Despite our best efforts to maintain wellness through exercise, eating healthy, and making sound lifestyle choices, at times we require medical attention. Planning ahead and understanding the details of insurance coverage is essential. It’s important to understand the coverage and benefits offered to ensure you get the best possible care with the least financial impact. Let’s be honest, even being in the field, I find navigating the myriad of plans and options confusing. Here are a few guidelines that might help to make the process easier.
Do your homework: Open enrollment for most insurance coverage has ended for 2019 coverage, but you are still eligible to enroll in a plan, either through the Marketplace, or through an employer with a qualifying life event (i.e. marriage, starting employment, losing coverage through a job, birth of a child, adoption, death, etc.). If you are in a situation to choose an insurance plan, balancing coverage, co-pays, lifetime maximums, and deductibles should be a factor in the plan you choose. Do not just automatically choose the least expensive plan for the sake of financial convenience. Conversely, do not pick the plan that offers every bell and whistle if you are in excellent health and will most likely only utilize the preventative care and a few other aspects throughout the year. Consider these factors:
- Premiums: This is the monthly fee you pay your healthcare plan just to have medical benefits. It does not include other possible charges, such as co-pays, out-of-network fees, deductibles.
- Co-pays: In addition to the monthly cost of premiums, you might pay co-pays when you visit the doctor or obtain services like labs (i.e. bloodwork), any imaging (x-rays, MRIs), Emergency Rooms, Urgent Care, or medications. If you do not need routine care, choosing a plan that has a fixed dollar co-pay, as opposed to a percentage after you reach the deductible, may be right for you. But, if you go to the doctor routinely and the deductible on the plan isn’t very high, consider choosing a plan where you pay out of pocket until the deductible is met, and then the plan pays either a portion or all the costs after that amount, depending on your plan. If you are unsure about what will be billed towards the deductible and what the insurance covers, call the insurance provider before you get treatment. Get names of the representatives you speak to. Notate the date you called and essential details about the conversation. Make sure you understand your benefits before any action is taken.
I had an epidural with a physician I had used previously. I asked his office repeatedly what the cost would be. Not once was I told there was also a “hospital fee,” because he was affiliated with a hospital rather than a stand alone facility. After two injections, six weeks apart, I received a $250 “hospital fee” for each. Calling the hospital and insurance plan after the fact, I was given multiple answers as to what I should have been charged. In the end, it turned out had I spoken to the carrier, not the provider first, they would have honored what was stated at the time, even if it was inaccurate. Bottom line- talk to everyone and document every detail, including the names of people you speak to.
- In-Network and Out-Of-Network providers: Insurance companies establish relationships with providers and come to an agreement on pricing for services. The In-Network doctors will consequently be the best financial choice within a health plan. With some insurance plans, you can still opt to use an out-of-network doctor and get some benefit, but with other plans, you pay the full price if the doctor isn’t within the network. Call to ensure you know the status of the provider with your insurance plan.
A friend of mine had a baby at a hospital that was in-network for her plan several years ago. She was surprised to see the hospital bill had delegated the anesthesiologist for her epidural as “out-of-network,” and the accompanying high bill was not a welcomed sight. Since she had done her homework and chosen the obstetrician and hospital based on her plan, it felt like a sneak-attack to have received care from a provider considered out-of-network despite her best efforts to only receive in-network care. While she called the insurance company for clarification, no resolution was met and she was still expected to pay.
When she was expecting her second child, she called the insurance company ahead of time to see how to avoid the situation again. It turned out that for specific providers (i.e. anesthesiologists, neo-natologist, radiologist, among several other specialties), the insurance company explained that if the patient was at an in-network facility, the provider’s charges would be reprocessed as in-network regardless of their actual status with the insurance. The thought behind this was that since these types of providers often fluctuate between facilities, neither the patient nor the facility often have the “choice” on who the provider will be. To make things fair for the insurance members, the policy was in place (and had been at the time of the first child’s birth). But, if my friend had not called ahead, or had the first experience, she would never have known this benefit. Lesson: ask a lot of questions, and if you can, do it before the medical treatment. If something doesn’t add up like in this situation, press on for clarification or ask to speak to a supervisor to find out why the benefit isn’t applied when it seemingly should.
- Deductible: This is the out of pocket expense you can expect to pay for certain services throughout the year. If a plan says it has a $3,000 deductible, then other than the services that are stated as explicitly covered (like preventative care), the first $3,000 of care is out of pocket for you. Deductibles are in addition to your monthly premiums and for the most part, co-pays do not count towards the deductible either. But wait, after the deductible is met, that doesn’t mean insurance plans pay 100% of expenses after that. . .
- Co-Insurance: After you’ve met the deductible, many, if not most plans will still only pay a percentage of the cost of care. For example, if you have a plan that offers you a 30% co-insurance, on a $1500 bill, you’d “only” pay $500 after the deductible has been met.
- Out-Of-Pocket Maximum: It is somewhat of a relief to know that there are maximums on every plan, as of now. When all your out-of-pocket expenses, including co-pays, deductible amount, and co-insurance are added up, they cannot exceed the out-of-pocket maximum. After you reach this amount, the insurance plan pays out 100%. But, make sure you read the details on this amount; if you opt to go to out-of-network providers, not only might the visit not be covered at all, but the amount may not go towards the maximum either.
Dave Ramsey, best-selling author and radio show host that focuses on financial health offers this example in how it all pieces together:
“[For this scenario,] the out-of-pocket limit for a Health Insurance Marketplace individual plan is $7,150 and $14,300 for a family plan.
Amy, a 28-year-old single professional, loves playing tennis when she’s not working. It’s all fun and games until she injures her knee, sending her to the emergency room. She has a $2,000 deductible with 30% coinsurance and an out-of-pocket maximum of $7,150. Since she needed surgery, her medical costs totaled to $30,000.
What should Amy expect to pay?
1- First, she’ll pay the $2,000 it takes to meet her deductible.
2- Her 30% coinsurance means, for the remainder of the costs ($28,000), she’ll owe $8,400. That brings her total costs up to $10,400.
3- But because Amy’s out-of-pocket maximum is $7,150, she’ll only be responsible for that amount. Her insurance company covers 100% of the rest.”
Now that the terms used in processing bills is a little bit more clear, there are still a few other options that may be available to you if the coverage being offered isn’t adequate, or is unaffordable. The reality is, many people have to piece together their coverage due to expense and (lack of) benefits.
- Shop around for hospital indemnity plans: These plans offer you a daily payout in the event you are admitted into the hospital. Benefits vary- some plans pay out a flat daily amount that you can put towards hospital bills, personal expenses that you incur while in the hospital, or whatever you need the funds for; the money is not tied to a specific service. Other plans may provide a daily payout in addition to coverage for specific portions of care while in the hospital.
- Look into discount medication plans: Websites like GoodRX, Retail Me Not RxSaver help you find the lowest price on prescriptions in your city. After inputting a prescription name, the websites detail prices at different pharmacies. You’d be shocked to see the significant price difference across providers. Some websites, like GoodRx offer free memberships that provide manufacturers coupons. You can use funds from your Health Savings Account (HSA) to pay for the medications too, providing more savings in the long run.
- Use a Health Savings Account (HSA): If the plan you opted for has a high deductible, a health savings account is often linked to help buffer the expense. If the plan isn’t tied to a HSA, you can also find banking institutions that help set up the account. The only caveat is that the insurance you have must be a HDHP (high deductible health plan)- read the fine print to make sure this is the case.
HSAs are funded pre-tax and if your employer also contributes towards the account, that amount isn’t considered taxable income to you either. The funds can be used for medical expenses like co-pays, co-insurance, and deductibles (make sure to read the details on this, as some items like over-the-counter medications cannot be purchased with an HSA and you’ll be subject to fees and a high tax on the amount). If you don’t use the full amount in the HSA in a calendar year, the funds rollover to the next year.
- Consider a Flexible Savings Account: Unlike a HSA, Flexible Savings Accounts can be initiated regardless of the health insurance plan you have, as long as your employer provides the framework. Like a HSA, the funds that go into FSA are also tax-free, up to the maximum allowed amount. The downside of a FSA is that funds that aren’t used by the end of the year are forfeited. The financial website, The Motley Fool shares that there are a couple of exceptions to this:
“One gives employees an extra period of time at the beginning of the year to use up FSA money from previous years. A newer choice lets employers allow their employees to carry forward up to $500 in unused FSA money into the following year, instead. However, employers aren’t allowed to offer both of these options to their workers, and there’s no requirement that they offer either one. You’ll need to talk with your HR specialist in order to get the final word on what applies at your job.”
The items that are acceptable to purchase with a FSA and HSAs vary, plans may cover items like gel shoe inserts, expenses at the dentist (but nothing cosmetic), skin care (talk to your doctor and read the terms of your plan for prescription requirements), and even bandages, heating pads, and ice packs.
- Call your auto insurance: An often overlooked option is to utilize your auto insurance for more coverage. Most policies offer medical payments as an additional portion of your coverage. In the event of an auto accident, the selected amount is available for any treatment related to the accident (not just hospital care, but physical therapy, primary care doctor, etc). This can be a great help in chipping away at the overall bill. The best part about this option is that the coverage is per accident, not per calendar year. So, in the unlucky event you have multiple car accidents in a year, the coverage is there.
- Use your preventative benefits: When it comes to your health, the best way to avoid additional expense is to prevent what you can. A healthy lifestyle paired with regular visits to your provider can mitigate a variety of issues by allowing early detection of medical concerns. Some employers even provide bonuses if you go to your annual physicals; check with the HR department at work to see if the benefit is available.
I know how confusing all this sounds, but making these important decisions in advance can prevent a catastrophe in the future. According to the Kaiser Family Foundation, medical debt contributes to nearly half of all bankruptcies in America- that is a shocking statistic. Sometimes the situation can’t be avoided, but doing the homework and finding the best insurance coverage and supplemental options for yourself will help keep you financially sound.