Health Insurance Deductible of $1,000 was the norm for 2008

It is not just those with Consumer Driven Health Plans (CDHP’s) or Health Savings Accounts (HSA’s) who are adjusting to increased deductibles.  In a Mercer study, National Survey of Employer-Sponsored Health Plans, it is reported that the median deductible for PPO health plans in 2008 was $1,000.  69% of all employees covered by employer sponsored health plans are enrolled in a PPO plan.

Just eight years ago only half of the PPO plans even required a deductible, and then it was just $250.  Currently 79% of plans require a deductible be met before insurance pays.  Mercer contends that the startling revelation of this study is this increase refers to traditional PPO plans, not CDHP’s which require a deductible of at least $1,100 for individuals.

In these tough economic times, employers are looking to reduce costs.  Premium costs go down the more the deductible goes up.  In order to reduce costs, employers can raise deductibles.  According to Blaine Bos, a worldwide partner at Mercer “Raising the deductible has become a fallback for employers faced with cost increases they can’t handle.  It’s the easiest way to reduce cost without taking more out of every employee’s paycheck.”

Another way to reduce costs is to change the type of health plan offered.  The cost per employee in a PPO plan for 2008 was $7,815 compared to $6,207 for employees enrolled in CDHP’s.  “The introduction of the HSA may have changed employer’s thinking on just how high a deductible can go without causing employees to revolt” said Bos.

Whether it’s an increase in PPO deductible or change to CDHP’s, employees will not see any change to their checkbook until the time comes to pay their doctor bill and suddenly they realize they are paying more before their insurance pays due to higher deductibles.

Lowering healthcare costs by offering Consumer Driven Health Plans

A recent Wellpoint report shows that both employers and consumers are saving money with Consumer Driven Health Plans (CDHPs).  The report details almost 8,000 employer groups who moved from non CDHP’s in 2006 to CDHP’s in 2007.  The initial cost trend for groups who elected CDHP’s was slightly negative compared to the 7-10% increase in costs for non CDHP’s.

What was also encouraging in the report was that consumers enrolled in CDHP’s had a higher utilization of preventative care than consumers in non CDHP’s. Males were more likely to utilize preventative care with a CDHP than females.  This is encouraging because health experts have observed males go to the doctor less frequently than females.

The choice of a health insurance plan is a personal decision based on your individual health and financial situation.  Some consumers find the savings in monthly premium with a CDHP will offset the costs involved with a higher deductible.

“Open Enrollment” and HSA’s

A recent New York Times story illustrates that it is “open enrollment” season in businesses nationwide as employees choose their health benefits for the coming year. The story details how some large corporations are switching from offering traditional insurance with small deductibles or co-pays to high deductible health plans which accompany Health Savings Accounts.

The offering of HSA’s by employers should not be viewed negatively as this article suggests. HSA’s empower employees and consumers by offering the freedom to choose when and where they receive their healthcare. HSA’s are growing in popularity at a rate of 20-30% a year. Currently 12 million American lives are insured with HSA’s. HSA’s provide a way for both the employer and employee to save money.

Premiums for high deductible health plans which must accompany a HSA are less expensive than traditional insurance. Employers (who pay the bulk of the premium cost for employees) choose this option to save money, and in the case of self-funded companies, to fix costs. Many employers fund their employees HSA accounts the difference in the amount saved in premium cost from changing to a high deductible health plan. Employees can also contribute pre-tax money into their HSA account, which are not taxed. When an employee or member of their family incurs a qualified medical expense, they pay for the treatment out of their HSA. When the employee pays for the medical treatment the withdrawal is not taxed as long as it pays for a qualified medical expense. The amount of money an employee has in their HSA rolls over year to year and can be invested in a variety of ways.

As the NY Times article details, HSA’s are not ideal for everyone, but what health plan is? Does it make sense for a young healthy family to pay over $1,000 a month in health insurance premiums just so they can pay a $20 co-pay when they go see their doctor? With a HSA, the monthly premium amounts drops tremendously and you pay $125.00 for the yearly visit out of your HSA.

If your employer allows you the choice between traditional insurance and HSA’s I recommend looking at the details of each plan. Patient advocates such as INSNET are always available no matter what type of health plan you elect.

Save money on prescription drugs

This post has nothing to do with SPAM email and Viagra.  It is about a way to save money on all prescription drugs, which happen to be the fastest growing of all healthcare expenses.  It is estimated that prescription drugs account for $.15 for every $1.00 spent on healthcare.

What do you do when you leave the doctors office with a prescription to be filled? Most people will simply stop off at the pharmacy which is on their way back home or back to work or wherever is most convenient.  Once inside the pharmacy, you give the pharmacist the prescription and they will ask for your insurance card.  If you have insurance and a prescription drug benefit, the pharmacist will take it and begin the process of filling your prescription.  Once it is filled (it always seems to take a long time doesn’t it) you pay your co-pay, your deductible amount or the full price depending on your insurance situation, and leave.

Supermarkets, department stores and retailers have all gotten into selling prescription drugs.  These establishments have realized that providing prescription drugs gets customers into their place of business.  As upcoming Black Friday shows, one of the best ways to get customers into your store is to offer discounts. In the case of some establishments, prescription drugs have become a loss leader.

Prescription drugs at a discount, how is that happening?  Www.yourrxcard.com is a free drug card program which provides discounts up to 70% on prescription drugs.  Simply go to this site, enter your first name, last name and email address.  You then print out a card and take it to one of their more than 54,000 pharmacies nationwide.  The website will show you all of the participating pharmacies in your town as well as the price they will sell the prescription for if you use the yourrxcard.  I have personally used this card and paid less using this card than I would have using the drug benefit portion of my health insurance.

This summer I needed a replacement Epipen.  The first thing I did was log onto the website for my prescription drug benefit of my personal health insurance. Using their pharmacy I would have paid $65.00. The next thing I did was log onto www.yourrxcard.com. I saw that there were several pharmacies in my town that would take the yourrxcard.  Next, I printed out a card from their website. Then I went to the same pharmacy as my insurance would have instructed me to use.  Using the yourrxcard I only paid $58.00.  I have a high deductible health insurance policy, so I was paying the full amount.  I realize $7.00 may not seem like that much, but it is more than a 10% discount off my own insurance plan and it didn’t cost me a dime to enroll.  When you’re paying the bills, shouldn’t you make every dollar count?

Don’t Pay ‘Sticker Price’ for your Healthcare

Upon graduating from college, yes it was over 20 years ago, a friend of mine got their first real job and decided it was time to get their first new car.  I’m told, and the details are a little fuzzy with time, that my friend went to the dealership, found the car they liked on the lot and agreed to pay the price on the window.

Now I realize this was before websites like edmunds and kbb which provide information about dealer cost and MSRP, but doesn’t everyone know you are not supposed to pay sticker price on a car?  Everyone should know that you do not pay sticker price for your healthcare.

Between 60 and 70 percent of the revenue for most hospitals and doctors come from one source, Medicare. In order to keep Medicare accreditation, all medical providers must bill all patients the same amount for the same procedures.  Medicare has a set rate for each procedure that the medical provider must agree to accept as full payment without billing the patient the difference.

For example if the fee for a doctor’s routine office visit $100.00, they must bill that amount to every person who has a routine office visit.  Medicare might have a reimbursement rate of $60.00 for the office visit and will pay 80% of that charge, or $48.00.  The doctor must write off the $40.00 difference and can only bill the patient their 20% or $12.00.

Often the Medicare reimbursement is less than the cost of the procedure itself.  Medical providers make up for this difference in the reimbursement rates for non Medicare patients.

Private insurance carriers are able to negotiate rates for their insured’s based on volume.  In the United States there are over 6,000 health plans.  Many of these have contracts in place with some of the more than 850,000 medical providers.  Each health plan negotiates seperately with each provider based on a number of factors.  As a result, between Medicare, Medicaid and private insurance, it is not unusual for a hospital or doctors to have anywhere between 5 and 100 reimbursement rates for the same procedure.

The uninsured and those with high deductible health plans and HSA’s often pay the highest amount for their healthcare as they have nobody to represent them to lower their bills.

My friend eventually went back to the dealer and negotiated a better price for themselves.  You should consider this with the next medical bill you receive.  If you are too busy or intimidated contact us at www.myinsnet.com.

Entering the Blog World

I’ve started this blog for the same reason I helped created INSNET, LLC, which was to help people save money on their medical bills.

Since 1985 Insurance Negotiating Service has assisted insurance companies by negotiating medical claims.  INS has represented some of the largest insurance companies and we have saved our clients millions of dollars.

While we were reducing the amount our clients had to pay on claims, we noticed that the patients were not realizing any of the savings as a result of our negotiations.  With the rising cost of healthcare; and higher deductibles and copays, individuals are paying more than ever for their healthcare. We created INSNET to be the individual’s safety NET to avoid overpaying their medical bills.

When you get a medical bill you probably do one of two things, and they are both wrong!  Most people either ignore the bill or pay it.  If you ignore the bill, the account could be turned over to collections which could adversely affect your future credit worthiness.  Paying the billed charge is also wrong.  I came across the article in a recent issue of Business Week which will explain a practice called ‘balance billing’

The healthcare industry is similiar to the automobile, airline and hotel industries.  They each have different charges rates based on who is paying the bill.  Have you ever asked the person next to you on an airplane how much they paid for their ticket?  More often than not it is not what you paid for yours.  The healthcare industry is similiar and I’ll be sharing detailed examples with you in future posts.  Here’s a brief example: You could have adult identical twins examined in the same hospital for the same condition.  They are given the exact same treatment and discharged at the same time. Depending on what type of health insurance they each have, the hospital will collect different amounts from each twin.

As this blog progresses, I will go into further detail about hospital reimbursement rates, errors, over payments, appeals, advocacy, ppo’s and many other healthcare issues.