Credit record, blood pressure, and health insurance

[kramer]

I will probably be applying for an HSA policy soon (it looks like the market has finally matured enough to make it easier to get one of these policies). I will be reading up on a lot of details this weekend (including many old threads on this board), ordering my M.I.B., and gathering my medical records. I will be applying as an individual in California and am not part of any group policy. I hope to be able to post details of the process to this board after I hopefully get a policy. I will probably be going after a high deductible plan.

Should I wait for my credit record to be cleared of a single ding before applying for any health insurance? Does this matter? I have taken care of it, but it takes a while to show up on my credit.

Also, I have recently found that I am perfectly healthy, I just had a physical and blood workup And I don't really have any bad health history, thank goodness. In the past I have had a couple of blood pressure readings with the top number about 140 (about a year ago). But now that I am a runner, my blood pressure is consistenly 129-130, which is considered normal. I am a 41 year old male. Do those previous borderline high BP readings affect my status with insurers? I have never taken any prescription medication for any chronic condition. My BMI is very good and I have never smoked. My resting heart rate is in the low 50's.

I will be moving in about three months from Northern to Southern California. Is there any issue with me applying with my new address and zip code before I move? I already have an address there but my official address is where I am living now (by official I mean with my brokerages, banks, electric, etc.) and my new address won't be showing up on anything official for awhile. I want to apply with my future address since I am about to move and the intention is to have insurance in that geographical area.

Thanks,
Kramer

 

[Martha]

Also, I have recently found that I am perfectly healthy. . .

Can I have your body?

Are you working with an agent? It might help in answering these questions.

 

[kramer]

Can I have your body?

That will cost you Actually, I was more than a bit surprised -- especially on the cholesterol readings. Like I said, I thank my lucky stars. On the other hand, this does lower the SWR . . . more years to support on average. Also, I hope to supplement my health with napping now

Are you working with an agent? It might help in answering these questions.

I hadn't really thought about that yet. I did go to ehealthinsurance.com and got some quotes. It seemed like something that I could do through the internet, talking to the insurance company directly, etc. I have not given notice yet, so these questions might partially affect the timing of my decision.

Since I may be overseas quite a bit in the next few years, I am mostly looking for a high deductible backstop policy in the US so that I could come back for anything serious and also formally maintain continuous US coverage. And hopefully have out-of-pocket health costs overseas count toward my HSA insurance deductible.

Kramer

 

[Rich_by_the_Bay]

Thanks for posting your experience. I look forward to seeing how this unfolds.

My BCBS policy in Florida has a conversion feature - I can continue the policy after retirement if I pay the standard group rates. However, if I drop it for another (presumably cheaper) policy I give up my rights to go back to the conversion policy. So if I switch, I have to make sure the policy I switch to also has a conversion feature.

When you do your research I'd be interested in knowing whether you can be nonrenewed or cancelled as an individual (unless, of course, the company drops the entire plan).

 

[Martha]

When you do your research I'd be interested in knowing whether you can be nonrenewed or cancelled as an individual (unless, of course, the company drops the entire plan).

Unless you buy insurance which is specifically sold as a temporary or short term policy, federal law under HIPAA provides that individual insurance is guaranteed renewable, with some exceptions. Here is the statute:

(a) In General.--Except as provided in this section, a health
insurance issuer that provides individual health insurance coverage to
an individual shall renew or continue in force such coverage at the
option of the individual.

``(b) General Exceptions.--A health insurance issuer may nonrenew or
discontinue health insurance coverage of an individual in the individual
market based only on one or more of the following:

``(1) Nonpayment of premiums.--The individual has failed to
pay premiums or contributions in accordance with the terms of
the health insurance coverage or the issuer has not received
timely premium payments.

``(2) Fraud.--The individual has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact under the terms of the coverage.

``(3) Termination of plan.--The issuer is ceasing to offer
coverage in the individual market in accordance with subsection
(c) and applicable State law.

``(4) Movement outside service area.--In the case of a
health insurance issuer that offers health insurance coverage in
the market through a network plan, the individual no longer
resides, lives, or works in the service area (or in an area for
which the issuer is authorized to do business) but only if such
coverage is terminated under this paragraph uniformly without
regard to any health status-related factor of covered
individuals.

``(5) Association membership ceases.--In the case of health
insurance coverage that is made available in the individual market only through one or more bona fide associations, the membership of the individual in the association (on the basis of which the coverage is provided) ceases but only if such coverage is terminated under this paragraph uniformly without regard to any health status-related factor of covered individuals.


There are many ways that insurance companies can try to get around these limitations. One is to increase rates dramatically for everyone for a particular product, but offer a new policy to those who are healthy. Another strategy is when faced with a large claim, go through the application for insurance with a fine tooth comb, looking for any omission which the insurer could claim amounts to an "intentional misrepresentation of a material fact."

So, once Kramer gets his policy it will be renewable with some caveats. Some states limit the amount the rates can increase based on age or health, but many don't. IIRC, California does place some limits on rate increases.

I trust that Kramer, given his good health, will find a reasonably priced HSA policy. I am interested in how the process goes as well.

 

[Tommy]

HSA's or high deductible plans will save money on premiums but I think there are alot of factors to consider with them.

Routine medical stuff is just too expensive. Preventive care such as blood tests, X rays, MRI's will cost alot of money. An annual visit to an MD may require some or all of these tests just as pre cautions. Over age 40 requires this exam yearly. Over 50 another.
An office visit for a minor problem may require tests and prescriptions.

Do we really need to pay these bills up to the deductible?

I would rather keep cobra or a regular plan assuming it is not a high risk plan and pay the extra premiums.
The bills incurred for one doctor visit may eat up all those premium savings.

Just my opinion.

 

[Rich_by_the_Bay]

Thanks, Martha. I think the ones that'll catch you if you're not careful are the out-of-area exception (lots of retirees move after termination), and out of area can be fairly narrowly interpreted and the plan termination provision, with many areas having a very dynamic situation as far as plans being terminated and replaced by new ones.

But it's good to know you have some rights.

 

[REWahoo]

HSA's or high deductible plans will save money on premiums but I think there are alot of factors to consider with them.

Routine medical stuff is just too expensive. Preventive care such as blood tests, X rays, MRI's will cost alot of money. An annual visit to an MD may require some or all of these tests just as pre cautions. Over age 40 requires this exam yearly. Over 50 another.
An office visit for a minor problem may require tests and prescriptions.

Do we really need to pay these bills up to the deductible?

I just moved in December from a $300 deductible COBRA policy to a HSA $5,000 deductible policy. I had a check up in January and the insurance company was billed for $456, including labs/blood work. After applying the insurance company discount to the provider, my total cost was reduced to $225, a long way from meeting my deductible.

My monthly HSA premium is $216. The premium for a $300 deductible policy would run $900+ per month. Even with your stated concerns, I think the HSA is a bargain by comparison.

 

[mykidslovedogs]

My monthly HSA premium is $216. The premium for a $300 deductible policy would run $900+ per month. Even with your stated concerns, I think the HSA is a bargain by comparison.

I have a client who is 55 yrs old and has been paying $780/mo for a low deductible, full-coverage plan. If she switches to a $2600 deductible HSA compatible plan with 100% coverage after deductible, her premium will go down to $256.00. The premium savings alone will pay for her deductible twice over in one year. Plus, the cost of her preventive office visit, pap smear and mammogram are covered at 100% NOT subject to the deductible. This is a Humana One individual HSA compatible policy. The client happens to have excercise induced asthma and some minor allergies, which are considered as "standard" under Humana's underwriting guidelines on plans with a $2500 deductible or higher. That means her prescriptions for Advair and Nasocort WILL apply to and reduce her calendar year deductible each time she fills the prescriptions, PLUS she will recieve network discounts on her prescriptions by staying within an in-network pharmacy. The switch is a no-brainer.

 

[Tommy]

I just moved in December from a $300 deductible COBRA policy to a HSA $5,000 deductible policy. I had a check up in January and the insurance company was billed for $456, including labs/blood work. After applying the insurance company discount to the provider, my total cost was reduced to $225, a long way from meeting my deductible.

My monthly HSA premium is $216. The premium for a $300 deductible policy would run $900+ per month. Even with your stated concerns, I think the HSA is a bargain by comparison.

Okay vs a $900 per month premium the HSA $216 appears to be the best choice.

But most non high risk premiums are not $900.
Maybe $400 - $500, cobra the same.

And many people of ER age wind up in a docters office more than once a year.
Something that may not be serious may require alot more testing.
Also the routine over 40 or 50 stuff.

 

[mykidslovedogs]

Should I wait for my credit record to be cleared of a single ding before applying for any health insurance? Does this matter? I have taken care of it, but it takes a while to show up on my credit.

Do those previous borderline high BP readings affect my status with insurers?
Thanks,
Kramer

In my State, most underwriters look back at least 5 years on medical history, so if you were diagnosed with elevated blood pressure within that time frame, it must be disclosed. The way I would disclose that is to say, "Elevated Blood Pressure" and Treatment is "controlled with diet and exercise". Typically, they will order medical records to find out your latest readings, and if they are normal, you most likely would not have any problem with underwriting, other than a possible rating factor for increased risk.

I don't think credit history is much of a problem with Health Insurance carriers. As long as you continue to pay the premiums, the policy remains in force. If you lapse payment, they can terminate you back to last date the policy was paid through and refuse to renew coverage.

Your out of pocket expenses overseas will not apply to the deductible unless your carrier (such as Blue Cross) has an overseas network.

 

[kramer]

Thanks for the replies.

On the high deductible vs. COBRA/low-deductible plan, this is a no-brainer for me for a number of reasons. Just the premium difference between COBRA and HSA should make up for almost the entire deductible. Also, routine care when done under negotiated insurance rates is not expensive (I don't consider MRI, etc., routine care, have never had one). Also, it does not normally make sense to get a physical each year, studies bear this out (although there is some disagreement, AMA does not recommend either way, every doctor I have talked with about this agrees they are not necessary that frequently). All of the routine costs are built into the preimum for low-deductible care, anyway, so if it is expensive for high deductible, it is just as expensive for low-deductible (except that there is more paperwork for the insurance company for low-deductible and less incentive for the patient to save).

Also, if I were to stay on COBRA it is going to run out in 18 months, although I can extend to 3 years if resident in California. But I could develop a pre-existing condition during that time -- this is why it is rarely a good idea to go with COBRA.

If I am going to be overseas and getting some out of network care, I would want my US premiums to be as low as possible, too. Basically, more like insurance for major emergencies.

Kramer

 

[kramer]

My BCBS policy in Florida has a conversion feature - I can continue the policy after retirement if I pay the standard group rates. However, if I drop it for another (presumably cheaper) policy I give up my rights to go back to the conversion policy. So if I switch, I have to make sure the policy I switch to also has a conversion feature.

Rich, you still have an advantage here in that at least you will have access to group rates. And this is more advantageous the older that you are.

Thanks, Martha. I think the ones that'll catch you if you're not careful are the out-of-area exception (lots of retirees move after termination), and out of area can be fairly narrowly interpreted and the plan termination provision, with many areas having a very dynamic situation as far as plans being terminated and replaced by new ones.

Yeah, I have to study this whole residency thing. I may be an overseas resident in the next year or two. I would think as long as I travel back to my home care area (Southern California) for care that this would not be a problem. I wouldn't think they could cancel me because of that.

Kramer

 

[kramer]

In my State, most underwriters look back at least 5 years on medical
Your out of pocket expenses overseas will not apply to the deductible unless your carrier (such as Blue Cross) has an overseas network.

Technically, I don't think I was diagnosed. This was just a blood pressure reading by the nurse before I saw the doctor. The doctor was not overly concerned about it. He said it could have been because I was nervous. He never measured it himself under better conditions. My last two visits, both this month, showed better blood pressure. I think it happened on two different visits.

Your out of pocket expenses overseas will not apply to the deductible unless your carrier (such as Blue Cross) has an overseas network.

Yeah, I will need to look into this closely. When I am actually working overseas, I will typically have insurance coverage for that country but there will be gaps of no coverage. And I also plan to do a lot of international travel this year and I won't be covered then. But overseas costs are so low, that I am not worried about paying out-of-pocket. I remember last year reading the HSA rules carefully, and it looked like even overseas expenses were allowed for HSA spending (i.e., can be withdrawn from HSA account tax free) but I believe that that is different than having the expense apply toward the insurance deductible.

All things considered, I would rather have an "overseas-aware" policy, including something that might cover me during travels, but that is probably asking too much. I think Ben (~38 year old Thailand resident) has a "world coverage except for the US" policy based in Thailand by world-known insurer that is around $800/year (say, $1000 for someone my age). Although, that is a lot extra to pay just to fill in a few small coverage gaps.

I'm sure I will have more to report back and more to ask after I get more up to speed I really appreciate the feedback.

Kramer

 

[mykidslovedogs]

I recommend MNUI's international citizen or international citizen economy plan for temporary or extended international travel coverage: This plan is renewable each year just as long as you spend a minimum of 6 months at a time overseas...Take a look at the plan summary. I guess depending on the country you are in, it might be a worthwhile investment.

http://www.mnui.com/quotes.asp


And yes, you can use your HSA account $$ for MEDICAL expenses occurred overseas (except I don't think you are allowed to use it for prescriptions that are purchased outside the USA - Then again, that rule might only apply to imported prescriptions, but not prescriptions taken while oversease. To tell you the truth, I'm not sure on that. I'll have to do more research).

http://www.treas.gov/offices/public-affairs/hsa/faq_using.shtml

And again, those expenses will not apply towards your deductible unless your insurance carrier has an overseas network. The only USA carrier I know of that has a Worldwide network is Blue Cross and Blue Shield. There could be others, but not with any of the products that I sell here in Colorado.

 

[kramer]

I recommend MNUI's international citizen or international citizen economy plan for temporary or extended international travel coverage: This plan is renewable each year just as long as you spend a minimum of 6 months at a time overseas...Take a look at the plan summary. I guess depending on the country you are in, it might be a worthwhile investment.

http://www.mnui.com/quotes.asp


And yes, you can use your HSA account $$ for MEDICAL expenses occurred overseas (except I don't think you are allowed to use it for prescriptions that are purchased outside the USA - Then again, that rule might only apply to imported prescriptions, but not prescriptions taken while oversease. To tell you the truth, I'm not sure on that. I'll have to do more research).

http://www.treas.gov/offices/public-affairs/hsa/faq_using.shtml

And again, those expenses will not apply towards your deductible unless your insurance carrier has an overseas network. The only USA carrier I know of that has a Worldwide network is Blue Cross and Blue Shield. There could be others, but not with any of the products that I sell here in Colorado.

Thanks very much for the links. They have been helpful.

Just to answer questions that came up here:

* You can use your HSA account to pay the cost of a prescribed drug that you purchase and consume in another country provided that the drug is legal in both the foreign country and the US. However, the drug must be prescribed. Even in the US, non-prescribed drugs are not considered valid medical expenses. The rules are covered in IRS publication 502. I was surprised to find that cosmetic dentistry is excluded as a medical expense (i.e., teeth whitening) as well as cosmetic surgery. The things mentioned here are the only surprises that I saw. There seem to be no issues paying overseas medical costs and you can even include the cost of a trip (transport and reasonable lodging) if the primary reason is to receive medical care at that location. It is very important to keep receipts for everything.

* I am not worried about building up too much money in an HSA. For instance, you can also use it to pay for your medicare premiums, deductibles, and co-pays after age 65. Thus, as long as you use it for healthcare expenses, you receive the IRA + ROTH tax treatment -- no tax on the money going in and no tax on the money coming out.

* The travel insurance link you provided actually looks pretty good. It even accounts for acute onset of a preexisting condition. And medical evacuation is covered. The cost for me (age 40-49 category) for a $2500 deductible and $100K max coverage is around $46/month ($50K max was ~$41/month), and you can time it for the exact times you are out of the country. The only negative that I saw is that the insurance company *must* be contacted before most procedures are done including even an MRI, for instance, or you pay 50%. The deductible is for the coverage period and not per incident and you are even covered for a short term if passing back through your home country. This gives me a good idea of how much this type of insurance costs, and how much to weigh the possibility of international coverage in getting my main US-based plan. My COBRA plan would actually cover me for the first 30 days outside of the country -- so if I end up getting a plan like that, I would purchase the travel insurance to start about 3-4 weeks after I left the country, saving a little more money.

* On timing for starting a new non-COBRA insurance plan, it looks like I have 60 days to elect COBRA coverage starting from the date of termination and then another 45 days to pay. I am not sure if I can use the insurance during that period, however, without committing myself to pay for it.

Kramer

 

[mykidslovedogs]

Actually, You CAN use your HSA dollars for over the counter drugs. Some relatively new legislation was passed on that in 2003. Here is a good link to use as a guide for eligible expenses. If you would like the actual document from EBIA showing the IRS guideline on that I can send it to you. It is Rev. Rule 2003-102. (you can send me a personal message with your email if you want to, and I will send it to you. Here is that link:

http://www.hsabank.com/forms/medical_expenses.pdf . They MUST be used to treat an illness. Vitamins don't count.

As far as COBRA goes, if you develop a condition during your grace period, you can go back and elect coverage and it will take effect all the way back to your date of termination, and you will have coverage for that condition/illness and you will be able to file a valid claim once the policy is back in force.

 

[wabmester]

I am not worried about building up too much money in an HSA. For instance, you can also use it to pay for your medicare premiums, deductibles, and co-pays after age 65. Thus, as long as you use it for healthcare expenses, you receive the IRA + ROTH tax treatment -- no tax on the money going in and no tax on the money coming out.

My understanding is that you can withdraw from an HSA account for *any* purpose after age 65 without penalty. Is that not correct?

I checked the HSA FAQ, and it was a bit ambiguous about whether non-medical distributions would be taxable after 65. IRS pub 502 didn't clarify.

Anybody have the last word on non-medical distributions after age 65?

 

[mykidslovedogs]

If you use your HSA money for non-medical expenses after age 65, then you just have to pay ordinary income taxes on your withdrawals. As long as the money is used for a medical expense after 65, there is no taxes. There are no penalties for withdrawals after age 65. There ARE penalty fees BEFORE age 65 if the $$ is pulled out for a non-medical expense. Basically, it is just like an IRA in that respect.

 

[wabmester]

If you use your HSA money for non-medical expenses after age 65, then you have to pay ordinary income taxes on your withdrawals. As long as the money is used for a medical expense after 65, there is no taxes. There are no penalties for withdrawals after age 65. There ARE penalty fees BEFORE age 65 if the $$ is pulled out for a non-medical expense. Basically, it is just like an IRA.

My understanding is that after 65, not only does the 10% penalty no longer apply, but ordinary income tax doesn't apply for at least certain non-medical expenses, such as insurance premiums. Is there a definitive reference for which post-65 withdrawals get taxed and which don't?

 

[Martha]

From the US treasury:

What happens to the money in a Health Savings Account after you turn age 65?
You can continue to use your account tax-free for out-of-pocket health expenses. When you enroll in Medicare, you can use your account to pay Medicare premiums, deductibles, copays, and coinsurance under any part of Medicare. If you have retiree health benefits through your former employer, you can also use your account to pay for your share of retiree medical insurance premiums. The one expense you cannot use your account for is to purchase a Medicare supplemental insurance or “Medigap” policy.

Once you turn age 65, you can also use your account to pay for things other than medical expenses. If used for other expenses, the amount withdrawn will be taxable as income but will not be subject to any other penalties. Individuals under age 65 who use their accounts for non-medical expenses must pay income tax and a 10% penalty on the amount withdrawn.


http://www.treas.gov/offices/public-affairs/hsa/faq_using.shtml#hsa13

 

[wabmester]

Thanks, Martha. Not quite the free lunch I was hoping for, but better than a sharp stick in the eye.

 

[wabmester]

Just one more note on overfunding an HSA. If you die, your HSA either becomes your spouse's HSA or it gets distributed to your estate or whomever you named as a death beneficiary.

In the latter cases, the estate/beneficiary gets hit with the full value as ordinary income. No step-up in basis! At least, that's my reading.

 

[Martha]

Yup, the money is going to get taxed. No step up with traditional IRAs or 401ks either, though at least you can work it so you don't have to pay the tax all at once. No step up on untaxed interest on bonds or untaxed dividends on stock or on untaxed wages you might have earned .

Only unrealized capital gains.

 

[wabmester]

Yup, the money is going to get taxed. No step up with traditional IRAs or 401ks either, though at least you can work it so you don't have to pay the tax all at once.

But with traditional IRAs, the contributions are tax-deductible, so you are effectively getting taxed twice on contributions to an HSA not used for medical expenses.