiations with your provider before a contract was executed with the insurance company.
- While your provider’s office should inform you of whether or not any services that you are providing are non-covered, it is ultimately YOUR responsibility to know this information prior to receiving services. This is because your provider has the right to charge you for the services in question if they are not covered by your health plan. You may be billed for the entire amount, a discounted amount or the charge may be written off altogether. However, this is all at the discretion of your provider.
- How non-covered services are to be handled should be negotiated between you and your provider before the service is initiated. This way, you have the option of declining the service or accepting it and planning for payment. Whatever the case, the bill should not be a surprise when it arrives.
- Coordination of Benefits (COB):
- When you and/or your dependents are covered by more than one health insurance plan, COB establishes a way that each plan will cover its fair share of the costs without duplicating benefits. In many instances, this can work to your advantage and decrease certain out-of-pocket expenses like co-pays, deductibles and co-insurance.
- In-Network vs Out-of-Network:
- Your insurance company prefers that you utilize the providers and facilities that are in- network with them. Those entities have met certain quality standards in order to become part of the company’s provider panel. They have also agreed to provide services at a discount to the insurer and its clients, which establishes a great deal of cost containment.
- Why would anyone use an out-of-network provider when the cost and risk for non- reimbursement are higher?
- Common instances of when out-of-network care is utilized includes: emergency situations; specialists if you require specialty care for which there are no in-network providers in your area; out-of-town care; challenges of proximity and locating a contracted provider near you; and natural disasters that may limit your access to health care options.
- An out-of-network provider is one that does not have a contract with your insurer for services to be provided at a negotiated and discounted rate. Many health plans, particularly, HMOs, do not provide reimbursement for out-of-network care. Therefore, you would be responsible for 100% of all costs incurred in that manner. Other health plans do offer some out-of-network coverage, but your portion of the financial obligation is bound to be higher.
- What does utilizing an in-network provider mean for you?
- This means that you will pay lower co-pays and co-insurance as long as your services are provided by someone within your carrier’s network.
- This also means that claims will be filed directly to the insurance company by your provider. They will only ask you for the amount that you owe in terms of deductibles, co-pays and co-insurance.
- In contrast, an out-of-network provider will leave you with higher costs and fees for your benefits. Your out-of-network provider(s) will not submit claims on your behalf. Instead, you will be responsible for paying for any services rendered upfront, and then requesting and waiting for reimbursement from the insurance company. If there is any problem with the claim, or if any portion of it cannot be paid, you will be stuck with the entirety of the bill. As you can imagine, this can be highly inconvenient, as well as expensive.
- Further, an out-of-network provider is not bound by a contract with your health plan which will limit what you are charged for services. In some states, they are not even held to the standard of “reasonable and customary fees”. Therefore, you have no guarantee of cost-containment with such a provider.
- Typically, when your insurer chooses to reimburse you for services by an out-of- network provider, they will only pay a portion of what they consider “reasonable and customary”. You will be responsible for the entire remaining amount, whether or not that portion meets the standard of reasonable and customary.
- Prior Authorization:
- Prior Authorization is a requirement that your treating provider obtain approval from your health plan in order to prescribe certain medications or to render care that might be particularly costly or carry risks, such as with surgery. It is also sometimes requested in order for you to seek specialty care, as in from a chiropractor or physical therapist.
- Any service that requires a prior authorization will not be reimbursed by your insurer if the prior authorization has not been completed and approved.
- Why are prior authorizations necessary?
- They serve many purposes, but are often used in order to establish that the treatment that you are receiving is, in fact, medically necessary.!
- They also serve to ensure that your providers are following the standard of care, and, in the case of invasive treatments or those that carry risk, that conservative options have already been tried and proven to be ineffective.!
- Finally, they serve as a practical form of cost containment. They ensure that before pricey medications are utilized, comparable and more cost-effective alternatives have been tried. Prior authorizations are also another strategy used to prevent duplication of services. For example, once a request for prior authorization is submitted, your insurer can check that the same service has not recently been provided through another healthcare entity.
V. How to make the most of your coverage:
- Know the limitations of the services that you need.
- The first order of business here is to know which services you and/ or your dependents will most need in the upcoming year. While basic medical services are ordinarily a part of every health plan, specialty care becomes far more individual. Do you or will you require services like speech or occupational therapy, physical therapy, chiropractic medicine or dialysis?
- If you feel that you or a dependent on your plan will require any of those, find out if they are covered. But, please do not stop there, or you may find that your services will come to a grinding halt before summer is upon us.
- Call the potential insurer or refer to the plan summary and inquire specifically about limitations on services. It is quite common that the above services, as well as others, will be covered for a finite number of visits. 25 – 30 sessions per calendar year is a commonly seen limitation. Therefore, if you have a prescription for twice weekly physical therapy, after 15 weeks, your treatment will no longer be covered. For short term therapy, these limitations may never be met; however, if extended treatment is required, you may want to look for a plan that has no limits on the services that you want.
- Such plans can be very difficult to come by, so keep that in mind as open enrollment deadlines approach.
- Ask if the insurer coordinates benefits.
- If you live in a household where two or more wage earners have health insurance that cover the same dependents OR if you have found that you must maintain separate policies so that all of your healthcare needs are adequately addressed, then understanding the “Coordination of Benefits” provision in each policy may help you to save some money.
- Coordination of Benefits allows each insurer to pay their fair share of services for a patient while avoiding duplication of payments, and while sometimes covering expenses that you would otherwise have been responsible to pay.
- First, you must find out which plan is primary and which is secondary for you or your dependents. This determination is made by guidelines set forth by your state and insurance providers. You may need to inquire with your individual carriers as to who would be the primary.
- Once the primary insurer is determined, it must cover benefits as originally outlined without regard to a secondary provider. Once this has taken place, the secondary insurer, after taking into account what has been covered by the primary plan, can consider what is remaining in terms of allowable health care costs.
- There are different methods that the secondary plan may use to determine its financial obligation. These may result in some, all or none of your out-of-pocket expenses being paid for a given service.
- If you are covered by more than one policy, find out how this works for plans that cover you and your dependents, and be vigilant to insure that you are maximizing your benefits and minimizing your financial obligations.
- Once your deductible is paid:
- Do all that you can to always know the status of your deductible, and that all payments made towards it have been reported to and recorded by your health plan.
- As soon as your deductible has been met for a given calendar year, if there are costly procedures or studies, i.e., surgeries, MRIs, CT Scans, that are needed, it is a very practical idea to get them done before December 31st of that year. If you wait until the start of the new year, then you will have to meet your deductible again before your health plan will pay towards your anticipated care.
- Use Employer-Sponsored Health and Wellness Incentives:
- In the interest of promoting wellness, many companies have established employee- health incentive programs. These work on the basis of a system of rewards for healthy lifestyle choices, as well as for being diligent about obtaining preventive health care.
- Examples of how some employers have chosen to reward and reinforce wellness with their employees are through:
- reduced deductible or co-pay requirements;
- corporate contributions to Flexible Spending (FSA) and Health Savings (HSA) accounts;
- access to a medical plan with more benefits covered or with higher limits attached to those benefits;
- accruing rewards points that can translate into monetary compensation to the employee.
- Use your FSA or HSA to cover co-pays and deductibles:
- If you work for an employer who offers Flexible Spending Accounts (FSAs) or Health Saving Accounts (HSAs), and you have not already opened such an account, please do so right away.
- The first advantage to these accounts is that they decrease your taxable income. Let’s say that you have an annual salary of $75,000. If the maximum allowable amount that can be contributed to an HSA is $6,000, you can contribute up to that amount. If you decided that you wanted to contribute $4,000, you can indicate that as you open the account and that much money will be placed into your account as PRE-TAX dollars. This means that you will only be taxed on $71,000 instead of the original $75,000.
- This money will be deposited into your FSA/HSA incrementally as you receive each paycheck. FSAs and HSAs will sit undisturbed unit you decide that you need them, at which point in time, you can use the money towards ANY healthcare related expense. These expenses can include, but are not limited to: provider visits, prescription drugs, durable medical equipment, surgeries and procedures, over-the-counter medications, and, yes, even co-pays and deductibles. You may NOT use the funds from these account for any endeavor that is not health care related.
- These have “triple tax advantages” in that they: are tax-deductible contributions; have tax-free accumulation of interest and dividends; provide tax-free distributions for qualified medical goods and services.
- Be aware of how each account is to be used. The FSA must be used within the same year in which you have been making contributions. If it is not used by the deadline, you will lose the funds. HSAs, on the other hand, can be carried over from year to year without penalty or loss.
- Obtain the Summary of Benefits… and read it!
- As you look for a new plan, please do your due diligence. Call insurance companies whose health plans you are considering, and ask questions. Make sure that their plan(s) will cover all of the services that you and your dependent loved ones will need. Ask about any limitations of coverage. Is there a limit to how many physical or occupational therapy sessions you can receive, and if so, what is it? Are prior authorizations required before you can obtain specialty care? What is the co- insurance and what are the co-pays?
- Write down what you are told, and then ask if you can obtain a copy of the summary of benefits. This should reflect what you have been told and what you can expect from the health plan.
- If you are told that you cannot have access to the summary of benefits until you purchase a plan, then consider calling back on two additional occasions and speaking with different representatives. Ask them each the same questions and make sure that you are not getting varying or discordant information.
- Be aware of deadlines for enrollment (These are general guidelines for most insurers):
- November 1, 2016
- Open enrollment begins. This is the first day you can enroll, renew, or make changes to a 2017 insurance plan.
- December 15, 2016
- Last day to enroll in or change plans for coverage to start January 1, 2017.
- January 1, 2017
- 2017 coverage starts for those who enroll or change plans by December 15.
- January 31, 2017
- Last day to enroll in or change a 2017 health plan. After this date, you can enroll or change plans only if you qualify for a Special Enrollment Period.
- November 1, 2016
- Is there a policy on non-compliance?
- Some insurers maintain a policy regarding your adherence (or lack thereof) to a treatment schedule. If it is established that you are consistently or regularly missing a routine plan of care, the carrier reserves the right to deny further coverage of those services.
- Are preventive services covered at 100%?
- Many health plans will cover preventive care at 100%. In other words, any assessments that are designed to prevent disease and fall under the category of routine screening, are covered without cost to you. This typically will include: Well- Child Visits, Well-Woman Examinations, Annual Examinations and Mammograms.
- Know what your plan says. If you find that your preventive exams are at no additional cost to you, then please take advantage of them. After all, you have probably paid for them through your premiums.
- Read your explanation of benefits.
- Become familiar with this statement, and pay attention to it when it arrives. Make sure that the services documented are services that you or one of your dependents has actually received. Make sure that you are aware of any financial obligation that you may have, and ask questions if you do not understand.
- Compare this to your summary of benefits and make sure that your EOB is consistent with it. If there is anything that you think may be in error, contact your insurer right away and inquire about it. You have the right to dispute information that you feel is inaccurate or that you feel is inconsistent with the plan that you have purchased.
- Keep your medical receipts and check that payments toward your deductible have been reported.
- Ultimately, you are responsible for any unpaid balances, as well as meeting your annual deductible. If you have paid towards that deductible but it did not get reported to your insurer, you can have the error corrected if you have receipts. However, without those, it is as if the payment never occurred and you will be responsible for more in deductible responsibility than you should have been.
- Know your coverage. Do not leave it up to the person verifying insurance.
- When you call to schedule an appointment with a provider, chances are that they will have a person on staff who verifies your benefits. This means that that staffer will contact your insurer and inquire as to whether or not the services that you are seeking are covered by them. If they are covered, your provider’s office will want to know which portion your health plan will pay and which portion is your obligation. They will want to know about any and all co-pays, coinsurance and deductibles related to the upcoming visit. Customarily, they will then convey this information to you PRIOR to your visit so that you can be financially prepared before your arrival.
- DO NOT LEAVE THE RESPONSIBILITY OF HAVING THIS INFORMATION ON THEM. You are responsible for knowing and understanding what your obligation is and how your insurance works. While they are doing the best that they can, it sometimes happens that they are given misinformation by the health plan. If you are unaware of what your financial responsibility is, you are likely to end up with bills and costs that you may not have anticipated.
- Be prepared by contacting your insurer ahead of time.!
VI. Selecting the best plan for you and your family
- Selecting a plan for yourself can be challenging as there are so many elements to consider. The level of complexity increases when there are also dependents whose medical needs must be taken into account. These are the basic questions that you should have clear answers to before reviewing health plans:
- What is your family size?
- How much can you afford in monthly premiums?
- Is there a deductible and can it easily be paid?
- Are there co-pays and what are they? What about co-insurance? Do these apply to preventive care? Or is that free of additional charge?
- Does anyone who will be on your plan have a chronic illness or disorder which which will make coverage of certain services imperative? What are those services?
- Are you attached to your providers or are you willing to change if you find an affordable plan on which they are not credentialed?
- If you have 2 plans, will each perform coordination of benefits?
- VII. The Affordable Care Act (ACA)
- The Affordable Care Act is beyond the scope of this article, but it provides for health coverage in the same manner that has been described above.
- Below are some facts about services that must be covered by plans under the the ACA. These services are not necessarily mandated to plans outside of it.
- All health plans, no matter the level, must provide some coverage for at least 10 essential benefits. They are:
- Outpatient care including chronic disease management
- Emergency care
- Pregnancy and newborn care
- Mental health and substance abuse services
- Prescription drugs
- Rehabilitation services and devices
- Lab tests
- Preventive and wellness services
- Dental and vision care for children
- The level of coverage for each of these services can vary. All of the health plans in the marketplace must provide consumers with a brief, clear description of what is covered and how their plan works. The Summary of Benefits and Coverage (SBC) must be posted on the plan’s website. These provide a good way to compare plans before purchasing one.