Thursday, November 15, 2018

Our Short Term Insurance Plan Options from United Healthcare

The short term health insurance plans we will describe below are all from United Healthcare (www.uhone.com). Actually, they are from Golden Rule Insurance Company which is a United Healthcare subsidiary. We are also reviewing plans designed for Ohio, and as mentioned, your state may have different options available. We reviewed short term plans on www.ehealthinsurance.com and kept coming back to the plans from United Healthcare primarily because our health provider is in network, but also because their plans offered flexible options including deductibles and co-insurance. You can build a bit more robust plan than most short term plans we saw available.

Choosing a Maximum Benefit

The first choice is to consider the maximum benefit you’d like covered. United Healthcare offers two options: $600,000 per individual or $2,000,000 per individual. In our situation, we’d prefer more robust coverage so we’ve only looked at $2M benefit plans. This means that any costs about $2M (per person) would not be covered.

Selecting Coinsurance

The next thing you have the option of choosing is your coinsurance. Coinsurance is the amount of money you’ll pay out of pocket after your deductible. United Healthcare offers the following options:

Plan Name
Coinsurance
Coinsurance out-of-pocket maximum
Value Select
30% or 40%
$5,000 or $10,000
Plus Select
20% or 40%
$2,000 or $5,000 or $10,000
Copay Select
20%
$5,000
Plus Elite
0%
$0

The coinsurance out-of-pocket maximum is the max you could pay, per person, in co-insurance. Thus, if your per person deductible is $5,000, and your coinsurance out-of-pocket maximum is $5,000, the max you could pay is $10,000 per person (assuming you do not exceed the $2M maximum benefit). Obviously, the price of the plan is dependent on the coinsurance chosen. 0% coinsurance would be more expensive than a plan with the same deductible but 30% coinsurance.

We are leaning towards a 0% coinsurance plan. In theory, since we don’t think we’d even use our deductible we should gravitate towards a higher coinsurance (since you don’t pay it until you hit your deductible). However, we’d also like to maintain some conservatism and we love the simplicity of not having to deal with coinsurance once we hit our deductible.

Deductibles

Plans have the following deductible options per person:  $1,000, $2,500, $5,000, $10,000, $12,000. Since these are per person we’d need to multiply our deductible times 5 to determine our total out-of-pocket cost assuming we had 0% coinsurance. You can mix and match these deductibles with the coinsurance options described above. If we compare these deductible amounts to what we paid for medical costs in the current year we would not even reach the $1,000 deductible per person. Assuming that’s the case again in 2019 (you know what happens when you make assumptions though...) you could argue that we should just choose the $12,000 per person deductible since it’s unlikely we’d hit any deductible amount. We are still uncertain what deductible we’d choose so we’ll run the costs for multiple options in this post and understand whether the savings is worth the risk.

Copays

Copays are popular in many insurance plans for routine doctor visits. Some plans cover “preventative wellness visits” for free while others might charge a copay. The United Healthcare Copay Select Plan offers 3 $50 copays for “history and exam” visits. Thus, we could take each of our boys for their annual check-ups and pay just $50. The copay plans require 20% coinsurance and a $2,000 out-of-pocket coinsurance maximum. This plan is best for families who would need multiple wellness visits and are comfortable assuming the coinsurance. This is an option we’ll include in our analysis.

Comparing the Cost of the Plans we are Considering

Below are the plans we are considering, all have a $2M maximum benefit per person and 360-day duration (maximum allowed in state of Ohio):

Deductible
Coinsurance
Copays
Annual / Monthly Cost
$12,500
0%
None
$2,382 / $198
$5,000
0%
None
$3,545 / $295
$2,500
0%
None
$4,459 / $372
$12,500
40%, $10,000 out of pocket max
None
$1,648 / $137
$5,000
40%, $10,000 out of pocket max
None
$2,455 / $205
$2,500
40%, $10,000 out of pocket max
None
$3,085 / $257
$12,500
20%, $5,000 out of pocket max
3 Exam and History Only
$2,097 / $175
$5,000
20%, $5,000 out of pocket max
3 Exam and History Only
$3,122 / $260
$2,500
20%, $5,000 out of pocket max
3 Exam and History Only
$3,925 / $327

You can see there is a wide variety of plans available (we’ve only considered a small subset above). We evaluate the following when thinking through a deductible amount: (a) out of pocket cost we could afford in a worst-case scenario (and by “afford” we mean pay for and not have a panic attack) (b) likelihood that a severe illness or injury would occur given our history.

We haven’t made a choice for 2019 yet but we will share the short term plan(s) that made our final evaluation when we unveil our final decision!


NOTE: All of the annual costs listed above are based on making a single annual payment. The monthly costs are based on dividing that number by 12. There is a nice cost savings if you make a single annual payment as opposed to paying monthly. Thus, your monthly costs will be a bit higher if you don’t make the annual single payment as we’ve represented. 

Saturday, November 10, 2018

Our ACA Compliant Options for 2019 (and the benefits of an HSA illustrated!)

Although it is unlikely we will purchase insurance through the ACA exchange this year (www.healthcare.gov), we still like to understand the options available there. Over the next few posts we’ll explain each of our options for 2019, a cost comparison of those options, then ultimately the choice we are making and why. 

A key criteria for any option is that it provides coverage for our primary providers. Thus, the plans from Oscar Health (www.oscarhealth.com) and the Cleveland Clinic are the best ACA options for us. Without the subsidy our cheapest available plan is as follows:


To provide perspective, our mortgage, plus property taxes, was about $768/month. Of course, that’s not a luxury home but health insurance that is roughly the cost of two mortgages is not an appealing option. Our cheapest option, however, did not include a Health Savings Account (HSA) so we next looked for the cheapest option that would also include an HSA:


So for an extra $90 a month you get a lower deductible and the option to contribute to an HSA plan. It is highly frustrating that more high deductible plans do not have the HSA option. We can pay $1,316 a month for health insurance and still not have access to save in an HSA! This is a problem.

In 2019, HSAs allow you to contribute up to $7,000 for a family (up $100 from 2018) or $3,500 for an individual (up $50 from 2018). You are permitted to make these contributions “before taxes” meaning the $7,000 a family might contribute won’t be taxed. This means $7,000 less of your income will be taxed. To illustrate the point let’s compare the cost of these two options:

Option
Monthly Cost
Yearly Cash 
Cost
HSA 
Contribution
 Tax 
Savings
Actual Yearly 
Cost
Oscar with no HSA
 $1,316
 $15,792
 $-  
$4,127
 $11,665
Oscar with HSA
 $1,406
 $16,872
 $7,000
$6,238
 $10,634

Wait, if I contribute the max to an HSA I can actually get a plan with a much lower deductible for a lower yearly cost? Yes, because of the tax savings. To understand the tax savings you’ll need to understand two deductions:

Self-employment insurance premium deductible – Since my wife and I are self-employed we are permitted to deduct the cost of our yearly premiums from our income. This makes up the majority of the deduction.

Health Savings Account (HSA) – As mentioned, we would also be able to deduct the full $7,000 HSA from our income.

If you have greater deductions then you have less income to report…and if you have less income to report you will pay less tax! So, although we likely won’t be purchasing one of these plans, hopefully this lesson in the benefits of an HSA was valuable!


Please note the Tax Savings column was calculated based on our specific tax situation (i.e. self-employed, certain income tax rate based on income, etc.). Your tax rate and situation will be different than ours and the tax savings may not be high enough to justify the higher premium! Please consult a tax professional if you have uncertainty.

Wednesday, November 7, 2018

The Latest Status of our Liberty Reimbursements

As we mentioned in our October updates we are still waiting for reimbursement for a few medical bills that were related to wellness visits. Liberty reimburses these visits up to $400, per person, per year. Just a quick update to let you know as of November 7 we are still waiting for reimbursement (the physical check). When we called Liberty they were surprised our bills were still sitting there without movement and promised to move quickly. For at least one of the bills, they indicated a check for reimbursement was sent on October 25. The problem is we haven’t even received that reimbursement.

We did receive a couple more ambiguous e-mails indicating bills are being “processed” but, as mentioned before, the status of bills in your ShareBox don’t tell you much. Coincidentally, during our last call our representative seemed to indicate that the official “clock” for reimbursement begins once your bill is “Processed”. Thus, the status Liberty shares may be a bit misleading because, at least in our case, it took a long time to even get to the “Processed” state. Hopefully we’ll receive our checks soon but to give you a sense of how long you may have to wait, these were for Summer visits and we are approaching Thanksgiving!


Liberty has made it clear they are working hard to improve their reimbursement turnaround and everyone we spoke to was very nice! We don’t doubt they are working hard, but trying is different than making it happen. Of course, this is our unique experience, others may have had better luck! We are hopeful Liberty turns their hard work into reality soon!

Thursday, November 1, 2018

Understanding Short Term Health Plans

We provided a little introduction to short term health plans in our last post but we wanted to dive a little deeper. If I reference specific language from a plan it’s likely from the short term plans we are considering from United Healthcare. We’ve researched these plans because they are accepted by our current healthcare provider, which is obviously a critical point based on our experience this year. However, providers, and even different plans within the same provider, have varying rules and coverages. Here are some of the key we've learned about short term plans:

Pre-Existing Conditions

The first thing you should know, and one of the elements that make these plans much cheaper, is that they do not cover pre-existing conditions. It may seem obvious but to be clear here’s the definition of a pre-existing condition per the plans we are reviewing:

“A condition: (1) for which medical advice, diagnosis, care, or treatment was recommended or received within the 24 months immediately preceding the date the covered person became insured under the policy/certificate; or (2) that had manifested itself in such a manner that would have caused an ordinarily prudent person to seek medical advice, diagnosis, care, or treatment within the 12 months immediately preceding the date the covered person became insured under the policy/certificate.”

Those individuals or families with a costly pre-existing condition needing coverage can immediately skip short term health plans. If you are pregnant at the time of plan initiation this is also considered a pre-existing condition so this isn’t the right plan for you if pregnant! However, if you are reading this it means you are considering Liberty, which also excludes coverage for pre-existing conditions (at least to start).

Maximum Benefits

Another key difference that keeps the price of short term health insurance plans down is that there is a maximum benefit that can be provided to each participant. With a traditional ACA approved long-term planned there is no maximum benefit. For example, the United Healthcare offers plans with two different lifetime plan maximums - $600,000 or $2,000,000. This means that with a short term plan, if you have medical costs that exceed $2,000,000, you will be on your own for those costs. There are certainly situations where costs could exceed that benefit. It’s a risk that needs to be weighed just like any other. These maximums are “per individual” so in theory each individual in your family could hit that maximum.

Prescription Drugs

Most of the plans we have reviewed from United Healthcare include prescription drug coverage, however, there are certainly options of the plans that do not. Under the plans we’ve been most interested in from United Healthcare you pay for your prescriptions up front with a discount card they provide (or you get a better deal from GoodRx as we’ve mentioned in past posts) and then submit the expense to United Healthcare. This cost would go against your deductible then would be eligible for reimbursement after the deductible is hit (subject to any co-insurance just as you may have in a traditional plan). 

Deductibles and Out of Pocket Maximums

Deductibles for the short term plans operate pretty similarly to traditional insurance plans, however, for the plans we’ve reviewed, there is no family deductible. A number of the long term ACA plans would include an individual deductible, say $2,500, then a family deductible of $10,500 for example. Thus, if you have a family of 5 like us, one person in your family could have $10,500 in charges and, even if someone hadn’t hit their individual deductible, all future charges would be covered (or subject to co-insurance). This is because the family deductible of $10,500 would have been met. The short term insurance plans we’ve reviewed have only individual deductibles. In the scenario just described, each individual’s deductible would still apply, even if one individual had significantly exceeded their deductible. There are, however, out of pocket maximums for families when co-insurance is used just like in a traditional plan. If you have no co-insurance your out of pocket maximum would be your deductible amount times the number of people in your family. For example, if we chose a short term plan from United Healthcare with a $5,000 individual deductible, and 0% co-insurance, our out of pocket maximum would be $25,000 (plus any medical costs over the $2M maximum benefit per person). If you choose a plan with co-insurance you are able to select the out of pocket maximum for co-insurance you are comfortable with.

Length of Plans

The length for short term health insurance plans varies by state. In Ohio these plans can be offered for 360 days. This makes it feasible to utilize short term plans for coverage. Previously these plans expired every 30-90 days which made it inefficient to use (expiring, then renewing, etc.). In some states short term plans may not even be an option (California, Massachusetts, New York and New Jersey look like they’ve effectively banned them). Thus, it’s important to review the allowed length of the plan in your state.

What Else isn’t Covered?

We have to admit, there are two pages of items that aren’t covered as part of short term plans and I can understand how someone wouldn’t read it all. That said, it’s important you have full knowledge and understanding of this before choosing a plan.

Below are some of the key items we’ve seen highlighted as not covered in the short term plans we’ve reviewed (beyond what we’ve already mentioned). Please, please, please do your own research because exclusions vary by insurance provider and plan!

-----

For hospital room and board and nursing services if admitted on a Friday or Saturday, unless for an emergency, or for medically necessary surgery that is scheduled for the next day.

Weird.

For injuries sustained during or due to participating, instructing, demonstrating, guiding, or accompanying others in any of the following: sports (professional, or semi-professional, or intercollegiate except for intramural), parachute jumping, hang-gliding, racing or speed testing any motorized vehicle or conveyance, scuba/skin diving (when diving 60 or more feet in depth), skydiving, bungee jumping, or rodeo sports.

I called about this one. We are a sports family but we don’t do the more extreme sports. I was assured the point of this exclusion was that you aren’t covered for injuries from professional, semi-professional or collegiate sports. It did not mean if my kids get hurt playing baseball or basketball they are not covered. 

For injuries sustained during or due to participating, instructing, demonstrating, guiding, or accompanying others in any of the following if the covered person is paid to participate or to instruct: operating or riding on a motorcycle, racing or speed testing any non-motorized vehicle or conveyance, horseback riding, rock or mountain climbing, or skiing.

Sorry risk takers or wealthy equestrians!

For non-emergency treatment of tonsils, adenoids, hemorrhoids or hernia.

Non-emergency treatment isn't allowed so do I just make sure it’s an emergency? Wouldn’t trust it for these to be covered.

Resulting from intoxication, as defined by state law where the illness or injury occurred, or while under the influence of illegal narcotics or controlled substances, unless administered or prescribed by a doctor.

Don’t do anything stupid when under the influence. A good rule regardless of your health insurance options.

For treatment of mental disorders or substance abuse including court-ordered treatment for programs, except as provided in the policy/certificate.

This has been a highly publicized exclusion.

Due to pregnancy (except complications), except as provided in the policy/certificate.

I don’t know what “except as provided in the policy/certificate” means but I’d be wary if planning a pregnancy.

So Who are these Plans Right For?  

Clearly these plans make most sense for younger, healthy individuals and families. If you are a healthy 26-year-old freelancer, who doesn’t have a subsidy for an ACA plan, this option will look great. Likewise, if you have already been considering Liberty, which has its own set of exclusions, and are blessed with relatively good health you might also consider these plans.

We understand the concern that the availability of these plans may cause the younger and healthy to exit the ACA disrupting the market (making it far more expensive for individuals with serious pre-existing conditions to buy insurance – a bad thing!). However, since roughly 80% of individuals/families buying insurance on the ACA exchange receive subsidies there may be little incentive for many to leave the exchange keeping short term insurance a niche product (that could be helpful to many).


Hopefully this overview provides some insight into short term insurance plans. If you are considering Liberty it means you are open minded about your insurance options and weighing risk to cost. Thus, short term insurance could a viable option (especially when coupled with the right level of research!). 

Saturday, October 27, 2018

Our Choices for 2019

As self-employed individuals with access to employer-based health insurance plans we closely watch developments related to the Affordable Care Act (ACA) in Washington. To understand our choices for 2019 it’s important to understand what’s happened with the ACA:

First, the current administration effectively ended the tax penalty for not having an ACA compliant health insurance plan. I won’t get into the technicalities but you won’t incur any penalty if you indicate you had no health insurance, or any other non-compliant ACA plan, on your 2018 tax return. What’s an ACA compliant health plan? Essentially anything sold on the ACA exchange (www.healthcare.gov) and employer-provided health insurance plans. Recall, however, customers of Christian healthcare ministries had been exempt from this penalty based on the original ACA rules.

Second, the fact you won’t be penalized for not having an ACA compliant plan created the opportunity for the administration to adjust access to non-compliant health insurance plans:

Short term health plans – In short (pun intended), these plans have traditionally provided shorter term (~30 days) health insurance coverage for those changing jobs or in another situation requiring short term insurance. They are not new. They do not cover the 10 essential categories of an ACA compliant plan (i.e. pre-existing conditions, mental health, maternal care, etc.). So what’s new? Short term plans, dependent on state rules, can now have terms for a year and in some cases be renewable for up to 3 years. In Ohio, short term plans are available for 360 days (I won’t get into the technicalities of being 5 days short of a year). There’s been no change to what short term plans do or don’t cover but the ability to have this type of plan for a full year makes it an option. Due to the fact these plans do not cover pre-existing conditions, and other essential categories, the cost is far lower than ACA compliant plans (at least for those not receiving subsidies). 

Association health plans (AHPs) – We haven’t done as much research on association health plans but we understand the basics. These plans have always allowed employers, or self-employed individuals with employees, to join together to buy health insurance. In fact, self-employed individuals with no employees can now participate in AHPs. “Associations” are generally people with a common interest – whether that be economical, through a business, geographically, etc. AHPs cannot exclude individuals with pre-existing conditions but, as we understand it, do not need to cover the 10 essentially categories of an ACA compliant plan. For example, certain AHPs may choose to exclude prescription drug benefits. We have not found relevant AHPs for our purposes but it is an option that seems more accessible under current standards.

Of course, the same options as last year exist as well: (a) self-insure and purchase no health insurance (not an option) (b) continue with Liberty and (c) purchase an ACA compliant plan on the health insurance exchange.   


We just wanted to outline the choices we are considering for 2018. We have been doing a lot of research on short term health plans. In our next post we’ll dive into the structure of these plans and the specific plans we are considering for 2019!

Wednesday, October 24, 2018

Our Current View on Liberty as we Head into Annual Enrollment

If you’ve been following along you understand our logic behind switching to Liberty and have a sense for how things have gone thus far. With annual enrollment upon us it’s a good time to summarize our experience to date from a pros/cons perspective.

Pros:

The cost – our previous post outlined it well. We’ve saved thousands of dollars with Liberty as opposed to the least expensive plan we could find on the Affordable Care Act (ACA) Exchange. Of course, it helps to be relatively healthy and not experience a lot of out of pocket costs, but from a premiums perspective, the savings are significant.

Increased freedom – okay, so maybe healthcare isn’t the area you want to choose to “buck the system”, but if we are being honest we like being a little different here. We are self-employed so maybe it’s natural we like systems that offer us greater freedom. It’s nice to not have to worry about being restricted to a specific doctor or healthcare system because of your insurance.

Friendliness – I won’t dwell on this point because I believe it’s highly variable but the people we’ve spoken to at Liberty have generally been friendly. While they might not have been able to solve all the inefficiency they generally had positive attitudes and we appreciated that.

Cons:

Our healthcare providers not working directly with Liberty – This has been the primary inefficiency we have experienced. Since we are recognized as self-pay customers we must pre-pay for medical appointments, go through an inevitable reconciliation of what we pre-paid vs. the actual cost, then submit a bill to Liberty. As we’ve clearly documented, navigating the back-office of a major medical provider is tedious at best.

Communication could use improvement – Once your bill is submitted we found that communication as to what is happening with your bill could be improved. This is probably not that difficult of a change. Instead of fairly ambiguous statuses provide a little more detail…or clearly explain what each of the statuses means. I’m sure this exists somewhere but it needs to be clearer to the customer. We had to call far to often to understand what was going on and in a couple cases, we learned they were waiting for something from us…but how were we to know.

Operational inefficiency – This relates closely to the previous point. Our gut feeling is that Liberty is a growing organization that is learning how to cope with a larger user base. A growing user base means interacting with more customers, more healthcare providers, having to process more bills, answer more questions – a higher degree of variation. Liberty has reported to members they are working to improve their billing processes with new systems, etc. and hopefully this will have a positive impact.

So, at this point, the million-dollar question: Would we recommend Liberty to someone asking? Here’s how we’d answer that:

Characteristics of people we’d recommend Liberty to:
Use a healthcare provider that will send bills directly to Liberty
Relatively healthy with no significant pre-existing conditions or medical needs
Have the cash flow to cover a 60-90 day lag in being reimbursed
Do not have a more affordable alternative
Open minded and can handle learning and some inefficiency to start

Characteristics of people we’d recommend looking for other alternatives:
Have a healthcare provider that treats you as self-pay and won’t send to Liberty
Have pre-existing conditions of significant/more frequent medical needs
Do not have the cash flow to cover a 60-90 day lag in being reimbursed
Have access to an affordable alternative


So are there any affordable alternatives to Liberty? Health insurance options are rapidly evolving with the current administration so it’s important to understand what is new for 2019. We can’t make an informed decision without understanding our options so our next few posts will preview how we are thinking about 2019.