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
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!