There are more debates going on in the country than just the presidential-elect taking office when it comes to health care. Individuals, families and self-employed small businesses are debating amongst themselves and their peers what healthcare access and cost mean to them, what they are willing to exchange to have health care and in looking at the “price” they are willing to pay for health care what that “price” means.
So when your clients are thinking about health care you might encourage them to look at these six things they should know about health insurance.
- Know what their plan would do if they were admitted to the hospital
- Know their out of pocket maximum
- If on an HMO or PPO make sure they not only have an out of pocket maximum in-network but that they also have an out of pocket maximum out of network
- Does their plan limit certain procedures (i.e. transplants)
Let’s talk deductibles
Deductibles can be written two different ways:
- If their deductible applies to their whole plan (things inside and outside the hospital), then take a low deductible. With a $500 deductible then each family member would have to incur $500 in expenses before the insurance would pay anything.
A family of four would have a $2000 outlay. They could go years without ever using their insurance.
- Put their deductible on a Hospital Admission or things like surgery. Things outside the hospital can be NO DEDUCTIBLE…A CO-PAY… or smaller deductible
When was the last time they were admitted to the hospital? And if they were admitted to the hospital, they will probably hit any deductible they choose anyway. The real question is what their coverage is going to do after the deductible has been met? Is the plan 90/10, 80/20, or 60/40? Deductible and percentages are simply insurance selling tools.
Say they have a $500 deductible and they have an 80/20 plan. What would happen when they have a $100,000 claim? They would end up paying 20% of $100,000 minus their deductible or $19,500. It wasn’t the deductible that hurt; it was the percentage of co-insurance they were left to pay, right? Would they rather have a $5,000 deductible on a 100% plan or a $500 deductible on an open-ended 80/20 plan?
Particularly if their deductible was for the major things like the hospital, they could put other things on their plan to cover the day-to-day medical expenses, with no deductible, a co-pay or a much smaller deductible.
Out Of Pocket
So what would be the most important thing to have on a plan?
An OUT OF POCKET maximum?
It does not matter if their plan is 90/10, 80/20, 70/30, 60/40 or 50/50. There has to be some point that the insurance company starts paying 100% of their claim. Once they make sure they have an Out of Pocket maximum, then they can decide on what type of insurance they want.
There are 3 basic kinds of health insurance:
- HMO’s basically let your client see one doctor (their primary care physician). they have to get his approval before they can see any other doctor or specialist. Some people consider HMO too much managed care.
- PPO’s give your client a book of doctors and hospitals and they can go to anyone in the book. They are not required to get permission from their primary care physician. PPO’s are still managed care…but they may give your client more options than an HMO.
- Indemnity products are scheduled plans that have daily limits.
Your client may be on an HMO or PPO. If they have an Out of Pocket maximum on an indemnity product, where they can go anywhere in the country they desire, then they have a true Out of Pocket maximum, because they can go anywhere.
If they have an Out of Pocket maximum and a PPO then where do they have an Out of Pocket maximum? Their Out of Pocket maximums are those doctors and hospitals in the PPO network. And while there are many fine hospitals around what if they or their family needed to go to the Mayo clinic, Johns Hopkins or Duke Medical Center, etc? What would their HMO or PPO do if they decided they needed to go to one of these places with their spouse or child? Most will tell them to go but that they will be out of network and thus they will have to pay the bill.
So not only do your clients want an Out of Pocket maximum in-network make sure they have an Out of Pocket maximum OUT OF NETWORK! It might be higher than when in network but they will know what the worst is that could happen to them, financially.
- Know what your plan would do in regards to Out Patient, Chemo, Radiation and Out Patient Surgery.
There is a big difference between in-patient (being in the hospital) and outpatient coverage. Most insurance plans say they will cover chemo, radiation, etc. under any hospital admission. The key word being hospital admission. The only problem is that most chemo today is not given in a hospital admission. If you had cancer you could go into the hospital. You might be there a week or ten days. They may do surgery and they may give you a pop of chemo while in the hospital to see how you react to the chemo. Then you’d be released from the hospital. They will set you up for future chemo treatments. These treatments will be administered on an OUTPATIENT basis and typically not covered.
- Know what their plan would do in regards to drugs
- Especially maintenance drugs
- Know their drug cards limit
- Know what would happen when and if they were even to hit that limit. What is their plan of action?
If they have a drug card on a plan, know what the annual limit per person is…many drug cards have $300 limit per person, or some similar amount or restriction. If all your client ever does is pick up a one-time antibiotic, that’s fine. But what if they are on some type of maintenance medication, heart meds, cholesterol, diabetes, etc.? Most drug cards have limits, know what the limit is and know what would happen when they hit that limit. What would happen if they were on maintenance medications?
- Know what their plan would do in regards to Out Patient Testing, Therapy, or Ambulatory Care
Most plans give your client co-pay at the doctor if they want it on their plan. Is that $50 or $90 doctor visit why they bought health insurance? The real concern may be what if that doctor starts running a bunch of test? The test may fall under the category of ambulatory care. Most insurance plans will give them a doctor co-pay however test are not typically covered. Would your client prefer to pay a $50 or $90 doctor visit and let the insurance company pay for that test, the test interpretation, that physical, occupational or speech therapy? What would seem more reasonable to your client? Be careful of Daily Limits.
- Does their plan cover them “on and off the job?”
Companies with four or more employees are required to carry Workman’s Compensation. Consequently many health insurance companies write their plans where they don’t cover you while you’re at work. Very few self-employed individuals carry Workman’s Compensation insurance. Even if they have four employees they tend to carry Workman’s Compensation on the employees and opt out for themselves. Where do they have a better chance of getting hurt, at home in front of the T.V. with the remote or at work? Often self-employed persons find out their health insurance did not cover them at work when they first visit the emergency room. They ask them for their insurance card then they ask if the injury occurred at work.
- Does their plan provide for any income protection if they were to have a heart attack, stroke, etc? What if they were laid up for several months?
In most cases if a self-employed individual gets sick, then there’s no money coming in to pay that mortgage, grocery, utilities, car payments, much less insurance premiums. Including critical illness and/or an accident rider for self-employed persons provides fuller protection.
So regardless how the presidential-elect taking office turn out the debate going forward is one that individuals, families and small business owners are having with themselves. The ultimate outcome of this debate will have lifelong consequences for each person and family.
Knowing what things matter most to them, the options available and what it means to maintain control of their choices will help the advisor build a loyal book of business that follows the changes that occur in their client’s lifestyle events.