Welcome to open enrollment season at the office ― the limited window each year when you make what are arguably your most important health care decisions with the barest amount of real understanding.
While there is an abundance of information out there to help you, you wouldn’t be crazy to think that things aren’t always as they appear to be.
Insurance terminology can be misleading: “Maximums” aren’t really “the most” and a copay isn’t the same as a coinsurance payment. And if you don’t know if the hospital you are in is in-network or out, you could wind up in deep medical debt ― which is the No. 1 reason people file for bankruptcy.
Here are a few things to watch out for:
“Out-of-pocket maximums” that aren’t
To the untrained eye, this phrase seemingly sets a ceiling for the absolute most amount of money you will have to shell out for health care before your insurance company says “don’t worry, we got this.” Except it isn’t that at all.
That’s because of the word “covered.” “Covered,” in insurance lingo, only means what your insurance company has determined is an eligible medical expense. And no, not everything is an eligible expense.
Every insurance company has things they don’t count when they calculate how much you have paid out of pocket. Your premiums most certainly won’t count toward your out-of-pocket maximum. Nor will any money you paid directly to a doctor who balance billed you. Balance billing charges occur when an out-of-network provider hasn’t agreed to accept what your insurance thinks is enough money for the service so the provider turns around and bills you for the rest.
If your insurer doesn’t cover what’s being done, your payment won’t count toward any out-of-pocket maximum. Acupuncture, bariatric surgery or even a virtual colonoscopy may not be covered by your insurance company and therefore wouldn’t be applied to your out-of-pocket maximum. That chiropractor you saw who helped your back? Sorry, not covered. If your insurance plan requires pre-authorization for an MRI or blood tests and you didn’t get it, the insurer can deny the charges and what you pay out-of-pocket still won’t count toward your spending limits.
Plans generally set out-of-pocket maximums for individuals and families. They also may have separate out-of-pocket maximums for in-network and out-of-network expenses.
And here’s the real rub: Most people won’t even come close to reaching their out-of-pocket maximum. It is required by law for insurers to set them, and there is some comfort in thinking “this is the most I will have to pay” ― even if that’s an illusion. Just know you likely will be paying more.
Deductibles, same deal.
A deductible is what you pay before your insurance company pays anything. If your plan has a $1,000 deductible, you will be responsible for the first $1,000 of your medical bills.
Now reread the section on out-of-pocket maximums. It’s the same deal with deductibles. Insurers only apply to your deductible what you shelled out for covered expenses ― and not everything is a covered expense. Some plans don’t even count your expensive prescription drugs.
Just because your plan covered your medication last year doesn’t mean it will do it again.
Every prescription drug plan has a “formulary” ― basically a big list of all the medications they cover. They are often grouped in tiers; the tier that your medication falls in determines the amount of money it will cost you. It’s important to pay attention to the tier of your drugs, because insurers can change the tier each year ― essentially raising the cost to you.
But there is another problem to be aware of: Insurance companies modify their drug formularies every year ― sometimes dropping medications from the list of what they cover. Express Scripts, which provides drug coverage to 83 million insurance plan members, plans to exclude 64 more drugs from its formulary. Combined with the medications it dropped in 2017, the total number of excluded drugs is 159 out of 3,791 available drugs. The company reports that 99.22 percent of its customers will not see any changes to their medication coverage.
It’s worth checking with your drug plan provider to see if what you take will still be covered next year, and at what cost.
Ask if your company offers a “cash in lieu” benefit.
The Affordable Care Act is still the law of the land and it requires both that every individual carry health insurance and that companies with more than 50 employees provide it or face a penalty. But your company is just one place where you can find coverage and what they offer may not be the least expensive or best plan for you.
But here’s the hitch: If you have a spouse or domestic partner and opt for coverage through their company’s plan instead of your own employer, you are basically walking away from a good chunk of your total compensation package. That’s because when companies determine what to pay you, they factor in what your health care and other benefits cost them. The U.S. Bureau of Labor Statistics puts the value of health insurance at between 7.7 percent and 11 percent of your compensation package depending on what kind of work you do.
Some companies offer a “cash in lieu” benefit option for employees who decline the company’s health coverage because they can get coverage under a spouse’s plan or on an exchange market. Those employees are offered a chunk of money. The practice isn’t universal, though, and rulings by the IRS have muddied the waters a bit.
There are two IRS notices that speak to “cash in lieu.” Notice 2015-17 flat out forbids it. But then the IRS came back and said nothing was stopping employers from giving people additional compensation ― like a raise ― as long as it wasn’t conditioned upon or in anyway connected to health care. As a salary raise, it will be taxed.
File this one under: You won’t know if you don’t ask, so ask your company if they plan on giving you some cash for saving them money.
Picking a plan means more than just comparing the premiums.
Choice can be a wonderful thing. It also can be kind of overwhelming. One difficulty with picking health insurance is that the devil is in the details and therefore you really can’t just compare plans by their premiums ― their price tags ― alone.
Start by figuring out what you already know about your and your family’s health. How often do you see doctors? Is someone being treated for a chronic condition? Do you know that you are likely to have a surgery in 2018?
If you are a big consumer of health care, you might consider a plan with the lowest deductibles, copays and coinsurance. If you rarely go to the doctor and are healthy as a horse, a plan with a high deductible with lower premiums may make more sense.
The freedom to choose will cost you.
If you want to pick your own doctors and be able to run to a specialty hospital for care, you can expect to pay more for that ability.
Ever heard the joke that asks: “What do you call the guy who graduated last in his medical school class?” You call him “doctor.” Bingo, not all doctors are the same. Some are better than others, and at the very least, some make you more comfortable when you are in their care.
Plans that lock you in to a seeing a select group of doctors will save you money. But they also take something away: your choice to determine who will treat you.