April 24, 2013 | 5:04 pm

The Ins and Outs of Group Health Insurance

Posted by Shmully Schwartz

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Q. What advantages are there by belonging to a group plan?

Well for one, in most cases, your employer will pay most of your monthly premium if not all of it. More money in your pocket is good… You’ll still be responsible for copays and coinsurance but your definite costs are being paid for by the group policy.

Secondly, group plans are guaranteed issue.  Meaning, the insurance carrier can’t deny one particular employee due to a preexisting condition. This is good as well.

Therefore, group plans are ideal for businesses that want to attract talented employees by offering them health insurance at no cost.  It entices the potential employee to your company over someone else’s.

Q. What disadvantages are there in a group plan?

Some companies will deduct money from your payroll in order to pay for your health insurance policy.  Though, if it is only part of the cost, you’re usually better off staying in the group.

In addition, some group plans don’t have the rich benefits that Medicare has. This means that not only is it a lot cheaper for employees over the age of 65 to be on a Medicare approved plan (instead of the group plan), but the monthly premiums, deductible, copays and coinsurance can be a lot more expensive with a group plan. Essentially, you’re paying more and getting less. For this reason many seniors who are still working will disenroll from their group plan and enroll into Medicare along with a Medicare Advantage or supplemental policy (see my blog relating to Medicare Advantage vs. Supplement - or email me directly).

Q. What is the definition of a group health insurance plan?

A group health insurance plan is a policy for two or more people who are connected not for the sole purpose of getting a group health policy. They either belong to a club or, in most scenarios; they work for the same company.

Anyone in the group can apply. It is illegal to discriminate against anyone in the plan for any reason. All must be afforded the option.

Q. What is the SHOP?

The SHOP is the Small Business Health Options Program. It is a government exchange that will go live three months before 2014 so that small businesses (under 50 employees) can shop for group health insurance plans. Some businesses may get a 50% tax credit for going through the exchange!

Q. Who in 2014 must provide a group health plan for their employees?

In 2014 any company with more than 50 employees must provide AFFORDABLE health insurance to their employees. If they do not provide affordable health insurance the company will be penalized for each employee after their first thirty employees.

Please comment with any questions or feedback you’d like to share…

All the best,
Shmully

March 13, 2013 | 12:19 pm

The Two Schools of Healthcare

Posted by Shmully Schwartz

Medicare, Obamacare, Paul Ryan and President Obama are going head to head on the budget, and they are refusing to budge on entitlements. 

Is it November?  No. I just checked my calendar and it's March 13, 2013.  President Obama was inaugurated in January and the elections happened over four months ago.  So, why all this déjà vu?

I think it's becoming obvious.  America has a major problem.  That problem is our health.  Moreover, it's our healthcare system.  We've all heard the statistics, America ranks 37th on the World Health Organizations performance ranking worldwide, but we rank #1 on expenditures on healthcare.  That's quite the gap.  Just to put this in perspective, I want to show some companies that rank higher than us: Singapore ranks 6th on performance and 34th in expenditures, UK ranks 18th and 26th on expenditures and Columbia ranks 22nd and 49th on expenditures. COLUMBIA.

How could this happen?  How could the greatest country in the world allow this to happen?  We are being beat by Columbia and Singapore.  A country that still does public beatings for littering is beating us in taking care of their sick, keeping their people healthy and keeping down costs at the same time!  This is ludicrous!

Right now public opinion is split between two competing schools of thought.  First is the Obama administrations point of view, and the other moves more in line with the points of view of Congressman Paul Ryan.  I'd first like to explain both of their points of view, so we can get a handle of how the current debate is facing the issue.  I would then like to explain my point of view, which is that we are looking at the wrong issues!  We are tiptoeing around what is really hurting us, and until we tackle these issues, we are going to break ourselves more than we already have!

The Obama plan addresses what and who pays.  One of his goals is to reduce payments to hospitals and drug companies.  Medicare currently doesn't have negotiating power with drug companies, which is why Medicare Part D programs (which is the stand alone prescription drug plan of Medicare) arguably provides weaker drug coverage than commercial plans and Medicare Advantage plans.  Additionally, he wants to decrease payments to hospitals and doctors for certain procedures, claiming they need to be more in line with other comparable costs.  He also wants to reduce readmission rates by incentivizing hospitals to nip issues in the bud, thereby reducing the risk that patients will keep coming back and costing us more money!

The president’s plan then goes on to address who is going to pay for this!  Guess who, the wealthy and new enrollees!  According to an article by Tami Luhbi, in CNN Money, they plan on increasing premiums on drug plans and doctors visits to high income seniors by 15% in 2017 and they want to make sure that 25% of beneficiaries are subject to these premiums. Additionally, Tami mentions that there will be a 30% surcharge on Part B premiums of anyone who enrolls in a comprehensive Medigap policy.  By the way, most people aren't aware of this, but Part B premiums go up already with income.  Here in Southern California someone making 90k a year is FAR from wealthy, but they are still charged a higher premium on their Part B.    

Now Paul Ryan's plan addresses the issues of cost to the system.  His plan, according to Rick Newman of US News and World Report, is "to solve the problem by giving seniors a federal subsidy they can use to purchase health insurance of their own choice.  The catch is that the subsidy would only cover part of the premiums, forcing seniors to pay the difference, which would be a sizable expense."  For all intents and purposes, it's a voucher system that would allow the seniors to go to a public market place for the insurance coverage, similar to what we do prior to Medicare.  The difference would be Guaranteed Issue policies that could not be denied on issue of previous conditions.  Ryan is basically saying, let the market take care of itself, let the seniors handle their own care and everything will work itself out in the free market economy.

Here are the primary issues that neither party is confronting head on, LACK OF TRANSPARENCY and FRAUD.

Let's first talk about transparency.  Today if I go to my primary care physician and get a physical and blood work, I have no idea what the cost of the procedure is going to be.  I know that I have a $25 co-pay and that's it.  I also know that I may get a bill in the mail for differences that may or may not be covered by my insurance company.  Actually, many people aren't aware of these potential expenses until the bill comes in the mail! Now let's go a step further.  My PCP's office is going to send a bill to the insurance company.  The insurance company will then reimburse the PCP based on their scale (rate), which may differ from the PCP's scale and ironically, may differ from all the other insurance companies scale.  Imagine if you went to the grocery store to buy an apple.  That apple doesn't have a price tag on it and you are forced to negotiate the price of this apple at the cash register.  That effectively is what's happening behind the scenes with our healthcare expenses. 

Here's the final kicker, a doctor, who goes to school for more years and puts themselves into more debt than most people would care to ever go into, is the only professional that doesn't get paid up front for their service!  Could you imagine going to your attorney and walking out the door paying $25 after they perform a service for you?  And that attorney isn't taking care of our most basic need, our health!

In a transparent system, within an open market, we should know what procedures really cost.  One shouldn't need an associate’s degree in medical billing to understand how we are charged for a procedure!  Have you ever seen an Explanation of Benefits from your insurance company?  I use them when I have insomnia because they are enough to shut down your brain!  This lack of transparency creates an uneducated consumer and puts the consumer on the losing end of the battle, or even worse, America at the 37th position.

The other major problem we aren't addressing is FRAUD.  Medicare FRAUD, Medicaid FRAUD, insurance FRAUD!  I hope what I'm about to say is going to make you sick.  I have clients, in Beverly Hills, whose zip code is 90210 who are on Medicaid.  That's right, the insurance program for the poor and disenfranchised.  They can rack up millions of dollars of bills, on our tax dollars and there is ZERO consequence to them.  They live with their kids in multi-million dollar mansions; they drive a Mercedes, yes, because you are allowed one car with Medicaid, even if that car is a Bentley!  They have diamond rings and are far from struggling, but because they technically have no cash in the bank, they qualify for Medicaid.  IT IS DISGUSTING! 

I propose doing something now that is slowly starting to happen.  If you are on Medicare and Medicaid together, you should be moved from being able to go to whatever doctor you want to, whenever you want to, which is how the system currently works.  We need to move these people onto HMO's stat!  They need to be forced into a limited network of providers that can manage their care, monitor their drugs, limit their effect financially on the system and limit the ease in which they can allow some of the fraudsters out their to further fraud the system.

Why haven't we done this yet?  I'll tell you why, because it's a system that makes money for a lot of people and they are in the state capitals and in DC lobbying against it with every dollar they can put into it.

I feel by addressing fraud and the lack of transparency in our medical system, we can effectively start moving in the right direction with bringing down the cost of healthcare and putting it more in line with our friends around the world. 

In the next installment, I'll explain our take on Obamacare, the Republican plan and the reality of where they both lead us!

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Jesse Hendon is the president of Simpler Horizons Insurance Solutions.  They focus on helping people on Medicare and with their health insurance needs.  They also consult with doctors and medical groups throughout southern California. Shmuel Schwartz is one of their senior agents.

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February 14, 2013 | 10:22 am

What Are My Medicare Options

Posted by Shmully Schwartz

So I’ve heard that there are insurance carriers that will cover the 20% of your healthcare costs that original Medicare doesn’t cover. Is this true?

Yes. Medicare will pay insurance companies upwards of $1,000 a month for managing your Medicare. This means that the insurance carrier will replace, or takeover, your Medicare Part A and Part B and will add additional benefits to entice you to join their plan. This is called a Medicare Advantage plan or Medicare Part C. Some of these plans do not have a monthly premium and many of them are an HMO type plan where you have a primary care doctor who refers you to specialists as needed. The most alluring element of this type of plan is that it usually has a $0 monthly premium. Free.

I’ve also heard that there is something called a Medicare supplement insurance policy. What is that?

Medicare supplement insurance will actually cover the 20% that original Medicare (parts A and B) doesn’t cover. So when you go to the doctor, for example, you show your Medicare card and your supplemental insurance card. Instead of the insurance carrier taking over your original Medicare and filling in the gaps, the supplement will leave your Medicare as is and add additional insurance. The benefit of this plan is that it allows you to see any doctor that takes Medicare as opposed to the Advantage plan that usually requires you to be in a network. The drawback of this plan is that it can be quite expensive and isn’t affordable for a lot of folks.

Well which one is better: A Medicare supplement or Medicare Advantage?
There are many insurance carriers and types of plans out there and there is no absolute best. There is only what’s best for you, and that depends on a few factors such as your prescription medications, your doctor, how often you travel etc.

As you well know, this is a complicated subject for a lot of folks but I’ll continue to try and keep it simple and shed light on any upcoming changes in Medicare.

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February 3, 2013 | 3:14 pm

An easier way to buy health insurance

Posted by Shmully Schwartz

Many of you have heard about a new place to buy health insurance starting at the end of this year called the exchange. As part of the Affordable Care Act (Obamacare), starting in 2014 ALL Americans must have a minimum amount of health insurance or be taxed by the government. The law also requires each state to have a health insurance exchange where people can buy health insurance.

Let’s think of the exchange for a minute as an airline ticket search engine. You enter your information based on family, age, geography and tobacco use, instead of airport city and date. The search engine then brings you plans based on four different metallic tiers, bronze, silver, gold and platinum. From the lowest premiums and least amount of coverage for the bronze tier, to the highest premiums and highest level of coverage on the platinum tier: A higher level of coverage means a lower deductible, lower out of pocket maximum, and more prescription drugs covered.

The bronze tier will cover 60% of your healthcare, silver – 70%, gold – 80% and platinum – 90%.  Additionally, all of these plans are “guaranteed issue” meaning the insurance carrier can not deny your application due to any preexisting conditions.  Furthermore, the government will subsidize the cost of your insurance based on your income. The less money you make the more credits and subsidies the government will give you.

If all goes as planned, exchanges will open for enrollment on October 1, 2013 and coverage effective dates will begin January 1, 2014.

The government will also offer another type of exchange where employers can buy group health insurance for their employees. This exchange is the Small Business Health Options Programs, or SHOPs, for short. Tax credits will increase for employers with 25 or fewer employees and the credit will cover up to 50% of the employer’s cost. Employers will be eligible for credits in the first two years they offer coverage through an exchange.

Now if an employer with a large group (50 or more employees) does not offer minimum coverage to full-time employees, and at least one employee gets subsidized coverage through an exchange, then a $2,000 penalty is assessed for each employee (after the first 30). 

So starting in 2014 there are three ways for folks to get health insurance. 1) Get coverage through their employer, if available. 2) Buy a plan through either: The individual market exchange or the traditional market. 3) Go uninsured and pay a penalty.

The penalty in 2014 for going without health insurance is $95 annually or 1% of taxable income whichever is greater. In 2015 the penalty will be $325 or 2% of taxable income. In 2016 the penalty will be $695 or 2.5% of taxable income.

As the year progresses and more information is available, we will in turn keep you informed!

Have a great week! Please post comments below.

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January 14, 2013 | 1:27 pm

Pay attention to the numbers when buying Health Insurance

Posted by Shmully Schwartz

In our previous post we spoke about Obamacare, the Pros and the Cons.  As we prepare for the insurance exchange and the employer mandate, I’ve had a lot of time to reflect what would be the best position for our clients.  As I was thinking about how to best help our clients, both group clients and individuals, my thoughts began to drift to the balancing act of folks who were self-insured versus folks with high deductible plans versus folks with “Cadillac Plans”.  Each one of these groups can make a strong argument for why they believe they are in the right for their current situation.  Today, I’d like to focus on the numbers when buying health insurance.

We should first focus on what a deductible is; it’s the out of pocket amount of money you must put towards a claim before your insurance company puts in a dime.  I think of it as the amount of risk you are willing to put into the game before your insurance company covers the risk.  As you can imagine, the more skin you are willing to put in the game, the more reward. Most people only focus on deductibles with their car insurance and think $1,000.00 dollars is a high deductible.  With health insurance, most high deductible plans reach $5,000 with some as high as $8,000 or $16,000 for a family.  That makes $1,000 laughable!
In addition to deductibles, many plans expose patients to Annual out of Pocket Maximums.  What is this extra money?  It is money a patient must pay in co-pays and/or co-insurances.  So once you’ve hit your deductible, you now must pay these extra charges until you’ve hit your max.  Once that happens, your insurance company goes to work! 

So why would someone of sound state and mind want to put $5,000 of their hard earned dollars at risk?  The answer: the difference in premiums between a Cadillac plan and a high deductible plan.  A very popular high deductible plan is the Anthem Tonik plan.  It’s one a lot of younger folks buy as the premiums are not so high, it covers dental and vision and allows a patient 4 doctors office visits throughout the year.  For a healthy 35 year old, single male, the monthly premiums are going to be around $220 a month.  The deductible with this plan is $5000 and the annual out of pocket maximum is $0.  Let’s then look at a PPO plan with a $1,000 deductible from the same company.  This plan is going to run that same healthy 35 year old, single man, $403 a month.  The biggest strength of this plan is unlimited office visits at $30 and $50 co-pays.  The price difference reflects the deductible difference. However, the plan also exposes the patient to an annual out of pocket maximum of $4,500 bucks.  The client is now exposed, if something were to happen, to 403 x 12 + 1000 + 4500 = $10,336.   This is versus a client being exposed to 220 x 12 + 5000 = 7,640.

In addition to the numbers there are also some very important points one must consider when looking at their health insurance options.  First, what insurance plans do your physicians accept?  Do you want an HMO or a PPO?  One important point, many HMO’s have zero deductible, but you pay for that $0 deductible in the premium difference!  Are there well-being assessments available to reduce my premiums?  What companies seem to raise their premiums versus a level premium history? 

Remember, you only have one heart, two lungs and one brain!  Take care of these over time and they’ll take care of you!  Until next time, be well.

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January 7, 2013 | 5:39 pm

What does Obamacare mean to you?

Posted by Shmully Schwartz

OBAMACARE!!!  It's a word that strikes fear into some, smiles onto others and confusion onto most! What is The Affordable Care Act?  Who does it affect?  Is it good?  Is it bad?  One blog isn't enough to tackle these questions, but we'll try and answer a few of them today!

Is there really a 716 billion dollar raid on Medicare to fund Obamacare? 

No, plain and simple.  Let me explain the dollars and cents of what's going on with this magic 716 billion-dollar number. Medicare Advantage plans and hospitals are paid capitations (a set monthly dollar amount per beneficiary) and bonus dollars. Obamacare has a provision in place starting 2013 that will only pay these bonus dollars if the plans and medical providers meet minimum quality standards.  That means if an Advantage plan doesn't meet minimum star ratings, and medical providers don't meet the standards in place, they won't get a bonus.  Those dollars are then spread out over ten years and that's how we answer the 716 billion dollar question.

Do all men really have maternity coverage on their health insurance?  

Yes.  Although science shows I will never be able to have a baby, I have that coverage on my health insurance.  That's whether I want it, or not...

I've heard that I can get health insurance with a pre-existing condition now, is that true?

Yes and no!  Today if you are under 19 and have a pre-existing condition, the health insurance company cannot turn you down.  If you are over 19, this starts for you in 2014.  According to healthcare.gov, "The law implements strong reforms that prohibit insurance companies from refusing to sell coverage or renew policies because of an individual’s pre-existing conditions. Also, in the individual and small group market, it eliminates the ability of insurance companies to charge higher rates due to gender or health status."

Are my health insurance premiums going to go up?

Yes.  There's going to be no way around this.  Health insurance companies are here to make a profit.  I know this sounds counter intuitive to the quote written above, but let me explain.  Health Insurance companies aren't going to be able to charge higher rates to a select few due to gender or health status.  This means they will simply charge higher rates to all of us!  I say this as fact, because it is.   

My Doctor said that Obamacare is going to drive him out of business?  

A trend that we see coming down the road is the end of the private practice.  Medicine is moving in the direction of managed care, for better or for worse.  Let me explain.  My doctor once told me that he's the only professional that goes to school for 8 years and doesn't ask you to pay him at the time services are rendered.  That's a great point!  We know we are going to be gauged when we see a lawyer, we expect to be bamboozled by a contractor, but if a doctor asks us to pay him, we're insured, we don't need to pay him! Private practice physicians are getting increasingly lower payouts from insurance companies.  Additionally, they need to fight to get what they're promised.  Have you ever gotten an explanation of benefits from your insurance company and read it?  The insurance company screws the doctor!  Now let's look at your doctor who works for UCLA, HealthCare Partners, Kaiser or Cedars.  These guys and gals get paid a pretty great salary and most of their bonuses are based on quality measures, not quantity measures.  Don't get me wrong; if they're not seeing patients, they're out the door!  However, the trend is more and more physicians are now working with big medical groups to avoid the pitfalls of private practice.  Is Obamacare driving the private practice doctor out of business?  Maybe not, but it sure isn't helping them to stay in business either. 

I agree that something needs to be done, but is forcing everyone to get health insurance the answer?

We tend to agree with that statement.  The bigger issue is the medicine for profit system we live in today. Most people agree that healthcare should be free, but how?  At the expense of higher taxes, my pocketbook doesn't seem to like that answer!  Doctors go to Med school and drive themselves into 100k plus debt in hopes to make it big.  Medical billing is so complicated; they have 2-year programs dedicated to it.  Nurses go to school for six years and dig themselves holes similar to the doctors.  Hospitals are run for profit, for the most part, and the ones that are not-for-profit still need the money to keep the lights on and the staff paid.  Finally, there are the good old insurance companies!  If there's ever a nuclear disaster there are two things that will survive, termites and insurance companies!

Over time, we are going to address the issues that are a concern to many people both in the Jewish community and abroad related to healthcare.  All we ask is, if you like something we have to say, be a mensch and pass it along.  If not, well, go ahead and say something anyways, there's no such thing as bad press!!!

Simpler Horizons is an Insurance Brokerage firm specializing in health insurance and related lines.  If we are not your trusted advisor, speak to your trusted advisor before reacting to anything we write!

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