Doni Greenberg dot com » Marge Beck

Health Matters: What’s a young person to do when parents’ insurance ends?

Marge Beck — Thu, 09 Oct 2008 02:31:39 +0000

Q: I’m 23 years old and can no longer be covered by my parents’ health plan. I have to get my own insurance and I don’t understand the underwriting process. Can you give me some ideas how to start shopping? I won’t have a job with benefits.

There are two main issues: health history and type of coverage. If you are taking any expensive medications or have an on-going health issue, you may have trouble getting individual insurance. So, you want to start the application process at least 90 days before your current coverage expires. The application will ask you detailed questions about your medical history. Be sure to give complete answers with physician names, addresses and phone numbers. The underwriter who reviews your application only “sees” you on the paper, so it’s important for them to have good information. They may write to your doctors for detailed medical information if necessary.

If your medical history warrants, the individual policy may be issued with a rating (extra premium) or could be declined. If your parent’s plan is a group plan, you will have COBRA benefits available. COBRA is a law that allows qualifying dependent children to continue the group coverage for up to 36 months. If you apply within the 60 days from the “qualifying event” (age change), you can not be turned down for COBRA coverage. You don’t want to close that door until your new plan is issued.

If your parents have an individual plan, most carriers will allow you to split off on your own plan with limited or no underwriting to a plan like theirs.

The other issue is what type of coverage do you need? Most young people don’t have a lot of medical expenses. So, it makes sense to look at the high deductible plans and perhaps start a Health Savings Account (H.S.A.) This way you are protected from a big claim but don’t spend a lot for premiums. Basically, the higher the deductible, the lower the premium. The savings account allows you to be prepared for future claims.

Be careful not to leave yourself without some form of coverage. If you are on your own with low income you may qualify for MediCal though the state. For information listen to the message at 225-5777.

Q: I don’t speak “insurnaceze”. Can you please provide translations for some of the common terms?

Following is a short list. Always be sure to stop the agent and ask for an explanation of any term you don’t understand. Don’t ever be afraid of sounding stupid.

PPO: Preferred Provider Organization: This is the group of providers (doctors, hospitals, labs etc.) that the insurer encourages you to use. They do this by giving you better benefits when you go to those providers. Usually, they have pre-negotiated a big discount off the regular billed charges, which saves money for you and the insurer. You will only pay your percentage of the discounted or negotiated amount.

Deductible: This is the amount you must pay before the insurance starts paying. Typically, it is accrued on a calendar year basis. Ex. If you choose a $1,000 deductible plan, you pay the first $1,000 in medical expenses before the insurance pays.

Coinsurance: This is the split between you and the insurance company for services. If they say the plan is an 80/20 plan, that means the insurer will pay 80% and you’ll pay 20% of the expenses after the deductible is met.

Copay: These are flat dollar amounts that you pay for a covered service. Typically, these do not count toward the deductible. The insurer pays the rest of the service after the copay. Ex. $35 office visit copay means that you will pay $35 for the consultation at your doctor. The insurer will pay the rest. Note this often means the consultation only and does not include lab tests or other services you received during that visit. Many plans have a prescription drug card that only requires that you pay a copay for your Rx. A typical copay would be $10 for generic drugs and $25 for brand name drugs that are listed on the Formulary.

Formulary drugs: These are drugs that are on the insurer’s preferred list. Typically the insurer will have a better price on these brand name drugs, so will charge you a lower copay. If a drug is NOT on the formulary it will be much more expensive for you.

Out of pocket maximum (OOP): This refers to the most you should have to pay in coinsurance (your 20%) in a calendar year in the event of a very large claim. Ask if it includes the deductible and copays. Often it does not, so it’s not truly the most you will pay out of your pocket in a calendar year.

Coordination of Benefits: (COB): This is how insurers pay when you have two insurance plans. Ex. A husband and wife are both covered on each other’s group insurance plan from two different employers. Both have a $500 deductible and 80/20 plan. Typically, they will have 100% coverage between the two plans.

EOB: Explanation of Benefits: This is a record of how the insurer paid the claim. It shows if any of the charges went to the deductible or copays as well as the net amount that you should owe the provider. Be sure to review these to be sure you did not over pay the provider.

It is open enrollment time for my Flex Plan (Section 125). How do I decide how much to defer into the plan?

This is a great way to pay for unreimbursed medical expenses with a pre-tax dollar. This can include copays, deductibles, orthodontia and even over the counter medicines.

First take a look at what you spent last year for those type of expenses. Then try to estimate what you will spend this year. Will it be close to the same or are you expecting to have a big expense like Lasix eye surgery? Once you reach a total, I recommend that you reduce it by 10 percent due to the fact that the plans have a “use it or lose it” provision.

Margaret R. Beck owns and operates Affiliated Benefit Services at 1348 Market St., Suite 208 in Redding where she is a licensed CLU (chartered life underwriter), ChFC (chartered financial consultant) and CEBS (certified employee benefit specialist). She may be reached at (530) 225-8583 and mrb1348@gmail.com

Obstacles to health insurance

Marge Beck — Mon, 22 Sep 2008 01:26:46 +0000

Q. I applied for an individual medical insurance plan and was declined. I was shocked. I only take two medications at 10 mg: Lipitor for cholesterol and Norvasc for blood pressure. I haven’t had any other claims in years. Why would I be declined? What do I do now?

A. Underwriting for individual health insurance is a real issue for our clients. The companies are very conservative. They use a point system that evaluates the risk, as well as some subjective criteria. The AWP (Average Wholesale Price) of your Rx might be about $225 per month. While you are used to only paying your copay, the insurer is already on the risk for something close to $2,800 for the year. Since you must be monitored, you will have a couple of office visits per year. They know they are “buying a claim.” This makes you a higher risk than someone who has none of these problems. If you are overweight, you are prone to more problems. Check out this link for more information on AWP: http://www.pdrx.com/ss/pdrxawp

The best analogy I can give you is to look at it like buying fire insurance. Your underwriter looks at the house and sees you have a small fire in the corner of the kitchen. You tell the agent, “Don’t worry. I water it every day and keep it under control.” But what happens if you don’t? Once the insurance company takes the risk in health insurance, it can’t cancel you. So if your health deteriorates, it can’t charge a higher premium or cancel you. That being said, most agents I know are frustrated with underwriting and we are working with the companies to review their practices in hopes that we can insure more clients.

There are several options for someone who is declined. Most are pricey but not as costly as an extended hospital stay.

First, you or your agent should contact the insurer to see if there is any other plan that might be offered to you. Be cautious about buying plans that cover only generic drugs. Following is a list of options to explore:

1) MRMIP (Major Risk Medical Insurance Program). This is a state-run program that offers coverage to declined individuals. Over half the total cost is provided by subscriber premiums. The balance is funded by Prop 99 funds.

2) If you have recently exhausted your COBRA coverage, your insurer will offer coverage in their Guaranteed Issue plans, assuming you meet the criteria.

3) If you are low-income, you can apply for coverage under MediCal.

4) If you own a small business you may be able to qualify for guaranteed issue group insurance.

Q. I’ve heard that health-care fraud is a big issue these days. Is that true or just a sham to get us to choke down these high premiums?

A. Sadly, health-care fraud is a huge issue. The total costs are estimated in the BILLIONS of dollars. These costs range from the simple practice of billing for a service that was never rendered to the more complicated areas of unnecessary procedures. The additional human cost of this level of fraud is immeasurable when you examine the way in which lives are changed. It can include such things as “upcoding” an office visit to obtain a higher fee. Other types of fraud include withholding material information such as medical history, dependent status, etc., to obtain coverage that would otherwise not have been issued.

It is my opinion that the public has become anesthetized to big numbers because they hear them so often. For example, the total settlements in the RMC cases were about $100 million. That translates to about $1,250 for each of Redding’s 80,000 residents. Imagine 80,000 people lined up to receive $1250. This is only one case. There are countless others.

As consumers are faced with higher deductibles and premiums, I hope they will be more aware of these issues and understand that they play a part in this system. Most insurers, as well as Medicare and MediCal, have fraud reporting tools for consumers to alert them to investigate. The California Department of Insurance has a fraud investigation unit.

A word of caution: If you are tempted to withhold material information on a health insurance application, remember that the company has the right to rescind the policy if it is discovered. Your premiums would likely be refunded and it would be as if no insurance had been in place. This is often discovered when you have a big claim and the file is reviewed. That is not the time to find out you have no coverage.

Health Matters: COBRA insurance

Marge Beck — Mon, 05 May 2008 07:32:23 +0000

By Marge Beck

Q: I am currently covered under COBRA from my prior employer. My new employer is going to implement a new health plan effective June 1. My COBRA premium is due May 15. What happens if I don’t pay it?

I would advise you to do the following:

First, call the current COBRA vendor and determine if you are allowed to make a partial premium payment due to the fact that you will have replacement coverage on the 1st and you do not want to pay double premiums. If that is acceptable, it’s likely a good idea to pay the partial premium so you have coverage during the two weeks.

If you don’t pay the premium and you are covered under the new plan on June 1 (you don’t get laid off or nothing has changed), then you will receive credit for “time served” under your prior plan toward any pre-existing condition limitation. Typically, plans do not cover pre-existing conditions until you have been covered six months under the plan. But this “prior qualifying coverage” applies. If you have been covered more than six months on your prior plan and do not have more than a 63-day break in coverage, then you won’t have to worry about pre-existing condition limitation. Your only risk is if you have a claim between May 15 and June 1; you won’t be covered.

Q: I received a letter from my company’s COBRA administrator saying that my COBRA ends after 18 months. Someone said that it would go for 36 months. What’s up?

The extension for the additional 18 months is known as Cal-COBRA and applies only to companies that are domiciled (headquartered) in California. Also, Cal-COBRA is administered by the insurance company directly.

So, perhaps your employer is domiciled outside California. If your employer is a California company, then it’s likely that the insurance company has not been notified that you have used up your Federal COBRA and now should be Cal-COBRA.

Note that the additional premium that can be charged for Federal COBRA is 2 percent, while the Cal-COBRA surcharge is 10 percent. Contact your employer or the insurance company directly to be sure you receive the extension if it is available to you.

Q: Our daughter has finished school and is between jobs. What do we do about her health insurance?

You have a couple of options. First, she can continue under COBRA with the same benefits that you have. She will pay 100 percent of the premium, plus a small surcharge. If she has health problems, this is likely a godsend. She has 60 days from her qualifying event to make the election. Check with your plan to determine if the event is graduation date or if they will let her stay on through the summer.

She can apply for temporary insurance. This usually requires simplified underwriting and has some limitations, but it works well for short-term situations. Or she can apply for her own individual policy. The industry has introduced some less-comprehensive plans that are designed for young persons. Just be aware of the reason the premiums might be less. For example, some cover only generic drugs or have no maternity benefits.

Q: So what does COBRA stand for, anyway?

COBRA is an acronym for Consolidated Omnibus Budget Reconciliation Act. It was passed in 1986 and has many provisions that address continuation of health care benefits from an employer-sponsored plan.

Marge Beck, Q&A “Health Matters” Health Insurance Expert

Marge Beck — Mon, 25 Feb 2008 06:45:55 +0000

Q: What is an H.S.A.? How can it help me?

An H.S.A. is a Health Savings Account. This account could be described as a “Health IRA.”

It is a tax-favored savings account that allows you to pay for qualified medical expenses with a (federal) tax-free dollar. The IRS allows you to open such an account if you have a “Qualified High Deductible Health Plan.”

Simply, the idea is to use the insurance plan to protect you from catastrophic loss and the savings account to pay your other medical expenses. Funds are deposited into the separate savings account and can be withdrawn to pay qualified medical expenses. Many of the accounts come with a debit card. So when you go to the doctor, you hand them your insurance card and your debit card. If it is a PPO plan, the claim will be billed to your insurer. You will be provided the discounted rate and the money will be withdrawn from your savings account.

One word of caution: Watch for your insurance company “Explanation of Benefits” (EOB) to be sure the claim was billed and that you only paid the negotiated rate that the insurer allowed.

The beauty of this account is that it keeps the money in your pocket, not the insurance company’s pocket. The money is available to you, but unlike a Cafeteria-125 Plan there is NO “use it or lose it” feature. In fact the money can accumulate and be used at age 65 to pay Medicare Part B premiums or as a supplement to your retirement plan.

Should you use the money for other than medical expenses, you will pay ordinary income tax and a 10 percent penalty to the IRS. Note that California does not recognize H.S.A. yet, so the deposit is not deductible for State purposes. However, for Federal it is an “above the line” deduction. You do not have to itemize to receive the deduction.

The contribution limits for 2008 for an individual is $2,900, regardless of your plan deductible, plus an additional $900 if you are older than age 55. If the plan has family coverage, the limit is $5,900.

These accounts can be opened at local banks. North Valley Bank, Premier West and Redding Bank of Commerce offer these accounts. If you grow the account and would like investment capabilities “www.hsabank.com/” actually offers brokerage accounts that allow you to buy mutual funds with the money.

This approach can help you control your health care costs and make you a better consumer of health care. For example, an individual age 45 may purchase a $750 deductible health plan from Blue Shield for $451 per month. This plan would pay 7o percent of expenses after the deductible and the maximum out-of-pocket cost to the person would be about $5,000 in a calendar year. Yet if they purchased the $4,000 H.S.A. Eligible plan, all services are covered 100 percent after the deductible. The premium cost is $162 monthly. This is a savings of $3,468 per year ($289 x 12). This is almost enough to cover the entire deductible.

So this approach can be very sensible. The other feature is that it puts the consumer back in the process. That’s why they are often called “Consumer Driven Health Plans.” The industry has found that consumers are more attentive to the costs and ask more questions when they are clearly aware that the dollars they are spending are their own.

My favorite analogy is this. If you were to go to Costco and put things in your basket AND other people put things in your basket and you were expected to pay whatever it totaled at the register, you would not do that. But we do it in health care every day. We are often unaware of the costs or the reason for the services we consume. This approach puts us back in the process.

Margaret Beck “Health Matters” Q&A expert, health insurance

Marge Beck — Sat, 08 Dec 2007 08:52:29 +0000

Margaret Beck and I became acquainted many years ago when our daughters were best friends and soccer players in middle school.

The Marge I knew and admired then was the Marge I know and admire now: smart, strong, funny, cheerful, unpretentious, kind, hard working and easy going.

Marge is a well-respected, top-notch professional, but she’s just as known for her devotion to improving the north state, whether it’s as an active Rotarian or by spearheading Ducky Derby, an annual mega-fundraiser that benefits our community’s youth.

I am pleased to feature Margaret Beck, our newest Q&A expert, of Affiliated Benefit Services in Redding. She and her staff work with employer groups and individuals to provide a wide range of insurance products, as well employee benefits and estate planning. But her emphasis is on health-related products. Feel free to e-mail Marge at the address below for future column questions. - Doni

Q: I was recently denied insurance coverage because my medical records showed I had “TIA” - but I didn’t. What do I do?

A: We have seen an increasing number of applicants have problems with underwriting due to coding on prior claims. Sometimes it is merely an error. Sometimes it is because the provider does not understand that “ruling out” a diagnosis and the actual diagnosis require different codes. In some cases, the provider is trying to help the person get an expense covered. Once that diagnosis is in the records, the only way it can be changed is through the provider. This would also require the original claim to be reprocessed and the explanation made in the chart and/or an addendum to the insurer.

It’s important to understand the long term implications of trying to use a diagnosis to “get something covered.” If there truly is no illness or injury, but the claims is coded as such, your future insurability could be impacted.

Q: My doctor says I’m fine, but the insurance company declined me for coverage. Why can’t they just accept my doctor’s judgement?

A: It’s important to understand that perspectives are quite different. Once the insurance company accepts you, they can not cancel your coverage. So, while you may be stable and controlled by your medication, that does not mean that you are an average risk or even a risk worth taking. The insurance company has a responsibility to its current policyholders to avoid “buying a claim.” An overweight diabetic may be controlled now, but there is no guarantee that he or she won’t become more obese and have more problems later. There is no guarantee that the medications they are taking won’t cause liver damage and further problems.

The best analogy I can give goes something like this: If you came to me to buy fire insurance, I would likely visit your home. If I found that you had a little fire in the corner, but you said to me, “Don’t worry, it’s all under control, we water it every day and keep the edges wet so it won’t spread,” it’s unlikely we would write fire insurance for you. After all, you might go out of town or a big wind might come up.

Insurance companies are in the business to manage risk. Unfortunately today’s individual health insurance market has gotten tighter. But don’t despair. There are other options, such as the HIPAA Guaranteed Issue pool or small group coverage, if you have a qualifying group of two or more employees. Most self-employed couples can make this type of coverage work and be eligible for guarantee issue coverage.