One of the first things people consider when they’re looking at health insurance plans is the cost. And they may look at the premium and figure that’s it. But there’s a lot more to cost than just premiums. You need to consider deductibles, coinsurance, maximum out-of-pocket expenses you’ll need to pay and copays. When I work with you on selecting a health insurance plan, my goal is to help you understand health insurance plans and then help you pick the health insurance plan that best fits your specific needs.
Since a lot of people focus on premiums, let’s talk about that for a moment. Premiums are based on many factors. They’re based on the type of coverage you select – which could be broader-based or could be limited. They’re based on the amount of deductible you select – which could be a lower deductible or a higher one. And they’re based on health care networks and even your health. We’ll talk more about that later.
Let’s start with the definition of a deductible. It's the fixed yearly dollar amount you pay -- in addition to copays, which we'll discuss in a moment -- before the benefits of the health insurance plan policy start. And it’s a calendar year annual amount. So each year you start with a deductible. Throughout the year some of your covered medical expenses count toward the deductible. There may be separate deductibles for in-network and out-of-network covered medical expenses.
Since you’re paying for this deductible out of your own pocket, you need to decide how much is comfortable for you. And then you need to weigh that against the cost of the premium. A higher deductible often results in a lower premium. And a lower deductible often means a higher premium.
Something else to consider when you’re thinking about cost is coinsurance and copays. After you meet your calendar year deductible, your health insurance plan goes to work for you. But it doesn’t pay 100% of all covered medical expenses. You need to pay some, too. And you pay that through coinsurance and copays. While each health insurance plan is different, many health insurance plans pay 80% for covered medical expenses while you pay 20%. This is coinsurance. Depending on the health insurance plan, sometimes the coinsurance applies only to certain covered medical expenses like hospitalization. Staying in your health insurer’s network has a direct impact on your coinsurance – it will be reduced or may even be eliminated when you stay in network so keep that in mind. When you’re looking at health insurance plans it’s also important to look at your maximum out-of-pocket expenses. A calendar year maximum shows the maximum amount of money you could pay out yearly for covered medical expenses. If you anticipate needing a lot of care in the coming year, make note of this number, as you may have to pay this amount.
Copays are something you may already be familiar with. This is where you pay a fixed dollar amount, like $25 for a doctor visit or $15 for a prescription. After your coinsurance if applicable, the health insurance plan pays the rest up to the point that has been negotiated.
I think you can agree that hospital coverage is very important and something you do not want to be without. Did you know that the average cost of a heart attack, including post-treatment, is over $110,000?* You’ll want coverage for services such as the emergency room, outpatient surgery and hospital admission – from the very first day of your stay, which may be the most expensive. That’s because if you go to the hospital for a scheduled treatment or surgery, it occurs that first day. Similarly if you need to go to the emergency room, there may be a lot of tests involved that same day. * Source: Consumer Reports, May 2009
I always check limits on which medical expenses are covered. This includes length of hospital stays, inpatient visits by doctors and specialists, prescriptions drugs, certain outpatient treatments and expensive tests like MRIs. Why? Because some health insurance plans have limits on these services and you need to be sure you’re covered.
I mentioned provider networks earlier today but want to expand on that for a moment. Each health insurance plan has networks of contracted doctors and specialists, hospitals, pharmacies, therapy centers – you name it. Health insurance plans distinguish coverage for services, and the cost of those services, by whether the covered service was received in or out of their provider network. You will almost always pay less for your care if you stay within the network. When we look at health insurance plan options, I’ll let you know the provider networks and then you can check to see if your doctor, hospital and pharmacy are in those networks. If you need to go out of network, you can certainly do that but know that you’ll be paying more generally. In some cases your coinsurance could double. The exception that always applies is for emergency room visits where you will pay the same coinsurance or copay regardless of in or out of network. So when you select a health insurance company with large networks, you could have access to more providers and you could also save money.
There’s a lot of buzz around healthy living and preventive care these days – and for good reason. Health insurance companies are recognizing the importance of helping you and your family stay healthy. And for new health insurance plans effective on or after September 23, 2010, the new health care reform act has made some changes that help address preventive care. Certain services must be covered without your having to pay a copay or meet your deductible – for example, blood pressure screening, certain cancer screenings, type 2 diabetes screening. There are also a variety of vaccinations available for both adults and children that don’t require a copay. This applies only to covered in-network medical expenses.
Other health insurance plans may offer you discounts on certain things that help contribute to a healthy lifestyle. Aetna has a lot of added values such as discounts and savings for eyewear, along with everything from hearing aids and services to natural products – even services like massage therapy and over-the-counter vitamins. If you’re looking to knock off a few pounds, they even have preferred rates on some gym memberships at certain clubs. These discount programs are not insurance and may change over time.
There are a couple of things to keep in mind when it comes to health insurance plans and prescription medications. First of all, staying in your health insurer’s network can save you money. If you use a pharmacy that is in network, you’ll pay less than if you go outside the network. Most pharmacies are covered in many networks but it’s a good idea to double-check. When it comes to your prescriptions, generic drugs are almost always less expensive than name brands. Your health insurance plan should show a difference in pricing from one to the other. And you should also see a lower copay for generics too.
Also, if you’re on a specific medication you should check the formulary – that’s the approved list of covered medications – to be sure yours is on that list. A formulary divides into tiers too, so you should look at that. These tiers are different between health insurance plans. For example, your medication could be on one tier in one plan and cost you X. In another health insurance plan it could be on a whole other tier and cost you Y. And that cost difference could be significant. That’s part of the work I’ll do for you. Something I generally recommend to people taking maintenance medication is mail order drugs. They get delivered to your door and you usually get a three-month supply so you have the peace of mind of not running out. You may even save some money too. Aetna has this service and they also can have specialty drugs, including those that are injected like insulin, delivered directly to you.
Let’s talk about the different kinds of health insurance plans available. Broader-based health insurance plans are really what most people want for the most coverage. It covers, at various levels, medically necessary doctor visits, specialists, prescriptions, hospitals, tests and more. Broader-based health insurance plans are available in a range of deductibles – from lower to higher. Remember that the amount of deductible impacts your premium so we’ll need to consider that. High deductible plans that are HSA-compatible are becoming very popular because they do lower your premium. Their out-of-pocket costs can go up to $5,950 for individuals. That’s the amount you’ll need to pay before most benefits are paid. So be sure you’re comfortable with those costs before you select a high-deductible plan.
Some major medical plans also offer something called Health Savings Accounts, or HSAs. They go hand in hand with high-deductible plans that are HSA-compatible to help you pay for your out-of-pocket portion. These are like medical savings accounts that provide a tax advantage. You deposit money into an account at a bank and pay no federal income tax on the money you deposit. You can deposit up to $3,050 in 2010 if it’s just for you or $6,150 for you and your family. The money you deposit grows tax-free in the account and you don’t pay any tax on your earnings as long as you use it for your qualified health care expenses. You can use it to pay for costs up to and beyond the deductible – which means it’s good for almost any of your out-of-pocket expenses as long as you have money in the account.
If you have money leftover in the account at the end of the year, you can keep it in there and roll it over into the following year and years following that. These HSA accounts require you have an HSA-compatible plan with an annual deductible of at least $1,200 in 2010 for individual coverage and $2,400 for a family. I can walk you through how this may work for you and we can look at all the options.
In addition to broader-based health insurance plans, there are also limited benefits plans. Sometimes these are also called “hospital plans. ” While they may also provide some limited preventive care coverage, their primary purpose is to cover you while you’re in the hospital. They’re less expensive than broader-based health insurance coverage. So they may be right for people who want to save money, consider themselves relatively healthy, and are looking to protect themselves principally from hospital stays.
Keep in mind they typically do not cover doctor visits or medications, although there may be some coverage for generic medications. If you’re considering limited benefit plans, be sure to speak with me so we can review what’s covered and what isn’t, and you know what you’re buying.
When we start to look at your health insurance plan options, we should talk about your health and what you may need in a plan. For example, how often do you see the doctor? What kind of tests do you need? Are you on medication now or will you need to be on it in the future? Answers to these kinds of questions will go a long way toward putting together the right health insurance plan for you.
There are several things to know when you’re applying for health insurance plans. I’ll help you but it’s a good idea to be aware of them. First, health insurance plans are underwritten to the extent permitted by law, which means the insurance company needs to know about your medical history. They will ask questions about your past and current health. They may deny you health insurance coverage based on this information – or they may accept you but charge you a higher premium. Health care reform, which I’ll get to next, will change this but not fully until 2014. I can do some pre-qualifying for you so we’ll get a good idea of whether or not you’ll be accepted for coverage. Finally, I’ll want to be sure to get a good understanding of where you are right now so that we put the right health insurance plan in place. Do you need this coverage while you’re in transition from one job to another? Or perhaps you’re considering early retirement. Or maybe you have your own business? Answers to these questions will steer us in the right direction for the health insurance plan to fit your needs.
The first thing to keep in mind when it comes to Health Care Reform is that most changes will not go into effect until 2014. So if you were waiting for this before deciding to get covered, don’t wait. You need to be sure you’re covered now. Let me highlight a few things that are in effect. First there is a temporary government insurance program available for people who have been denied coverage for a pre-existing condition and have been uninsured for at least six months. If you’re in that boat, talk to me and we can look at all of your options. Next are lifetime limits – that’s the limit insurance companies will pay for your care over your lifetime. For new health insurance plans, lifetime limits were lifted September 23, 2010. This is good news. Also effective in October 2010, your health insurance company cannot cancel or discontinue your coverage retroactively except for non-payment, fraud, or intentional misrepresentation of material fact about your health. For new health insurance plans, enrollees under the age of 19 with pre-existing conditions may not be denied access to your health insurance plan effective September 23, 2010. So if you want your child/children on your plan, you’ll need to add them and of course pay the appropriate premium for them. And, health insurers will not be allowed to insure your child but exclude treatments for that pre-existing condition. They can, however, charge you a higher rate.
There will be no out-of-pocket maximums for a calendar year, and you will not have to share in the cost of in-network preventive care, as recommended by the guidelines adopted by Health Care Reform. And finally, for new health insurance plans, dependent children who don’t have coverage through their job are now allowed to stay on their parents’ plans until their 26th birthday.
When it comes to buying your health insurance, I urge you to work with a professional. As I mentioned at the beginning, I’m a registered and licensed agent. And I work only with reputable health insurance companies that are proven, stable companies. My job is to help you get the right health insurance plan so you have the coverage you need. This is what I do day in and day out. I know health insurance companies and their plans. And that includes Aetna, which is a company I can whole-heartedly recommend to you. Keep in mind that my time and advice come to you at no extra charge. So take advantage of that! I can analyze your situation and look at a variety of different health insurance plans to fit your specific needs. I’m here to help you.
I know we’ve covered a lot today and you’ll need time to digest this. I have a handout for you that summarizes what we’ve talked about so be sure to get one before you leave. Here’s a quick recap – 1. When you’re reviewing costs of your health insurance, keep in mind that cost is more than premiums. There are deductibles, copays, coinsurance and don’t forget about the maximum out-of-pocket expense you may need to pay. 2. Many health insurance plans pay 80% of a covered medical expense while you pay 20%. That’s your coinsurance. Check the amount on your health insurance plan. Health insurance plans may also offer different amounts of copays. A copay is where you pay a fixed dollar amount for a doctor visit, like $25 or $15 for a prescription. After your coinsurance if applicable, the health insurance plan pays the rest, up to the negotiated charge and at the levels that apply to your health insurance plan. 3. Hospital coverage is extremely important. You’ll need coverage for the emergency room, hospital admission, outpatient surgery, and tests like MRIs. Review any limits on the amount the plan will pay for these items. 4. Staying in the health insurer's network almost always saves you money. In some cases, a lot of money. You can go out of network but you’ll spend more. Find out if your doctor, hospital and pharmacy are in your health insurer’s network. 5. Certain preventive care is now offered with no cost sharing on your part for in-network, covered medical expenses. This includes screenings for blood pressure, certain cancers, diabetes and more. Take advantage of this to stay healthy. Some companies also offer discounts and savings on things like eyewear, hearing aids, acupuncture and even gym memberships. 6. If you’re on medication now, or plan to be, find out if your medication is on the health insurance plan’s approved formulary. To help save money, stay in your health insurer’s network, consider generic drugs vs. name brands, and also take a look at mail order drugs if you’re on maintenance medication. 7. A broader-based health insurance plan is available in lower and higher deductibles, including Health Savings Accounts, which is like a medical savings account with a tax advantage. As the name implies, a limited benefits plan provides limited benefits, principally hospital stays. 8. You’ll be asked your medical history when you apply for a health insurance plan. I can do some pre-qualifying work to see if you’ll be accepted. 9. Most health care reform changes take effect in 2014. But for 2010 there is temporary coverage for those previously denied, elimination of lifetime limits, no denial of coverage for pre-existing conditions for enrollees under the age of 19, and it’s okay for dependent children to stay on their parents’ plan until their 26th birthday. Also, out-of-pocket maximums are eliminated for a calendar year, you will not have to share in the cost of preventive care if you receive services from an in-network provider, and companies cannot cancel or discontinue your coverage retroactively except for non-payment, fraud, or intentional misrepresentation of material fact. 10. Work with professionals when you’re getting a health insurance plan. Use a registered, licensed agent like me. And work with a reputable health insurance company that is proven and is stable.
I want to thank you for your time today. I hope this has been helpful. If in group setting: If you’d like to meet with me one-on-one, please use the sign-up sheet if you haven’t already. Now are there any general questions I can answer for you?