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Premium increase
Old 10-23-2013, 11:24 AM   #1
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Premium increase

So I just got the annual enrollment for DH's retiree insurance from Megacorp. The new increase is $301 a month! Ouch. The is a subsidized plan but a few years ago they began limiting subsidizing increases to 5% per year. This has resulted in dramatic increases in premiums.

We are on a high-deductible plan for me and kids. (DH is on Medicare). The history of the cost of this plan over the past 3 years:

2012 - $180 a month
2013 - $479 a month
2014 - $780 a month

This is for a plan with a $3000 family deductible, $7000 in network Out of pocket max (out of network limits are higher). Also, megacorp (who is self-insured) switches from Aetna to United Healthcare for 2014.

If unsubsidized the premium would be $1242 a month.

Right now, the subsidized premium is probably approaching the premium for an unsubsidized younger family on an ACA exchange. Since I'm almost 60 I think an ACA policy would cost more than this, but it is hard to get exact numbers. Given the amount of uncertainty with ACA right now (particularly not being to easily find out who is in networks), I'm not going to jump to ACA this year.

However, next year I would think we would definitely look into it.

Other observations:

We can keep kids on the megacorp policy until the end of the year in which they turn 26. But there may come a time when it is cheaper to drop their coverage and go ACA for them even if I stay on the megacorp policy. My premium for 2014 would be $433, so we are paying $327 to be able to include the kids. At some point when all are out on their own, I expect they would be eligible for subsidies such that it would cheaper for them to get their own ACA subsidized policies.

Another interesting thing is the insane cost of getting the non-high deductible policy offered by megacorp. The non-high deductible policy has a $750 deductible (which doesn't apply to prescriptions but it does apply to prescriptions on the high-deductible policy). The in network out of pocket max is $6000. So, if you think you will hit the out of pocket max you don't save much by going for the high deductible policy.

Anyway that policy is $2274 a month or about $18k a year. Basically you would be spending $18000 a year more to get a $2500 lower deductible, a $1000 lower out of pocket max, and prescriptions not subject to the deductible. The $2274 a month policy has co-pays for doctors visits instead paying 80% which may end up being cheaper but can be more expensive. In any event, I can't envision a scenario where it would make sense to buy the $2274 a month policy.

So - for this year - we will stick with this but in a year we will reassess it.
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Old 10-23-2013, 12:03 PM   #2
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When I see numbers like that it makes me very thankful that I live in a place with universal medical insurance.
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Old 10-23-2013, 12:16 PM   #3
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We just went through the process to decide between DHs retiree health care insurance vs Obamacare options. I made spreadsheets based on our last few years medical expenses and it turns out that if we go over a combined $11000 in expenses that we have to pay, then we made the wrong decision which was to go with a low cost HDHP with HSA from Obamacare.

Here's our history of monthly premium cost since DH retired in 2010
2010 - $0 monthly for a high deductible Basic coverage plan (no HSA)
2011 - $75 monthly for same plan as 2010
2012 - $75 monthly for same plan as in 2010
2013 - $376 monthly for low deductible low co-pay plan (no option for the Basic plan we had earlier)
2014 - $472 monthly for same plan as 2013
2015 - estimating $700+ monthly for same plan as 2013 (unless they decide to change it) because they are eliminating 1/3 of our subsidies, on the way to transitioning to eliminating coverage for spouses altogether.

Most years we expect to have about $2000 in regular periodic office visits, bloodwork and prescriptions that we have to pay for. I estimated $1000 increments for additional stuff that happens and the low cost HDHP is the best choice until we go over $9000 in additional expenses. Cross your fingers.
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Old 10-23-2013, 12:20 PM   #4
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Your DH is on medicare and has plan from Megacorp?

Are they just covering what Medicare doesn't cover for him? Sounds expensive if that's the case.

We (DW and I) are on Medicare and have Medigap Plan F supplemental polices. Plan F covers all deductibles and a host of other stuff that Medicare doesn't. I had a hip replaced by a world-class doctor and it was no additional cost to me beyond premiums. DW has been hospitalized a few times for a week plus and we have not had to cover any of that cost.

Our monthly cost each is:

Medocare: $110
Plan F: ~$200
Part D (drug coverage): $30

Why is he not doing what we are?

If I read this right, you might be better off with DH going off Megacorp's expensive plan and getting yourself and the kids a plan through the ACA.
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Old 10-23-2013, 01:28 PM   #5
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Whenever I look at medical insurance pricing, I break it down into catastrophic coverage, plus prepaid care for regular visits, labs, etc. The highest deductible plans give a good idea of the cost for catastrophic care plus the minimum prepaid care (one physical + related labs per year, etc).

As I look at higher coverage plans, the annual cost of the plan rises approximately with the reduction in max out of pocket plus the usage (office visits, labs, etc) the actuaries anticipate the plan purchasers will use. I suppose a spreadsheet wizard could put together a curve fitting function that would tell you the sweet spot in number of office visits or other usage for any given plan.

For folks who don't anticipate anything beyond the recommended annual checkup, the cheapest plans are definitely a good deal. I'd go with a Bronze-like plan and a Health Savings Account, essentially prepaying myself for unexpected non-catastrophic usage, rather than prepaying the insurer for care I might not use. I can always use the HSA to pay Medicare plan coverage later in life if I don't use it now.

Folks with chronic illnesses who anticipate more use of medical services every year may find a better deal in the Silver and Gold plans. I think you could get a ballpark estimate by looking at recent annual usage, and figuring out the likely costs from recent insurance statements ("In-network Level 1 doctor visit: $75.00" "In-network labs: $87.50", etc). Add up the annual guesstimates, and add that to the cost of a catastrophic or Bronze plan. Look through higher priced plans that might cover all this at a cost, including deductibles and copays, less than the catastrophic plus guesstimates cost.

Yes, it's a lot of work. What you are trying to do is find the best deal for your specific needs. It's you versus the actuarial wizards in the insurance company. There may not be a sweet spot, in which case again, the catastrophic or Bronze plan with the Health Savings Account will be the best deal.
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Old 10-23-2013, 01:55 PM   #6
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Quote:
The non-high deductible policy has a $750 deductible (which doesn't apply to prescriptions but it does apply to prescriptions on the high-deductible policy).
Our renewal from Mega corp for retiree medical insurance included a statement that starting in 2015, the prescription co-pays on a non-high deductible plan will count toward the deductible the same as for their high deductible plans. Interesting.

Every year I do an analysis of our medical costs based on yearly actuals and compare to the three plans that are offered. Each time, the high deductible plan with family deductible of $3k and Max OOP of $10k is the cheapest by far when I include premiums, expected oop and HSA tax savings. The HDHP pays 70% after deductible is met and of course 100% after max oop. One of the other plans is a 500 PPO a $500 deductible/85% with $2750 max OOP but the co-pays are not included in deductible or max oop limits. The third plan ($1000 PPO is $3250 ded, 80%, $4,250 without Rx co-pays included in the limits.

Cost to me for family of four:
HDHP $363/month
$1000 PPO $665/month
$500 PPO $752/month

Our portion of premiums represents 25% of the total premium for the policy.
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Old 10-23-2013, 04:16 PM   #7
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And people look at me like I have two heads when I tell them I use $30k / year for healthcare (premuims + deductable + copays) in my budget for DH and I
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Old 10-23-2013, 04:27 PM   #8
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Quote:
Originally Posted by aja8888 View Post
Your DH is on medicare and has plan from Megacorp?

Are they just covering what Medicare doesn't cover for him? Sounds expensive if that's the case.

We (DW and I) are on Medicare and have Medigap Plan F supplemental polices. Plan F covers all deductibles and a host of other stuff that Medicare doesn't. I had a hip replaced by a world-class doctor and it was no additional cost to me beyond premiums. DW has been hospitalized a few times for a week plus and we have not had to cover any of that cost.

Our monthly cost each is:

Medocare: $110
Plan F: ~$200
Part D (drug coverage): $30

Why is he not doing what we are?

If I read this right, you might be better off with DH going off Megacorp's expensive plan and getting yourself and the kids a plan through the ACA.
You don't understand what I was saying. DH is on Medicare and has a supplemental plan and drug plan, just like you do. Megacorp pays for his drug plan.

The numbers I gave are for health insurance coverage for me and our kids, not DH. If DH and I were both covered with the kids, the cost would be $1256 a month next year not $770. It is $770 because DH is not included.
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Old 10-23-2013, 08:20 PM   #9
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Kats, I feel your pain. Living in BC I do have to pay a healthcare subsidy to compensate for the lower income taxes here. My annual payment is approximately the same as your monthly one.
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Old 10-23-2013, 08:20 PM   #10
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This is unreal the prices some of you are paying. I am glad I read this because last week I was on the phone with my retirement program complaining about how much I am paying. They assured me I was getting a very good deal and I see they were right. I almost feel like I owe them an apology. Hope there can be relief for those of you paying exorbitant fees.
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Old 10-23-2013, 09:13 PM   #11
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When I see numbers like that it makes me very thankful that I live in a place with universal medical insurance.
Where do you live Brett? What is you insurance like and what does it cost. How is it paid for? Always interested in learning about what health care is like in other countries with universal medical insurance.
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Old 10-23-2013, 09:35 PM   #12
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Originally Posted by Katsmeow View Post
You don't understand what I was saying. DH is on Medicare and has a supplemental plan and drug plan, just like you do. Megacorp pays for his drug plan.

The numbers I gave are for health insurance coverage for me and our kids, not DH. If DH and I were both covered with the kids, the cost would be $1256 a month next year not $770. It is $770 because DH is not included.
I stand corrected. Thanks.
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Old 01-05-2014, 01:26 PM   #13
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Originally Posted by modhatter View Post
Where do you live Brett? What is you insurance like and what does it cost. How is it paid for? Always interested in learning about what health care is like in other countries with universal medical insurance.
I don't see a reply from Brett. I'm interested in knowing the situation where Brett lives so I can understand more about the subject.

I've spoken to several people in Canada, the United Kingdom, an in Germany - they all say their systems work and imply the system in the U.S. is inferior. I'll be the first to say we need an overhaul and I don't think PPACA is the solution IMO. However, when I dig deeper and understand more about their situation I find their systems have warts too. I'd like to hear from Brett to understand more about the universal health care story.
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Old 01-05-2014, 02:30 PM   #14
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Old 01-06-2014, 06:58 AM   #15
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Where do you live Brett? What is you insurance like and what does it cost. How is it paid for? Always interested in learning about what health care is like in other countries with universal medical insurance.
I live in the USA.
Total health care insurance premium for he policy I have through the company I retired from is ~$16.7k. I pay 25%, megacorp pays 75%. This is not guaranteed and the company can change it at any time without prior notice.

it is a high deductible, health care savings account eligible plan. This covers me, my wife and two children.

I pay all costs out of pocket up to $3k of covered expenses. Covered expenses are described in the plan. After $3k out of pocket, the plan pays 70% and I pay 30% of covered costs until my total out of pocket expenditures total $10k. After that, the plan pays 100%.

I have to use health care providers that are in the plan's network of providers or else I have more out of pocket costs.

Any costs not covered by the plan I have to pay for out of pocket.

Covered costs include pharmacy, doctor office visits, specialists, outpatient treatments and hospital stays. Mental health treatment is also covered.

Dental and vision insurance are separate policies and only pay $1.5k and <$1k per year for covered expenses.

I can pay for some of my out of pocket costs using money I have deposited in a Health Care Savings Account. I do not pay federal income taxes on this money, so that is a savings to me.

As far as payment for covered expenses go this is the sequence:
1) I receive the health care services.
2) The health care provider files a claim with insurance plan administrator with a "list price" for the service.
3) insurance plan administrator reviews the claim and reduces the price to the price that the provider agreed to previously. These prices are not published and are not readily available to either me or health care provider.
4) insurance plan administrator then calculates how much the plan pays based on my previously paid out of pocket costs and sends that payment to the provider.
5) the provider then sends me a bill for the balance I owe and I pay them.

All of that typically takes about 4-6 weeks.
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Old 01-06-2014, 09:32 PM   #16
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Thanks for your reply Brett_Cameron but it seems like your not the right brett. Maybe I'm confused but I think the brett referred to by modhatter is the brett that made post #2.

If brett from post #2 is around... there are people who would like to know more about your version of universal medical insurance.
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