Healthinsurance pays for healthcare

Health Insurance The Way it Should Be

According to a 2019 Commonwealth study, 85% of insured Americans are satisfied with their health insurance.  But when these same Americans use their health insurance, a different story emerges. 

According to a 2019 study by the Kaiser Family Foundation half of all Americans stated that they or a family member skipped needed medical care because of cost.  Of those who skipped care, one out of eight people stated that their condition worsened as a result. In addition, three out of ten respondents stated that they did not take their medications as required because of cost. Another 26% of U.S. households have had problems paying their medical bills with half of those people stating that medical bills had a major impact on their family.

 

One of the challenges that has taken center stage in the last year has been the issue of “surprise medical bills.” Twenty percent of Americans have had to deal with a surprise medical bill.  Surprise medical bills arise when an individual gets care from an “in-network provider” who then uses the services of an out-of-network provider to provide care. As a result, the individual receives a bill that is either not covered at all (in the case of an HMO) or not covered well in the case of a Preferred Provider Organization. The situation has gotten so bad that the government is now looking at legislative fixes. 

This in turn has led to a call for “transparent pricing” which would allow the member to know exactly what is being charged. And make no mistake transparent pricing is incredibly important! Healthcare is the only industry where the American consumer has no idea what the cost of services is. Worse, they may believe that they are only liable for their copay or deductible, only to receive a bill after the fact for a service that was handled by an out of network provider. To illustrate this problem, I want to share my own recent story.  In 2017 I went to my in-network dermatologist to have a growth removed from the left side of my face.  I paid my $50 specialist copay and believed that everything was taken care of. Imagine my surprise when six weeks later I received a bill for$173.50 for lab services.  It turns out that my in-network dermatologist sent the removed growth to a lab that was not in my network.  I have been a health insurance agent since 1985 and it never occurred to me to ask if the lab was in my network.

Education concept: Think Different on Paper background

Transparent pricing will not help the American healthcare consumer get better care for less money because as long as there are managed care networks it will be impossible to shop among providers.

 

Medical Networks Must Be Abolished for There to Be Real Transparency!

Health Insurance the Right Way!

Unfortunately, if you have health problems you may be locked into health insurance plans sold on the Affordable Care Act Marketplace where preexisting conditions are fully covered.  But if you are reasonably healthy and pay for your own health insurance (as opposed to receiving a subsidy on the Marketplace) there are some amazing alternatives to traditional health insurance. These alternatives will fall into one of three plan design categories:

  • Major Medical
  • Fixed Benefit
  • Medical Cost Sharing

 

Regardless of the type of health plan that you are considering, focus on plans that do not utilize a managed care network. While the health plans (in all three design categories) that use a managed care network may be somewhat less expensive, you will almost always be better served with a plan that does not use a managed care network. The elimination of the managed care network empowers you to have a meaningful discussion with your doctor, hospital, or other provider about the care that you need and the expected costs. Not being restricted to in-network providers also allows you the freedom to seek out the best care.

Yes, There Are Plans in All Three Design Categories That Do Not Utilize a Network

Technology has made it easy for a member to learn what the plan will pay for a given procedure before making a healthcare decision.  One plan that I work with provides members an app where they can find out what the cost of more than 170,000 procedures will be. Before going to the doctor for an annual physical, the member can enter the zip code and either the name of the procedure or the procedure code and know exactly what the plan will pay as well as whether the plan considers that procedure medically necessary. The best plans will also provide you a customer service team that can help you identify providers who will accept what your plan will pay. More importantly, this same team should be able to assist you in finding high-quality and not just low-cost providers.

 

What Plan Design is Right for You?

I want to begin this section by stating that the best way to get a high-quality healthcare plan that is right for your needs and budget is by working with an independent, highly trained health insurance agent. An independent health insurance agent can provide information about and enroll you in a variety of different plans with different companies.  If an agent can only enroll you in the plans of one health insurance company, I strongly suggest that you find a new agent. If in doubt, you can always look up an agent’s licenses by visiting the state Department of Insurance website.

To begin, ask yourself these questions:

Do you may want a plan that will help pay for doctor visits and urgent care visits without having to meet a deductible first?

Are you primarily concerned with incurring a large medical expense and simply want to protect your life savings?

If you have a major medical expense what is the most that you would want to have to pay out of pocket?

Is prescription drug coverage important?

Are you willing to become a good healthcare consumer?

 

Finally, what is the most that you can afford each month?

Some Example Plan Designs

Option 1

A 40-year-old male non-smoker in North Carolina can get health insurance with a $2,000,000 annual benefit, no deductibles and first dollar coverage for $329 monthly. This plan has an app that tells you the amount that the health insurance company will pay for over 170,000 procedures and it includes an optional prescription drug benefit. The challenge with this plan is that you can be left with medical bills that exceed what the plan would pay.  By adding a Medical Bill Negotiation Service ($20 monthly) to the plan this risk can be minimized.

Option 2

For the same 40-year-old male non-smoker who is willing to pay for most routine expenses himself/herself a plan with a $5000 deductible and 50% coinsurance on the next $10,000 (total out-of-pocket = $10,000) can be purchased for $237 monthly.

Option 3

Here we combine the best of two plans above.  With some tweaks to the design you can get comprehensive coverage with minimal out of pocket liability.

By reducing the Option 1 health insurance policy’s annual benefit from $2,000,000 to $25,000 and retaining the prescription drug benefit you get first dollar coverage with no deductible and a premium of $215 monthly.

Next by changing the deductible in the Option 2 health insurance plan to $10,000 and increasing the total out-of-pocket liability to $20,000 the premium drops to $167 monthly.

 

With a combined premium of $382 you get the most comprehensive coverage possible with first dollar benefits for 170,000+ procedures and very little out of pocket. For the budget conscious we can add a $500 deductible to the first dollar plan which reduces the premium by an additional $36 a month or $432 annually (almost the amount of the $500 deductible). And if we eliminate the prescription drug benefit, we save another $54 a month.  The total monthly premium now is $292 monthly. This person can use any doctor or hospital, anywhere in the country.  Now that is great coverage!

Comparison to Traditional Major Medical

The cheapest traditional health insurance plan that I could find had a premium of $308 with an $8,150 in-network deductible. This plan used a very narrow network and had a $40,750 out of network deductible. Under this plan there were no benefits until the insured incurred more than $8,150 in medical bills, although an annual physical which is covered at 100%.

 

To find a traditional health plan that even comes close to the benefits of our customized health insurance plan you would have to more than double the monthly premium.

The Medical Cost Sharing Option

Medical Cost Sharing is not health insurance, but it is an innovative way to pay for medical expenses.  Medical Cost Sharing is a community of like-minded people who contribute to each other’s medical bills. Each month members contribute a set dollar amount into the community.  Then when a member incurs medical expenses the community uses the available money to reimburse the member for those costs. In many ways this is similar to a fully self-funded health plan, although it lacks the legal protections of ERISA.  None-the-less, these plans have been around for a very long time and work exceedingly well.  They are significantly less expensive than traditional health insurance and the best of these plans provide an incomparable healthcare experience. When combined with a plan similar to the First Dollar, No Deductible plan that I talked about above, the member gets the best of all possible worlds and a more permanent healthcare solution. To understand this look at the example in the next paragraph.

 

This same 40-year-old could choose to replace the short-term major medical health insurance with a Medical Cost Sharing Plan where the member would be responsible for the first $5000 of any one accident or illness. The monthly cost would be a low $180 a month.  By reducing the annual maximum on the first dollar health insurance plan to $5000 the monthly premium would be $115 monthly.  Combined, this individual would pay $295 monthly and have virtually nothing out of pocket. For an additional $34 monthly this individual could add in a prescription drug benefit.

Conclusion

It is possible to have complete control over the design and cost of your health insurance coverage if you are working with an independent health insurance agent who knows what he/she is doing. More importantly you can take back control of your healthcare and get the health insurance company out of those decisions.  It is possible with the right health insurance policy to be able for you to see any doctor in the country and you can virtually eliminate surprise billing if you are willing to get involved in your healthcare.

 

Most important of all – you can design a health insurance policy that you can actually afford!

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