I talk with people about health insurance plans every day…that’s my job. It is interesting to note that I would estimate that 95% of the people I talk with don’t know that there is a way to obtain a health insurance plan inexpensively.
It is easy, but most people don’t do it. The secret is to get a health insurance plan while you are young and healthy. (Did I hear you groan?)
It isn’t too late. Even if you are older now, and didn’t get the plan you need, you can start right now. (You aren’t likely to get more heathy as you age. As we age, we tend to put on weight and as we age, more things tend to go wrong — the wheels on your wagon tend to get wobbly.)
If you are the correct weight for your height and you don’t use tobacco, you might get a preferred rate on your plan.
So, it sounds pretty easy. Just get the insurance plan early while you are young and healthy! If you are not young and healthy, get one anyway before your health deteriorates.
Another salient point. Once you have obtained a plan, and have a rating as to your health at that time, that insurance company cannot change it later.
So, let’s take an example. Let’s say you get a preferred rate on a plan and two weeks later, you are diagnosed with cancer. THE INSURANCE COMPANY CANNOT CHANGE YOUR RATING based on your health, and it cannot increase your premium. You will carry this preferred rate as long as you stay with that carrier.
Your monthly premium will likely go up each year because, of course, you are a year older. Also, the insured population in your area of the state aged by one year. The insured population in your area also might have a higher incidence of disease, so your premium will increase. Remember, though, the amount of your premium increase will likely be less than someone who didn’t get a preferred rate to start with.
What do you do if you have financial trouble?
I would suggest that if you possibly can, keep your plan in force. If you have a preferential rate, don’t lose it by canceling your health insurance - simply change to a less expensive plan with your current carrier.
Health Savings Account Plans (HSA)
You might be “forced” into considering an HSA type plan. This type plan is a high deductible health plan that doesn’t have copays for doctors and drugs. You may feel that you are forced to make this decision. Actually, this is the way you should have insured yourself from the start. HSA plans are not only less expensive per month, but your total out-of-pocket expenses, if you are hospitalized, are typically less than copay type plans. In addition, you have the right, but not the obligation, to open a savings account at your local bank.
HSA Savings Account
The money that you deposit into this savings account is not subject to taxes. The tax savings that you will experience will reduce your overall expense of the health insurance plan. Don’t underestimate the effect that taxes have. For example, as an individual, you can deposit $3,000 into your HSA account for 2009. The average individual is in the 28% tax bracket. Add in the state’s income tax fee, which is usually in the range of 8%, and you have a savings of $.36 of every dollar you deposit into YOUR account. That is $1,080 or $90 per month!
How does the HSA type plan work?
Let’s take an example: You find that you need to have your gall bladder removed. If you have a copay plan, you typically will have a deductible of $2,500. So, you are likely to think that you will have to pay $2,500 to have this procedure done. No, no, my friend. You still have something you may not know about, or forgot about. It is called coinsurance.
Coinsurance means that you co-insure the first $10,000 of the expenses with the insurance company. The most common coinsurance proportion is 70/30. That means that you will pay 30% of the first $10,000 and the insurance company will pay 70% of the first $10,000. In other words, you pay $3,000 and the insurance company pays $7,000 of the first $10,000. After that, the insurance company pays 100% — up to the limit of the policy.
Since a gall bladder operation is at least $10,000, you will have to pay your portion of the coinsurance, 30% or $3,000.
Let’s do the math on the Copay plan: You are going to pay $2,500 for the deductible and another $3,000 for the coinsurance. Your out-of-pocket expenses totals $5,500. Where is that money going to come from? If you are like most people, you don’t have that amount of money sitting in a savings account. If you don’t, you can usually work out a payment plan with the doctors and the hospital. If you don’t have any insurance, this isn’t quite as easy, and the doctors and hospitals have no limits on what they charge you for the same procedure. Let’s do the math on the HSA type plan: Now, let’s compare the out of pocket expense for the less expensive HSA plan. The most popular HSA type plan for an individual is $2,700 deductible with NO coinsurance — That means that the insurance company pays 100% of expenses after the deductible is met. So, if you have that same gall bladder operation, your out-of-pocket expense will be $2,700. That’s it. So you see, your risk is reduced from $5,500 to only $2,700. That is a savings of $2,800 - over 50% savings in the amount YOU have to pay!
Be wary:
Be wary of insurance companies where the rate is lower than the “gold standard” plan in your state. New insurance companies may be trying to “buy business” in your state. They will get you in with a teaser rate. Next year, you are likely to have a gigantic increase in your premium. Why? Because they don’t have a large enough insured base. If a small number of people get dread diseases, it affects the small population of insured people inordinately.
Just leave:
If this happens to you, you would leave and go to another insurance company. However, you can leave, only if you are still healthy. If your health has changed for the worse during that year, you are stuck with the expensive insurance company. Next year, the healthy people will leave and go find insurance elsewhere. . . only the sick people stay, because they have to. It is an upward spiral of insurance premiums. The insurance company will have to make up their losses by increasing YOUR premium. You don’t want to get caught in this horrible situation. Therefore, go with the plan that has a large number of insured individuals in your state.
In summary:
Find the right health insurance carrier from the start, and stay with it.
It must be one that has a history of paying claims without a hassle.
It must be one that is accepted by all the hospitals in your state.
It needs to be the insurance company with which almost all the doctors participate.
Make sure that the plan covers you if you were to travel to other states or to other countries.
Choose a high deductible health plan and open up an HSA (Health Savings Account).
(Don’t go for the lowest priced plan from a company not well established in your state.
What experience have you had? Any stories out there of someone who bought while you were young and healthy? Let me know in your comments.
Inclusive Health is North Carolina’s Health Insurance Risk Pool (NCHIRP). It provides affordable, individual health insurance coverage for North Carolinians who do not have access to an employer health plan and face higher premiums due to a pre-existing medical condition.
Similar to most traditional employer-sponsored and individual health plans, Inclusive Health covers a broad range of services, including preventive care, outpatient services, urgent care, a prescription drug benefit and other common health care services. Inclusive Health offers several plan options from which to choose. Chose the plan that best meets your individual medical and financial needs.
Premiums for Inclusive Health vary based on gender, age and whether you are a smoker or not. You have the choice of Plan A, B or C.
Beginning January 1st 2009, you will be able to get coverage on “INCLUSIVE HEALTH”. (Actually, you can apply now, so that your coverage will be effective on January 1st.) The rates are reasonable, but not everyone is eligible.
Coverage Waiting Period:
The plans offered by Inclusive Health include a waiting period on coverage for pre-existing conditions. The length of the waiting period is six (6) months for all policies that go into effect between January 1 and June 1, 2009. Policies that go into effect on or after July 1, 2009 will be subject to a 12-month waiting period.
Who can Join Inclusive Health?
You can qualify for coverage from Inclusive Health if you:
(a) are a North Carolina resident and a legal resident of the United States;
(b) don’t have access to group coverage as an employee or as a dependent of an employee;
(c) don’t qualify for any government program such as Medicare, Medicaid or SCHIP; an meet one of the following
If you
Have been rejected or refused by an insurer for similar coverage for medical reasons
Have been offered coverage by an insurer with a conditional rider limiting coverage
Have only been offered coverage at a premium rate that is higher than Inclusive Health’s rate
Have existing non-group coverage in effect, but at a premium rate higher than Inclusive Health’s rate
Have a diagnosed condition from a list of high-risk conditions (also known as “resumptive health conditions”
Are a federally HIPAA-eligible individual, including those who currently have this coverage through an insurer
Are a resident eligible for federal Health Coverage Tax Credit under the Transitional Assistance Act (international trade-displaced workers and Pension Benefit Guaranty Corporation recipients)
If you are a North Carolina resident and you have questions, just give me a call. I will help you to understand some of the complexities of the plans. 888.759.1738 or email richard@richdayhealthplans.com
The Universal Preventive Reminder incorporates seven preventive health screenings recommended by the US Preventive Services Task Force (USPSTF).
Blue Cross and Blue Shield of North Carolina® will incorporate member-specific data to highlight specifically those screenings for which the member is due.
Monthly Mailing Campaign: BCBSNC® will mail reminders each month to members with an upcoming birthday who are overdue for one or more of the seven preventive health screenings.
This reminder replaces automated phone calls and letters and plus it includes four additional screenings that weren’t included in previous programs. An estimated 425,000 reminders will be sent to the members each year, which represents a 40% increase in the number of reminders sent in 2007.
There is no question that the terms used to describe the features and benefits of health plans is confusing. A large number of people think that they have to hit their deductible before they can use their copays. You do not have to hit your deductible before you can use your copays.
There are two separate buckets. One bucket is a hospitalization and out-patient bucket. The second bucket is a copay bucket. They are completely separate buckets. Let’s look at the first bucket - the deductible and coinsurance bucket:
For example: If you need to have your appendix removed, you will go to the hospital. Perhaps it will cost $30,000 for the operation. What do you pay? You will pay your deductible and your coinsurance.
Coinsurance? What is that? You have never heard of that! You and Blue Cross co insure the first $10,000 of the $30,000 operation. If you have a 70/30 plan, you will pay 30% of the first $10,000 or $3,000 and Blue Cross will pay $7,000. After you have paid your deductible, of let’s say $2,500 and your $3000 coinsurance, you are home free. It doesn’t matter if it was a $1,200,000 operation, you don’t have to pay any more than the $5,500, ($2,500 + $3000). If anything else happens to you the entire year, you don’t pay anything more.
Now, let’s look at the copay bucket:
You wake up Monday morning and you have a head cold that is killing you. You know that you have to see a doctor, because last year you didn’t and this progressed into pneumonia. When you go to the doctor, you will have to pay the copay — typically $30.
They are separate:
The (copays) and (deductibles and coinsurance) are separate. If you are hospitalized, you won’t have a copay. You will pay your deductible and coinsurance.
On the other hand, if you go to see the doctor for a sick visit, you only pay a copay — no deductible and coinsurance involved here.
Starting January 1st, 2009, North Carolina will begin offering health insurance coverage to high-risk individuals. It is called the North Carolina high-risk health insurance pool. The state legislature passed Session Law 2007-532 (House Bill 265), AN ACT TO ESTABLISH THE NORTH CAROLINA HEALTH INSURANCE RISK POOL (NCHIRP). The NC High-Risk Health Insurance is not free, however. It is not a welfare program or public assistance. It is, also, not an entitlement program.
For years, unhealthy residents of North Carolina have been unable to afford health insurance coverage. Even though Blue Cross and Blue Shield of North Carolina offers to insure anybody regardless of pre-existing conditions, in practice it doesn’t work well. The problem is the high premium. Practically speaking, it does not matter if you can get a health insurance plan offered to you, if the premium is so high that you cannot afford it. Premium quotes in the range of $1,200, $1,800, $2,300, and higher per month are offered to people with health issues. Obviously, these premiums are much too high for the average individual.
Here is how the, North Carolina High Risk Plan works:
The high-risk pool means Blue Cross and Blue Shield of North Carolina, (BCBSNC), is the provider of last resort. It cannot charge high-risk individuals more than 200% above the standard health rate quote. 200% is still a large differential to pay, but it is about 50% better than what is offered currently. For example, if you have had heart problems, your current quote might be $1,900 per month. Under the new high-risk pool, you would probably get covered for about $950 per month. This is a savings of 50%, even if it is still a high premium.
There are a number of disabled people who are currently receiving Social Security Disability and Medicare benefits who would like to re-enter the work force. It doesn’t make sense for them to re-enter the work force because the cost of health insurance that they would be responsibile for, even if it is the high-risk pool, is just too much for them to pay. It would exceed the pay they would receive from the job. Actuaslly, the loss of Medicare coverage is far more important than the loss of the SSDI beneifits. Therefore, many people who might likely become productive citizens are not able to do so.
The NC Health Insurance Risk Pool for North Carolina will definitely help a large number of people who have pre-existing conditions that make it too expensive to obtain health insurance. This risk pool is available January 1st, 2009.
For more information, you can contact:
North Carolina Health Insurance Risk Pool 3739 National Drive, Suite 228
Raleigh, NC 27612
Customer Service Center at (866) 665-2117.
The Blue Options HSA(sm) offers lower premiums and tax-savings options.
The Blue Options HSA(sm) plan provides lower premiums and savings as much as 35% off Blue Advantage® plan. (The Blue Advantage plan of Blue Cross and Blue Shield of North Carolina® is the number one plan in the state.) The Blue Options HSA(sm), plan gives you the ability to take control of your health care costs.1
The Blue Options HSA(sm) plan combines a health savings account (HSA) with a high-deductible health plan (HDHP). This combination enables you to pay for qualified medical expenses tax-free.2, 3. Out-of-pocket maximums protect you from high-dollar medical costs, and, your HSA is portable. Any unused balance rolls over at the end of the year — this is so important.
With Blue Options HSA(sm), you can choose your own doctor from our largest provider network in the state. Preventive care services are covered at 100%, including routine physical exams and screening tests; well-baby and well-child care.4 Generic drugs coverage is unlimited and brand-name drugs include a $2,000 combined in- and out-of-network maximum (per person per benefit period).
If you chose Mellon Trust as the fund administrator, the HSA is automatically included with the health plan. Mellon Trust includes a convenient debit card at no charge, and HSA contributions and withdrawals are tax-free.2, 3
To be eligible for Blue Options HSA, you must be a resident of North Carolina, between the ages of 18-65 and not eligible for Medicare. Individual or family plans are available. You can also select maternity coverage for an extra charge when you first purchase a policy, renew a policy (if the policy has been in effect for at least six months), or if you have a family status change, such as marriage.
1 Blue Cross and Blue Shield of North Carolina® Internal Data, 2008: Based on copayment plans that include a $2,000 coinsurance maximum and a $10/$25/$40 copayment structure for prescription drugs. Based on data for Blue Options Underwritten Groups as of 10/1/2006 with 5 to 20 subscribers. Pricing is for a single male, age 40-44, residing in Durham.
2 BCBSNC® does not administer your HSA and is not affiliated with your HSA custodian or administrator. Your HSA custodian is Mellon Trust of New England, N.A.
3 Withdrawals are tax free only if used for qualified medical expenses. See www.irs.gov for specific regulations.
4 Includes in-network annual routine physical exam, well-baby and well-child care and certain immunizations and screenings. Other covered services may be subject to deductible and coinsurance. Members who receive covered services out-of-network may be required to pay the difference between the provider’s actual charge and the BCBSNC® allowed amount, in addition to the coinsurance amount.
®, SM Marks of the Blue Cross and Blue Shield Association. SM1 Marks of Blue Cross and Blue Shield of North Carolina.
The Blue Advantage® health insurance plan is a traditional PPO (Preferred Provider Organization) plan.
You can have access to many of the doctors, hospitals and specialists in North Carolina with the Blue Advantage® plan. Because the Blue Cross and Blue Shield of North Carolina’s® networks are large, you will find that the member copayments and coinsurance expenses are predictable.1 Just visit an in-network provider, show your BCBSNC® ID card and pay the copayment. The administrative details and filing of claims is handled by the doctor. Go directly to in-network specialists without a referral, and you can even go outside the network for most services.2, 3 The only difference is the out-of-pocket cost.
There are three plans offered by Blue Advantage®, that allow you to choose the deductible and benefits that work best for you and your family, with costs as low as $15 for copayments and $10 for generic prescription drugs.4
You are covered in more than 200 countries and territories worldwide through the BlueCard® network with the Blue Advantage® plan.5 To find a nearby network provider, (1-800-810-2583) or search the BCBSNC® provider directory.
The Blue Advantage® is available for children too. With Blue Advantage, children receive full benefits, including coverage for well-child and well-baby care and immunizations. Maternity coverage is available for an extra charge when you first purchase a policy, renew a policy (if the policy has been in effect for at least six months) or if you have a family status change, like marriage.6
As a Blue Advantage® member, you have access to a variety of online resources and programs designed to maximize your healthcare experience. Resources include the value-added program Member Health PartnershipsSM1, created to help you better manage health conditions like asthma and diabetes 7. Blue ExtrasSM, another value-added program that gives you member discounts on everything from gym memberships to vitamins. 8
To be eligible for Blue Advantage, you must be a North Carolina resident, under age 65 and not eligible for Medicare. Enrollment takes approximately 30 days.
1 Some services and supplies received by members in an office setting or in connection with an office visit are in fact outpatient hospital-based services provided by hospital-owned or operated practices. These services and supplies may be subject to your deductible and coinsurance. Please see the BCBSNC provider listing to identify these providers.
2 Referrals may be needed for certain mental health and substance abuse services.
3 Preventive care is limited to in-network benefits.
4 Refers to Plan A, Preferred Tier, policy form number M58, 7/06
5 Blue Cross and Blue Shield Association Internal Data, 2007: www.bcbs.com/news/press/facts/bluecard.html. (02/08)
6 Maternity coverage is offered through Blue Advantage at an additional rate.
7 BCBSNC provides the Member Health Partnerships program for your convenience and is not liable in any way for the services received. BCBSNC reserves the right to discontinue or change the program at any time. Benefits available through MHP are subject to your current benefit plan and pre-existing waiting periods.
8 These Blue Extras programs may not apply to all health plans. Discounts on certain goods and services may not be provided directly by BCBSNC, but may instead be arranged by BCBSNC for member convenience. Any discounts are outside your health plan benefits. BCBSNC is not liable for problems resulting from goods and services it does not provide directly, such as goods and services not being provided or being provided negligently. BCBSNC may change or discontinue these programs at any time.
®, SM Marks of the Blue Cross and Blue Shield Association. SM1 Mark of Blue Cross and Blue Shield of North Carolina.
Try this experiment the next time you are waiting in line at the grocery store:
Take a visual survey of what people have put into their grocery baskets. In some baskets you will find items like:
Cookies, Crackers & Donuts
Soda & Chips
Prepared foods
Sugar enhanced cereals
Cheeses, Pies & Ice Cream
White bread
Other high calorie items
They know that they are making unhealthy choices, but that is their right. Now, take a look at the person purchasing these items. There is a high correlation between what they eat and how healthy they look. Most likely, they are overweight, but they have the right to choose what they eat.
Now take a look at other grocery baskets.
If they have items like:
Vegetables
Lean Meat (perhaps organic)
Oranges, apples, pears and other fruit
Dark bread - whole wheat, with grains
Very few, if any of the items that are high in calories
Those customers are more likely to be slim and trim and “look healthy”.
Is it cruel to point this out?
Perhaps, it is cruel, but people should take responsibility for their own health. We know that. But how about the fact that we don’t have, nor need, “food police” telling us what we can or cannot buy.
Can what you eat solve all your health problems? Of course not! It does have an influence on one’s overall health conditions. It also has an impact on your health insurance premiums by the way.
What about the individual’s responsibility to act in a prudent, careful and intelligent manner when it comes to guarding one’s health? There are many healthy lifestyle choices available.
In the last couple of years, Health Savings Plans, (HSA) have been more widely accepted than in any years in the past. HSA plans were introduced on January 1, 2004, but they really were confusing to most agents and therefore, they were confusing to most of the buying public.
What has caused HSA plans to become more popular? There are many reasons, of course, but here are some of the more important ones:
Agents have been properly trained
Customers have experienced large increases in their traditional copay type plans
Doctors are much more familiar with the HSA plans and their benefits
Hospitals, drug stores and other providers understand them better
Certified Public Accountants and financial advisers are explaining the benefits to their clients
HSA type plans are much less expensive than copay plans - especially if you equate risks
In 2007, in North Carolina, there were two flu seasons. It is unusual to have two flu seasons in one year. Most years, one flu season is all we will have. Because people with copay plans like to get their money’s worth, they visited the doctors more frequently.
Their thinking is along these lines…I spend X dollars per month on my health insurance, and I hardly ever use it. It only costs me $15, or $25, or $35, copay to go see a doctor and get help. Why wouldn’t I take advantage of the plan I have paid for?
Consequently, the doctor visits and drug prescriptions for the year were almost doubled. The insurance companies had factored in a certain, normal number of doctor visits and drug purchases per year in the cost of their plans. When they found that people used the plans much more than they had calculated they would, they had to raise the premiums. Depending on your age, and the plan that you had purchased, the increases were in the range of 20% to 35%. That was a shock! People know that they need health insurance, but this was getting so expensive, they were worried that they couldn’t sustain those increases. Many people investigated how they could cut their costs. The HSA plan was suggested as a solution by many informed agents.
Now, for the surprising part:
HSA type plans’ premiums went up about 4 to 7% depending on your age and the plan you were on. Why the large difference?
Here is the line of thinking of someone who has an HSA type plan:
They have bought the insurance to be catastrophic coverage. They will personally take care of the small costs like doctor visits, drugs, and other expenses of that type. However, if they have something catastrophic happen to them such as a car accident, cancer, heart problems, and the list goes on, then they want a solid, secure, insurance company to carry those costs. Bankruptcy is not in their plans.
Therefore, when they got the flu, they were more reluctant to go to the doctor… it was going to cost them about $50 or $60 out of pocket to see the doctor. They thought, well, let’s see. It has been a week so far…if my conditions haven’t improved in a couple of weeks, I will go see the doctor. (This is just what several families have reported.)
Since the insurance companies where not affected very much by people on HSA type plans, they didn’t have to raise their premiums much.
In summary: People who purchase HSA type plans pay less every month to protect themselves and their families. They have catastrophic coverage that will protect them from large losses. They understand that the best, most economical use of insurance is to cover the catastrophic event.
After you have gone through the quoting process with Blue Cross and Blue Shield of North Carolina®, and have made a selection, it will be necessary to provide BCBSNC® with the first premium payment. If you use a credit card, they will charge the card at the time that you accept coverage. It doesn’t matter that your insurance policy’s effective date is thirty days in the future, they will charge the card immediately.
The credit card can be used for the first payment only. You will be billed monthly for all subsequent payments. (Technically, BCBSNC® will allow you to pay monthly with the credit card, but you must fill out the credit card section on the back of the premium statement each month.) Most members on monthly billing, will pay with a check.
Paying by checking account:
Probably the easiest way to make sure that your health insurance payment is made every month, is to have your account debited automatically by BCBSNC®. Provide them with your name as it appears on the check, the routing number and the account number and that is all you have to do. This is better for all involved. You don’t have to remember to write a check. (You don’t want your insurance to lapse because you were on vacation or were too busy.) It is less expensive for the Blue Cross and Blue Shield of North Carolina® to debit an account rather than handle a paper check, and send a paper bill.
You don’t have to worry about BCBSNC® stopping the automatic debit if you cancel your insurance. Unlike other companies you may have done business with in the past, BCBSNC® is very careful about stopping this automatic debit procedure. North Carolina insurance companies are regulated by the North Carolina Department of Insurance. As long as you follow the procedures necessary to stop an automatic debit, you won’t have trouble. Simply, the procedure is to provide the insurance company a letter requesting cancellation of the policy on a particular date, the policy number, the names of the people covered on the policy and your signature.
Bank Drafting policies:
Blue Advantage®: BCBSNC® Bank Draft transactions are processed on the 5th of the month a policy is effective. On-going drafts occur on the 5th for 1st of the month bills and 12th for 15th of the month for bills that are effective mid month.
Blue Options HSA(SM): The Blue Options HSA(SM) product will always default to a 1st of the month bill cycle even if the individual chooses an effective date of the 15th. The general rule for drafts is that they occur on the 2nd day in the month that a policy is effective. If the 2nd of the month has passed, the draft will occur immediately.
For individuals with the Blue Options HSA(SM) plan with a 15th effective date , this means that potentially they could draft immediately for only 15 days of premium, then follow with another full month draft when the 5th of the next month occurs. Example: Effective date is 3/15, they enroll on 3/23 and we draft immediately for 15 days. On 4/5, they draft for a full month. Additionally, a 45-day draft will occur in this example if enrollment does not occur until 4/1 or after.
Dental Blue Dental Policies: The dental premium will be bank drafted on the 5th of the month.
In Summary: It is easiest to have BCBSNC® automatically debit your checking account each month. However, if you prefer to be billed monthly, then use your credit card for the first payment.
