Life in the trenches of the health insurance business
This month’s health insurance nightmare: You believe the cost of your policy is too high and the benefits too low.
The situation: Sara E. was looking at new insurance options because she was concerned that her current policy cost too much and covered too little. A case in point was a recent eye exam. She had to pay for the appointment because she hadn’t yet met the $1000 deductible on her current policy.
The solution: It was clear that Sara did not understand the details of the policy she had purchased. It’s not unusual, but can prove problematic. In fact, we recommend that all of our customers make a list of the medical services they will likely need throughout the year. Before buying anything, we tell them to read the fine print on the policy and ask questions until they are certain they understand what they are paying for – and what will be an additional charge.
Here’s why: The fine print on an insurance policy can be complex. The bottom line is that if you purchase a policy with a high deductible, there will be no coverage until the deductible is paid in full. Deductibles apply to all coverage if you purchase an HSA (Health Savings Account) compatible plan – except for preventative services.
And realize this:
1. Deductibles can also apply to specific services such as lab work and hospitalization.
2. They also apply to services differently depending on whether they are in or out of network.
3. It’s important to know that deductibles may be cumulative or shared, or based on the calendar year or contract year. Know how it works for the policy you purchase.
4. If the policy is a Health Savings Account (HSA) versus a high-deductible plan, you will be able to write off the amount placed in the HSA account up to the maximum allowable by the government. The minimum deductible for HSA plans start at $1200 for a single and $2400 for a family.
5. Do note that there are many after-tax expenditures such as those that are included in the FSA Section 213 of the tax code, which can be written off that are not covered under an insurance policy, which is the advantage of an HSA.
If we were the Health Insurance Ambassadors
Before any new customer signs up for a policy, we’d make sure they were given a short primer course, at the expense of the health insurance company, ensuring that they understand the benefit package they are buying.
We would also have the insured initial a disclaimer stating what is covered, how the deductible works and what it applies to, and what the exposure is based on the out-of-pocket limits. That would alleviate the confusion.
The painful truth
The reality is that there is a cost to pay when you buy health insurance. Realize that you’ll end up paying out-of-pocket either with a deductible or a premium. Nothing is free. And if an employer, or a parent, is footing the bill for the premium, you will still be required to pay out-of-pocket costs when you visit a doctor or hospital. If you are self-employed, and are paying both the premium and the deductible, be careful to analyze the cost of having a policy that includes a deductible plus out-of-pocket expenditures and premiums.
Stephanie Cohen blogs regularly at Disruptive Women in Health Care.
