Ask Colleen King

Health insurance is on everyone’s mind these days–either you don’t have it, can’t get it and want it, you’re upset about what you are paying for it, or you turned on the daily news and there it is, the topic is right in your face again.

A Health Savings Account (HSA) is an account that you are eligible to open if you have a specific type of health plan, also known as a qualified high deductible health plan. Generally the only benefits you have prior to meeting the deductible are preventive, but check the benefits before you buy–some plans now are not offering preventive coverage prior to meeting the deductible. I think they should, but they didn’t ask me.  These types of plans are available in both the individual health insurance market and the group health insurance market.

Anyway, I’ve included in this article an excerpt from a study that United Healthcare relating to ‘transparency’ of health care costs when people have what’s referred to as consumer driven health plans.  What it boils down to is if you you see how much things cost, you are more prone to looking at less expensive alternatives, just like any other area you might spend  money:

“Study Reveals HSA Plan Effects on Cost and Utilization

The latest UnitedHealthcare study is among the first to examine the impact of plans eligible for health savings accounts (HSAs) on health care costs and utilization among both large and small employers. Some highlights of the study:

• The positive impact of HSA plans continued through the second year of enrollment.
  This is meaningful because some first year differences in cost and use may have been attributable to a redistribution of elective care services as employees rushed to get care in the baseline year before an anticipated change in their benefits. This dynamic typically levels out in year two, providing a better view of consumer decision-making.
• Employers who implemented HSAs showed greater declines in hospital admissions and emergency room visits. At the same time, the number of prescriptions increased over time in the HSA. However, pharmacy costs decreased in the HSA population. This suggests that HSA members are making more prudent health care choices, such as using lower-cost drugs.
• Full replacement strategies appear to deepen the impact of HSA plans. When comparing cost and use across employers’ full populations (including traditional plan enrollees when the HSA was offered as an option), employers adopting a full replacement HSA had better cost results for both medical and pharmacy than employers offering an HSA option.
• The utilization analysis suggests that large full replacement employers realize lower costs due to a decrease in emergency room visits and lab usage. This highlights the possibility that full replacement members are making more appropriate use of emergency room and lab services.

The study results are consistent with other cross-sectional studies done by UnitedHealthcare on CDH plans. HSAs, especially those with a full replacement strategy, have great potential to slow the growth in health care costs compared to more traditional plans, even after adjusting for the better health found among those with an HSA. The study also confirms that we see a favorable impact for smaller companies.

Consumerism in Health: Insights from Experience
The positive impact of CDH plans has been widely documented, largely based on the experience of health reimbursement account (HRA) and HSA programs. Over the last nine years, UnitedHealthcare has compiled a body of work that measures if and how CDH strategies deliver on their promise – to provide lower costs through better consumer decisions – when compared to more traditional plans. Similarly, UnitedHealthcare has investigated market concerns that threaten to slow the adoption of CDH plans.”

So doesn’t it make sense? How can you save money on your health care, if appropriate, if you think a $5 co-pay is all it costs to see a doctor?  Be well!

Tags:   Group Health Insurance · Health Savings Accounts · HSAs · Individual Health InsuranceNo Comments.

In order to save money on insurance premiums, many people whether in an individual health plan or group health plan will select a health insurance plan with a higher deductible. They figure they are normally healthy, aren’t going to a doctor very often, so why spend a fortune on health insurance premiums? This is how I generally direct people to go.  But then they go to a doctor, pay for the visit and associated costs, and wonder, ‘why the heck am I paying premiums if I’m paying for care too?’

A couple of months ago I had something come up with a client reinforced what I tell people all the time. When you have a higher deductible plan, it’s true, you are paying for a lot of your expenses. But, when you see a doctor or other type of provider that is contracted with the insurance carrier you have your health insurance with, you pay the contracted or ‘negotiated’ rate. Big deal? It sure can be.

My client had a lap band procedure done for weight loss. A couple of weeks after it was done, she received a call from the facility saying her insurance claim had been denied because her coverage had lapsed, and she owed approximately $22,000 for the procedure. Wow! Well, there had been a problem with payment and her group plan was terminated. She and I both called the carrier and got it straightened out, as the coverage was not supposed to be canceled. The facility needed to resubmit the claim, and it would be paid.

The next day I received a very nice call from a claim rep at this carrier saying that the claim had been recalculated and a check in the amount of $3804 would be sent that day. That was the ‘negotiated’ rate, down from $22,000. My client may have been able to negotiate a few thousand off herself, but one reason the insurance companies get strong rates overall is volume. Individuals can try but rarely do they have the ‘volume’ to get the better rates.

Just recently I had something similar happen. I went in for a physical and had the usual plethora of blood tests done. The lab bill alone was $484.50! But the ‘insurance discount’ was $385.25, so I ended up paying $99.25. You can’t tell me the lab isn’t making some kind of profit on this. So when you hear about all the debates in health care reform need to find a way to contain costs, keep these two examples in mind. Remember, it’s not only the insurance companies that are in this for the money–Be well!

Tags:   Group Health Insurance · Health insurance · indivdiual health insuranceNo Comments.

This article was put out by the Associated Press on July 4 and it brings out a lot of points that people aren’t aware of within the European health care systems. You know, the ‘free’ ones that everyone thinks we should go to. Well, I’ve tried to edit it down a bit because it’s long, but I think you’ll find it really enlightening!

July 4: London – As President Barack Obama pushes to overhaul the American health care system, the role of government is at the heart of the debate. In Europe, free, state-run health care is a given.

The concept has been enshrined in Europe for generations. Health systems are built so inclusive that even illegal immigrants are entitled to free treatment beyond just emergency care. Europeans have some of the world’s best hospitals and have made great strides in fighting problems like obesity and heart disease.

But the system is far from perfect. In Britain, France, Switzerland and elsewhere, public health systems have become political punching bags for opposition parties, costs have skyrocketed and in some cases, patients have needlessly suffered and died. Obama has pointedly said he does not want to bring European-style health care to the U.S. and that he intends to introduce a government-run plan to compete with private insurance, not replace it.

Critics fear Obama’s reforms will lead to more government control over health care and cite problems faced by European health systems as examples of what not to do. Other experts say Americans could learn from countries like Germany, the Netherlands and Switzerland, especially in the debate on how to reorganize health insurance.

“These countries are in some way an inspiration for our reforms,” said Uwe Reinhardt, a health economist at Princeton University. “All of these countries somehow manage to assess risk and compensate for it … we could learn from that.”

Many European health officials applaud Obama’s attempt to provide health care to millions more Americans, but they also advise him to proceed with caution.

“What we can be proud of in Europe is the ground rules, that everyone has the right to health care,” said Jose Martin-Moreno, a health expert at the University of Valencia in Spain. “But the implementation has been difficult and one size does not fit all.”

Private health care is also available in Europe, creating in some instances a two-tier system that critics say defeats the egalitarian impulse on which national systems were built. When Britain’s National Health System was founded 61 years ago, it pledged that with few exceptions, patients would not be charged for anything. All prescription drugs are covered, and the government regularly sets health targets, like maximum waiting times in emergency rooms or for having an operation.

Critics say the policies are often driven more by politics than science. Last week, Prime Minister Gordon Brown promised that patients unable to see cancer experts within two weeks would get cash to pay for private care. Brown had previously argued against paying for private providers and some say the reversal may be a gimmick to boost his sagging popularity.

More serious problems in Britain’s health care were reported last month, when cancer researchers announced that as many as 15,000 people over age 75 were dying prematurely from cancer every year. Experts said those deaths could have been avoided if those patients had been diagnosed and treated earlier. “There is nothing inherently different about cancer in the U.S. and Britain to explain why more people are dying here,” said Dr. Karol Sikora, of Cancer Partners UK.

The U.S. already spends the most worldwide on health care. According to the Organization for Economic Co-operation and Development, the U.S. spent $7,290 per person in 2007, while Britain spent $2,992 and France spent $3,601.

Still, experts say that before committing the U.S. to footing the bill for universal health care, Obama should consider it has cost Europe. A World Health Organization survey in 2000 found that France had the world’s best health system. But that has come at a high price; health budgets have been in the red since 1988. In 1996, France introduced targets for health insurance spending. But a decade later, the deficit had doubled to 49 billion euros ($69 billion).

“I would warn Americans that once the government gets its nose into health care, it’s hard to stop the dangerous effects later,” said Valentin Petkantchin, of the Institut Economique Molinari in France. He said many private providers have been pushed out, forcing a dependence on an overstretched public system.

Similar scenarios have been unfolding in the Netherlands and Switzerland, where everyone must buy health insurance. “The minute you make health insurance mandatory, people start overusing it,” said Dr. Alphonse Crespo, an orthopedic surgeon and research director at Switzerland’s Institut Constant de Rebecque. “If I have a cold, I might go see a doctor because I am already paying a health insurance premium.”

Cost-cutting has also hit Switzerland. The numbers of beds have dropped, hospitals have merged, and specialist care has become harder to find. A 2007 survey found that in some hospitals in Geneva and Lausanne, the rates of medical mistakes had jumped by up to 40 percent. Long ranked among the world’s top four health systems, Switzerland dropped to 8th place in a Europe-wide survey last year.

Government influence in health care may also stifle innovation, other experts warn. Bureaucracies are slow to adopt new medical technologies. In Britain and Germany, even after new drugs are approved, access to them is complicated because independent agencies must decide if they are worth buying.

When the breast cancer drug Herceptin was proven to be effective in 1998, it was available almost immediately in the U.S. But it took another four years for the U.K. to start buying it for British breast cancer patients.

“Government control of health care is not a panacea,” said Philip Stevens, of International Policy Network, a London think-tank. “The U.S. health system is a bit of a mess, but based on what’s happened in some countries in Europe, I’d be nervous about recommending more government involvement.”

And that’s coming from someone without a vested interest in US health care reform–Be Well!

Tags:   Group Health Insurance · Health insurance · indivdual health insurance · Medical insurance4 Comments

In the past couple of weeks, there have been a lot of celebrity deaths reported, but none overpowering the news more than the death of Michael Jackson. I’m not going to debate his talent or lifestyle issues, but it got me thinking.

Here is a guy that in one way or another had significant assets; homes, rights to the Beatles catalog, investments who know where. And three children. And for how many days was there a question as to whether or not there was a will, what was to become of his fortune, if there was one, and who was going to raise his children?

Well now there appears to be a will, but is that the only one? Are there others? And ultimately, who has the most recent will? Most of us don’t have estates quite this complex, at least I don’t, but take a ‘time out’ and make sure you have a few things in order.

If you have minor children and something happens to you, who do you want to raise them? If you made that decision a few years ago, and either the person you designated ‘predeceased’ you or for some other reason you don’t want them raising your kids, change your will.

Do you have assets that you want to go to specific people? They may end up with a relative you didn’t want to get a dime if you don’t spell your preferences out. If you have an expensive home to leave your kids, will they be able to afford the estate taxes on it, or will it be a financial disaster? That’s where sufficient life insurance can come in handy. Life insurance isn’t meant as just something to make your heirs rich. Since it is received tax free by the beneficiary, it is often set up to be used as a source of cash to pay inheritance taxes that otherwise might really devastate what you thought you had left. IRAs may have tax consequences, properties too, and if they can’t pay the estate taxes they will lose a large part of what you left.

The LAST important thing after you do all of this is to make sure someone knows where to find your documents! In a shoebox under your bed is only good if someone knows about it.

So in between Access Hollywood updates and the 11:00 news, make sure to review your plans and coverage, or be sure to at least get a will and trust in place if you don’t have one. Your insurance agent can help you figure out what will keep the wolves from the door.

Be well!

Tags:   estate planning · Life Insurance2 Comments

Health insurance remains one of those things that most people still find confusing. For group health insurance, disclosing your health history helps determine the rates your employer gets. For individual health insurance, it determines not only rates, but whether or not you will even be accepted!

Focusing on individual health insurance, all carriers ask about whether you’ve taken medication, been treated for or had symptoms of anything in the past  ten years. One carrier, it used to be the past twenty years. There’s a rumor that one is going to drop it to the past five years. Whatever the number, talk to your insurance agent about anything you’ve been treated for, because carriers look at things differently than you and I do. I recently did a policy with a nice guy who was on no medication, not under the care of a doctor or anything. When I saw his online application though, he had stopped taking an antidepressant 3 months ago.  He did end up getting approved but at an above standard rate because of this. Why does it matter? He isn’t on anything! This is one of those cases where depending on the carrier, an applicant needed to be off medications between 6-12 months in order to qualify for a standard rate. Recently stopping some medications, they are concerned that you haven’t been off of it long enough and may need to go back on it. Basically, don’t let common sense and logic get in the way of reality.

Another dicey situation is when women have had breast implants. Now, consider this. When you first start working with a health insurance agent, it’s not unusual for them to be someone you found on the internet, pretty much a total stranger. They are going to be asking all sorts of personal questions, and you don’t know them from adam. Women often think they don’t need to disclose their implants, after all, it was cosmetic and insurance didn’t cover them before, so what does it matter? Well, it does. Some carriers, silicone implants are an automatic decline. Others, depending on how long ago they were inserted, will accept you but at an above standard rate because of the high likelihood of someone developing contractures, encapsulation that hardens and causes pain necessitating removal. And the carrier may be on the hook for it. I finally figured out a less direct, more tactful way of asking the question so I run into that ’surprise’ less often.

I could go on, but I think you get the idea. Even if you think an old health issue is irrelevant, talk to your insurance agent about it when considering making a change. If you don’t disclose and there’s an issue down the line, your policy could be rescinded and new coverage tough to obtain. And if you aren’t comfortable with the agent you are talking to, talk so another one or two. There are tons of us out there, we all want your business but you’re the consumer, so find someone you like dealing with!

Be well!

Tags:   Group Health Insurance · Health insurance · Individual Health Insurance1 Comment

Here is another term in Health Insurance, both Group Health Insurance and Individual Health Insurance that people don’t always understand. I would have posted this sooner, but it’s been a busy month!

(“Help, I don’t understand!”)

Coinsurance might be easier read with a hyphen; co-insurance. This is one of the three main questions people should ask (in my opinion) in looking at a health insurance plan. You have the deductible, the out of pocket maximum and then that step in the middle, co-insurance. ‘What’s my co-pay’ is a good one too, but not as important as the ‘big figure’ numbers.

Generally the deductible is what you pay before the coverage kicks in. If you have something big hit, the out of pocket maximum, or co-insurance maximum is the part that keeps you from going broke. Once you hit your out of pocket maximum, that is generally all you pay on eligible health care expenses for the remainder of the calendar except for office visit co-pays and prescription drug co-pays, depending on your plan. The key word here being, eligible.

How do you reach your out of pocket maximum? That’s where co-insurance comes in. Once you hit your deductible, then the carrier starts to pay. Co-insurance is what percentage of eligible charges they pay and what percentage you pay. 80/20 used to be pretty common, with the carrier paying the 80% part. Now we are seeing all kinds of splits. There are a few (very few) 90/10 plans, but they are really expensive. In the individual market we mainly have 70/30 plans in California, but now there are 60/40 and even 50/50 plans.

Some people balk at a 60/40 or 50/50 plan–what’s the point in having insurance, they ask. That brings me back to the out of pocket maximum. You may be paying 30, 40 or 50% of the bill, but once you hit the out of pocket maximum the carrier pretty much comes into play at 100%. It’s a matter of how soon do you want the carrier to come into play.

All plans are not created equal. The more you want from a plan, the more it will cost. If you want more coverage sooner, it will cost you more. In reality, you’ll either pay in advance (premium) or you’ll pay at the time you need help (medical bills). So if you can handle more of the expense of health care, buy a plan with a lower premium, especially if you’re basically healthy. There’s no rebate for low utilization if you have a ‘healthy’ year as opposed to a ’sick’ year.

Be well!

Tags:   Coinsurance · Group Health Insurance · Health insurance · Individual Health Insurance3 Comments

It’s getting to be that time of year when the four years of college (or five, or six) is about to wind up. At last. That tuition bill is going to be gone and the kid(s) will be out of the house. Then it occurs to mom and dad (not usually to the new grad) that their young adult can’t stay on their insurance policy any longer.

Carriers allow full time college students to stay on their parents’ coverage until age 23, 24, or even 25. As the hassle with pre-existing conditions continues to increase, some carriers are talking about increasing the age a kid can stay on their parents’ policy, even if they aren’t in college. But we aren’t quite there yet.

This little detail can easily escape everyone since finals and planning for graduation are a lot more interesting. I had this situation come up last year with a family, and there are a couple ways to do it. It was a Friday, college graduation was Saturday, the new grad was turning 24 on Sunday so as of Sunday, she was going to be uninsured and Mom was panicking.

We could have done a regular policy, but since that usually takes 2-4 weeks, the young woman wouldn’t have been covered. Instead, we elected to do a short term health plan. These will vary from state to state, so what I’m relating here pertains specifically to California.  These plans I refer to as ‘accident and illness’ policies. They don’t cover anything routine, they don’t cover pre-existing conditions or maternity, but if you get sick or have an injury you have coverage. And, because it doesn’t cover anything pre-existing the underwriting, or review of the application, is much quicker. We can usually get a response in a couple of days.

So the short term health plan was how we handled it. These can be kept on a month to month basis, up to a maximum of 6 months, and if you’ve not had any claims, you can renew it for up to another six months. These plans are also really useful in situations where you get a new job, you don’t have benefits for the first 90 days of employment and you don’t want to pay the exorbitant cost of COBRA. I’ve used these many times and while they aren’t ideal due to the fact that they are short term, they sure can be a great stop gap. And the carrier I use most, if you go to an emergency room for an injury, the deductible is waived. I wish all policies would do that!

So congratulations, and good luck to the class of 2009!

Be well!

Tags:   Group Health Insurance · Health insurance · Individual Health Insurance · Short Term Health PlansNo Comments.

A couple of months ago I did an article on COBRA coverage: how it works, and why you should or shouldn’t take it.

Now that there’s a subsidy of 65% for people involuntarily terminated after September 1, 2008, the picture changes somewhat. Depending on how much the 35% you have to pay is, that 65% can be pretty tough to turn down. But I still have a couple of caveats for you.

This only lasts 9 months. With any luck, during that time you will have another job, with benefits, and you don’t have to think about this any further. Normally when someone is offered COBRA I suggest they look at an individual plan if they are potentially insurable because anyone can have something develop or happen to them that could render them uninsurable.

I still think you have to give that serious consideration but I know that subsidy is REALLY tempting. Here is what I think you should consider. If buying the coverage is on your own is less than the 35% you’d need to pay, then look at individual plans. Whenever someone elects to take COBRA for a family, but not everyone needs to be on COBRA, meaning they are insurable, look at individual plans. Especially if you don’t qualify for the subsidy. You need to look at all options for your situation, which is why an independent agent in addition to your HR person at work is important.

If the cost issue with the subsidy is close, maybe the plan on your own is slightly more than your COBRA cost, consider getting your own coverage, again, just in case. It’s all a matter of what’s going to make things easiest for you to handle.

Be well!

Tags:   CalCOBRA · COBRA · Health insurance · Individual Health Insurance2 Comments

It’s so nice to have people that keep you on your toes. Health Insurance questions abound when you ask for topics for this blog. Thanks to Lisa Nicole Bell again, www.adivinebook.com for this one.

The plus for you, the consumer, whether it’s for individual health insurance of group health insurance is that the rates are the rates. No one has special ‘deals’ to get you something better, it’s a matter of service. When you go directly to an insurance company, a carrier, they can only give you information on what they offer. And that’s fine, but if you want information on multiple carriers, you have to call each one. That also means you have multiple people following up with you trying to gain your business. If you have the time to do that, great. Some people would rather do it that way, so there’s no right or wrong.

But by going to an independent agent, which is what I am, you can talk to one person, for FREE, and get all the information on several carriers from an unbiased source, theoretically. Some agents are more partial to certain carriers, so you may even want to talk to a couple different agents to see who you are most comfortable with. But basically you can have one contact for multiple companies.

Agents are paid on a commission basis by the insurance carrier they place the business with. You can talk to one of us for hours, never do anything, and there is no charge to you. One of my group cases, I spoke with the contact for 2 1/2 years before they did anything. The situation was such that they didn’t need to start a group plan right away. But when they finally did, it absolutely was worth the wait. One of the two partners in this group has referred 3 family members to me because she liked working with me.

An even more important reason to have an independent agent is if there is an issue after the sale. Agents working for a carrier will certainly do all they can to help you if there’s an issue, usually. But, if an outside agent is pressing an issue, carrier reps (the people inside the company that an independent agent can call for problems) know you can move that business by next month if the client is really unhappy.

So again, there’s no exact answer because everyone will have different opinions. But if you have a good independent agent, you may end up doing less of the leg work yourself which many people prefer in this busy day and age.

Be Well!

Tags:   Group Health Insurance · Health insurance · Individual Health Insurance3 Comments

Once of the best things about getting my insurance license was learning the difference between the two basic types of insurance, which had eluded me for years. Basically there are two types of life insurance and they break down to temporary and permanent.

Love this, this should be our ‘real’ security

An easy way to remember the difference, is ‘term is temporary’—Term life insurance is something you buy for a specific period of time, 10, 20, 30 years for example, and for a specific amount. At the end of that time period, if you are still around, that’s it; it’s gone. One ‘add on’ option is to buy what’s called a return of premium rider, so that and the end of the term, if you are still alive, all the premium you have paid is returned. Term is generally what you buy when you are younger, because financial demands are greater when raising your family, and term life insurance is more affordable.

“Permanent” types of life insurance basically are whole or universal life. Once you buy these policies, they are in force until you pass away or cancel them. People tend these days to lean more toward universal life versus whole life because the premiums are flexible; you aren’t always locked into a specific amount per month. The downside with permanent types of insurance is that these policies are more expensive, because they have to be in place for an unknown length of time. These policies also build a ‘cash value’ which can be used in a number of ways, including supplementing retirement income.

Most term policies are able to be converted to a permanent policy without proof of insurability, which helps out later in life. You can make it for a lower face value, so you can still take care of your loved ones needs without having to qualify for on a health basis. The main reason to have life insurance is to buy your surviving spouse time to grieve and deal with life without facing losing the home. It gives them time to figure out what they are going to do, and not having to make huge financial decisions at a time when they can’t think straight. And that’s what matters.

Be well!

Tags:   Life Insurance2 Comments