The Right Insurance At The Right Time
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1. Know Your Health Insurance Plan
It’s unfortunate but very few people know what’s in their health insurance plan. Partly, this is because health insurance plans are incredibly complicated. But there’s often also an assumption that the plan you have covers more than it actually does.
Many medical treatments and procedures may be excluded from health insurance plans include the following:
- Long-term care
- Cosmetic surgery
- Adult dental services
- Weight loss programs
- Routine foot care
- Infertility treatments
- Private nursing
- Adult eye exams
- Weight loss surgery
Two other categories that are frequently excluded include treatment by chiropractors and healthcare services provided outside the United States.
But in addition to specific coverage exclusions, you also need to know the procedures to get the proper consideration.
For example, most health insurance plans require that you get pre-certification prior to any significant medical procedures. That can include everything from physical therapy, consulting a specialist, or undergoing surgery.
Many assume required pre-certifications are automatically obtained by the healthcare provider. But as I learned in my own experience, it’s worth taking an extra step to check with either the provider or your health insurance company to make sure the necessary referral or pre-certification has been obtained.
In some cases, the absence of a referral or pre-certification can mean the denial of a claim. That’s why it’s critical to know your policy and to be proactive in managing your care. Many people get socked with uncovered medical expenses simply because the right form wasn’t approved or even applied for.
2. Out-of-Pocket Maximums DO Matter
As the cost of healthcare skyrockets, insurance companies have made policies “more affordable” by passing more of the first dollar medical expenses onto the consumer. First dollar medical expenses are those that you pay before your insurance applies.
Collectively, these expenses are referred to as out-of-pocket costs, and are comprised of three different charges:
Copayments – These are the payments you must make upfront directly to your healthcare provider. It may take the form of $30 for your primary care physician, $60 for a specialist, or $25 for a prescription.
Coinsurance –Few consumers know exactly what it means or how it works. Simply put, coinsurance is a form of cost-sharing. The health insurance company will apply a percentage–usually 20% or 30%–which you must pay over and above the deductible.
For example, let’s say your policy has a $2,000 deductible, a $6,000 out-of-pocket maximum, and a 20% coinsurance provision.
If you need a surgical procedure that will cost $50,000, under the terms above, you’ll pay the first $2,000 as your deductible. But you’ll then pay 20% of the amount above the deductible until your out-of-pocket maximum is reached.
Since your out-of-pocket maximum is $6,000 and your deductible is $2,000, the dollar amount of your coinsurance provision is $4,000. That means you’ll pay 20% of the first $20,000–or $4,000–of your surgery after you make your deductible. Your insurance will pay 80% of $20,000, plus 100% of the cost from that point forward, for a total of $44,000.
Deductibles –These are flat dollar amounts you must pay before insurance kicks in. For example, if your policy has a $2,000 deductible, you’ll pay that much out-of-pocket for most medical expenses before your insurance coverage will begin.
Dealing with Out-of-Pocket Costs
As you can see, out-of-pocket costs have gotten much more complicated in recent years. But the important takeaway is to carefully consider these costs when choosing a health insurance policy. You may not have that option if you’re covered by an employer-sponsored group plan. But if you’re shopping for an individual policy, you’ll need to figure this into the mix.
Consumers often go with high deductible plans as a way to reduce the premium costs. That strategy can make sense if you’re young and healthy and unlikely to need to file a claim. But if you’re older, or have any significant medical conditions that may require treatment or hospitalization, choosing a plan with the lowest premium can be a serious mistake.
If you believe you are likely to need costly medical treatment, you may be better served by a policy with a $500 per month premium and $2,000 out-of-pocket, than one that has $350 per month premium and a $6,000 out-of-pocket limit. Though you’ll save $1,800 per year on the lower premium policy, you’ll pay more than that with the additional $4,000 in out-of-pocket costs if you need a major medical procedure.
In many cases, the better choice is to choose a higher premium with a lower amount of out-of-pocket costs. Not only will that reduce your financial responsibility in the event of a medical procedure, but it will also reduce the shock of being hit with a very large medical bill at a very inconvenient time.
If you obtain coverage through the Affordable Care Act, you can get estimates on different policies, premiums and out-of-pocket limits when you preview plans and prices at healthcare.gov. There you can get an idea of what plans cost without having to go through the application process.
3. Avoid Treatments That Aren’t Necessary
This is a big part of managing your out-of-pocket costs. Some consumers, unaware of the full implications of out-of-pocket costs–particularly the coinsurance provision–may undergo medical treatments not entirely necessary under the assumption that they’re paid for by the insurance company. It’s only after the procedure is performed and the bill arrives that you become aware of your financial responsibility. But by then, it’s too late.
Out-of-pocket costs impose a requirement on us all to be more responsible with our medical care. This can be more difficult than it sounds. In an effort to get the best medical care and to have the highest level of assurance on a health condition, consumers often agree to tests and procedures that aren’t entirely necessary.
Part of this is the result of what’s known as defensive medicine. A healthcare provider may order certain tests or procedures as a potential defense against a future lawsuit. Because of the prevalence of malpractice suits, this strategy is understandable–and unfortunately, not at all uncommon.
However, because of out-of-pocket provisions, you’ll pay at least part of the cost of any test, procedure or treatment whether it’s necessary or not.
It’s hard to know where to draw the line here because we’re consumers, not medical doctors. But getting a second opinion on a major procedure is usually an option and may reveal if a recommended treatment is not necessary.
4. Stay “In-Network”
Most health insurance plans include a network of approved participating providers. Costs for using in-network providers fall within the out-of-pocket expense provisions for the policy.
But if you need to go outside the company’s network, the out-of-pocket costs increase, usually doubling. For example, while you might pay $50 to see a doctor in-network, the cost will be $100 for an out-of-network doctor. Your deductible may double from $2,000 to $4,000 and the coinsurance provision may require you to pay 40% after the deductible is met rather than the usual 20%. The out-of-pocket may also double.
Before visiting any healthcare provider, whether that’s a doctor, a clinic, a lab, or hospital, first make sure that it’s an in-network provider. If it isn’t, it can cost you thousands of dollars more.
If you need to go out-of-network because there are no suitable providers in your geographic location that are in-network, some health insurance policies will allow you to request a provision for an out-of-network provider to be treated the same as an in-network provider for insurance purposes.
If that’s the case, be certain to get that confirmed in writing. In the insurance universe, a verbal assurance is not legally binding. But if you have written confirmation, you’ll have evidence your insurance company agreed to cover an out-of-network provider as though it’s in-network.
5. Look for Cheaper Alternatives for Prescriptions
One of the fastest growing expense components of healthcare is prescriptions. A single prescription can cost hundreds or even thousands of dollars per month.
Use the following strategies to control those costs:
Use only prescriptions that are part of your health insurance company’s formulary. A formulary is simply a list of prescription drugs approved for use by your health insurance company. If a prescription drug is excluded, you may pay 100% of the cost yourself and it won’t count toward your out-of-pocket cost limits. If your doctor recommends a drug that’s not included in the formulary, request a substitution by one that is.
Use generic prescriptions whenever possible. Generics are the equivalent of buying store brands instead of name brands. Typically, when a medication has been available for several years, identical substitutions become available. Most health insurance companies have tiered pricing on prescriptions. That might include a $50 copayment for a name brand drug compared to $10 for a generic substitute. If your doctor doesn’t prescribe a generic medication, request a change if a generic is available.
Buy in bulk. Many pharmacies offer significant discounts if you purchase larger quantities of maintenance medications (those that you’re on for an extended period of time or even for life). For example, a 30-day supply of a prescription may require a $30 copayment. But if you get a 90-day supply, the copayment may be $50. You’ll save $40 on the prescription over the course of three months.
Buy through mail order providers. These are centralized prescription providers offering medications at significant discounts. They’re not as convenient as going to a pharmacy and getting your prescription filled immediately. But in exchange for ordering your meds a few days in advance, you can save serious money on copayments.
6. Participate in Health Insurance Wellness Programs to Reduce Your Premium
Many insurance companies offer wellness programs that will give you an opportunity to lower your premium costs. By participating in certain healthy activities or reaching specific health improvement goals, you’ll be eligible for premium discounts.
For example, CIGNA offers their Wellness Programs and Incentives. As is typical of such programs, discounts may apply if you participate in either activity-only or outcome-based behavior modifications. Activity-only requires only that you participate in the prescribed behavioral modification, such as engaging in a walking program or a coaching program.
The outcome-based program requires reaching certain health goals, such as lowering your body mass index below 30% or completing a smoking cessation program. Success in meeting the outcome-based goals can be rewarded with a reduction in the total cost of medical coverage of as much as 30% or 50% of the cost of coverage for tobacco-related programs.
The CIGNA program is just one example. Many health insurance companies offer wellness programs, and you should investigate the options offered by your carrier.
7. Carefully Scrutinize Any Medical Bill You Receive
Never simply assume you owe all that’s included in a medical bill. As many as 80% of hospital bills contain errors that can cause you to pay more for your services than you should.
Analyzing medical bills is not easy for the average person. The one thing you can easily do is look for duplicate charges or charges for services you don’t remember receiving. A healthcare provider may also fail to credit a previous payment and charge you a second time.
If you spot such errors, you should contact the health provider immediately and dispute the charge. Many will cooperate, especially if you provide evidence of previous payments or highlight duplication. Charges for services you didn’t receive is a more difficult process.
Hospital bills tend to be the most complicated and fraught with errors. However, many hospitals have patient advocates who can help you to both analyze and dispute your bill. But there may also be a dispute resolution department through your employer or your health insurance company and you should absolutely take advantage of it if that service is available.
As a precautionary method, it’s usually possible to get a statement of benefits in advance of a scheduled medical procedure. The insurance company will provide you with a statement that will show the charges by the healthcare provider, any plan discounts the provider is required to accept, the amount paid by the insurance company, and the patient’s responsibility.
If the invoice you receive from the medical provider significantly exceeds the patient’s responsibility indicated on the insurance company’s statement of benefits, you should institute a dispute immediately. Letting the dispute go for even two or three months runs the risk of the invoice being turned over to a collection agency, which will make your job that much harder.
8. Open a Health Savings Account (HSA)
A health savings account will help you better manage the out-of-pocket-costs portion of your health insurance plan. It will do that in two ways:
1. It will enable you to accumulate funds specifically for health care costs on a regular basis, and
2. The contributions you make to the plan will be tax-deductible–even if you don’t itemize.
HSA’s are often offered by employers, but you can also set one up individually.
To be eligible to open an HSA account, your health insurance plan must meet the following qualifications:
Your health insurance plan qualifies as a high deductible health plan (HDHP), defined as a plan with a minimum individual deductible of $1,400, or $2,800 for a family.
The plan must provide for maximum out-of-pocket costs of $6,900 for an individual, or $13,800 for a family.
If your health insurance plan qualifies you can contribute up to $3,550 to an individual HSA, and up to $7,100 for a family. Both contribution limits allow for an additional $1,000 if you are 55 or older.
How to Save Money on Health Insurance
- Check Out Your Options
- Know The Different Plans
- Health Savings Account
- Stay In-Network
- Health Insurance Pros
Your first tip for saving money on insurance is to actually know your options, and those will vary depending on whether your workplace offers health insurance benefits or if you’re exploring individual plans. Let’s start there.
If your workplace offers health insurance benefits, that’s the first place to look. In 2016, employer-based insurance covered 55.7% of the population in the United States, so by far, it’s the most common scenario. Your employer-paid group plan may have more limited options—usually a few different plan options within the same health care company. But your employer also shares the cost of premiums with you, which helps you save money.
Advantages of employer-paid group plans:
- Your employer shares in the cost of premiums with you.
- Your premium contributions can be made pretax (as well as contributions from your employer). That translates to tax savings for you come April.
- Your employer chooses the health insurance company and plan options.
If your workplace does not offer health insurance benefits or if you’re self-employed, partnering with a health insurance pro makes it easier to know your options. And just because you don’t have health insurance through an employer doesn’t mean you have a spend an arm and a leg on insurance costs. A pro can help you pick the right plan that works for your needs and your budget.
Advantages of individual plans:
- You get to choose the insurance company and plan that works best for you.
- You can change jobs without losing your insurance coverage.
- You can choose a plan that allows you to see the doctors you want.
#2: Know How Different Plans Work
There are three different ways to categorize health insurance plan options. You may have heard of them before, but knowing how the difference affects your health insurance cost can be complex.
Health Insurance Network Types
There are four different network types, also known as managed care plans. What does that mean? Simply put, it means that each of these types uses a specific network of providers. These providers agree to a lower cost of service in exchange for having access to the network plan members.
What are the four network types?
- Health maintenance organizations (HMOs) – An HMO provides access to certain physicians, clinics, and hospitals in its network. To be eligible for an HMO plan, you may have to live or work in in a particular service area. Your health care is only covered by insurance if you stay within your network of providers.
- Preferred provider organizations (PPOs) – If you use a PPO insurance plan, you pay less when you choose from a network of providers. You can get out-of-network care without a referral from your primary care physician, but it will be at a higher cost..
- Point-of-service (POS) – With a POS plan, you may be required to choose a specific primary care physician, who will have to refer you to specialists for care, if needed. You can receive care from physicians out of your network, but with increased out-of-pocket costs.
- Exclusive provider organizations (EPOs) – If you have an EPO plan, services are covered only when you use providers in your plan’s network, unless it’s an emergency..
Health Insurance Tiered Plans
Some plans are classified by tiers, which estimate the costs you pay out-of-pocket compared to what your insurance covers. Plans with lower out-of-pocket costs will generally have high monthly premiums. Plans with higher out-of-pocket costs usually have much lower monthly premiums.
How do you know which tier is best for you? There are a lot of factors involved, which is why it’s always a great idea to work with a health insurance pro who can help you choose the right option for your particular situation.
High Deductible Health Plan (HDHP)
The third classification for health care plans is the high deductible health plan (HDHP). A HDHP is simply a plan with a higher deductible, compared to traditional health insurance plans. According to the IRS, a health insurance plan with a deductible of at least $1,300 for an individual or $2,600 for a family qualifies as a HDHP.
High deductible plans offer lower monthly premiums, helping you save money over the long-haul. What’s the downside? With a HDHP, you will have a higher deductible and things like dental, vision, and prescription drugs may not be fully covered. The good news is there are still lots of ways to save money with a HDHP, including the option to take advantage of tax-free savings for health care expenses by utilizing a Health Savings Account (HSA).
An HSA allows you to contribute money to a savings account dedicated to health care costs tax-free. Using an HSA can be a great way to save money on health insurance costs, if it’s available to you.
Here are four reasons to consider an HSA:
- You can take advantage of tax-free contributions.
- Lower monthly premiums help you save money.
- Your contributions roll over year-to-year.
- You can invest your HSA funds so they grow over the long-term.
When you use pretax money to pay for co-pays and health care costs before you hit your deductible, you can reduce your overall health care costs. Even CSEZone takes advantage of the tax savings by using an HSA!
When you use an HSA, not only do you get the benefit of tax-free contributions and withdrawals for health care costs, you are also eligible for a tax deduction. In 2017, you can deduct your HSA contributions up to $3,400 for singles and $6,750 for married couples.
Having a higher deductible may seem scary, but when you already have the money on hand in your HSA to cover an emergency, it’s no problem. An HSA is an especially great plan if you are generally healthy. You’ll also be taking advantage of lower monthly premiums, and you’ll be able to use tax-free savings to cover any out-of-pocket health care costs.
In nearly all circumstances, you’ll save money by using physicians, clinics, and hospitals that are in your health care plan’s network. When you use in-network care, you can take advantage of the relationship that your plan has with certain care providers. These providers agree to lower fees on services in exchange for having access to the plan’s network members.
Depending on which health care plan you have, your costs for out-of-network care could vary.
- If you have a HMO or EPO plan, it’s likely you will be responsible for the entire cost of care from an out-of-network provider.
- Do you have a PPO or POS plan? Your insurance may still cover part of your care. But since your overall costs weren’t discounted, the amount you owe will be higher—even after your insurance chips in.
Let’s take a look at an example:
Stephen visited an in-network physician when he started experiencing flu-like symptoms. The charge was $200. Because his plan has a discounted rate with that doctor, he got a $50 discount on the service. His insurance covered $130, leaving him with a $20 bill to pay.
If Stephen had chosen an out-of-network provider for the same service, he wouldn’t have received a discount on the overall costs. Even if his insurance covered the same $130, he would be responsible for paying the remainder, which in this example would be $70. Stephen can visit an out-of-network provider if that’s his preference, but he should be prepared to pay extra.
If you can stay in-network for your health care, do it. It’s an easy way to save on your overall health care costs.
The responsibility of making sure your provider is in-network falls on you, so it’s important to ask the right questions on the front end. Just because a clinic accepts your insurance doesn’t mean that they are in-network. If you want to verify that a provider is in-network, call the customer service number for your insurance company.
What is “balance billing”?
When you work with an in-network provider, they have agreed to certain discounted rates on services. However, when you see an out-of-network provider, they can charge full price and bill you for anything that your insurance company doesn’t cover. The term balance billing refers to your provider’s ability to bill you for that remaining balance.
What should you do if you get billed for more than you think you owe?
Your first step is to double-check the math. Sometimes errors are made, either on your end or in your provider’s billing department. If you think there may have been an error, simply call your provider and explain that you think you may have been incorrectly billed.
It’s also a great idea to talk to an insurance pro, who can help you make sure that you understand your insurance bills correctly. Your insurance pro is your best advocate when it comes to navigating complex health care costs.
A health insurance broker can help you find the best plan for your budget and your family’s needs. Understanding your health insurance is complicated, so why not partner with an expert?
An insurance pro can:
- Help you review and compare your health care plan options
- Show you how co-pays and deductibles affect your overall health care costs
- Help you know if a tax-favored option like an HSA is right for you
- Navigate complex situations if you encounter unforeseen costs like balance billing
- Advocate for your best interests