Self-insurance health opinions and challenges

[Roger_R]

I am pretty new to these forums and am still catching up reading all of the interesting and helpful older posts. It's my very general impression that many of the ER here get group health insurance from previous employment, working spouse, military benefits, etc. My retirement with group health benefits (I will still pay 40%) from work is three years out. I think I am financially able to go ER at about anytime with self insured health assuming the costs are in the $2000-$3000 range and maybe double in the next ten years when I would then qualify for Medicare. No pre-existing conditions, and single.

For those of you who self insure for health insurance, I'm wondering mostly, in generalities right now, your apprehensions with private policy health. Do you worry about being cancelled out if your insurer dicontinues area coverage? Did you shop through an insurance broker or on your own? High deductable vs. low? Seems like I recall that a person can set up a tax defered account to cover eventual deductables, but don't recall the details and whether it might be a big advantage. Other things to consider? Is the three year wait worth it if it might be mainly for access to a group health policy?

 

[Brit]

I am looking into the new HSA accounts. ( Health Saving Account.) Apparently it is like an IRA for medical deductable payments. In other word's you can get a high deductible medical plan and put the deductable amount into the HSA and it can be invested tax free. But it can only be used for medical payments.

That is my understanding, anybody knows anything more.

Brit

 

[Cut-Throat]

Roger,

I am probably in the minority here. But my thinking is this. The higher the premiums for Health Ins. go, the less likely that I will pay them.

I have rolled the dice of life more risky than going without Insurance, and yes I know one Illness could wipe you financially - But here is the way I look at it. If medical Insurance cannot be offered cheap enough, then I won't buy it! -

My thinking - We'll all be dead in 50 years - So, why pay Insurance that will guarentee you'll be poor while you're alive instead of risking it all with no Insurance. I am healthy. live healthy and have good family genes, don't smoke, exercise etc. - I am not covering FAT America!

BTW - I would only go with No Insurance, if the policies become totally outrageous (which I think they may be now)

Think about it - if we all continue to pay the high premiums they will keep charging them. If you Boycott the Insurance Industry and the Medical Industry (which works hand in hand) - they will have to provide a service that is beneficial to the customer. Right now they are holding us all hostage!

I am currently under my wife's employers plan. When she quits, my Tolerance is about $7K per year, otherwise I will not participate.

You also have to realize that 70% of all medical costs are spent in the last year of life (In other words they did not work anyway).

Radical Yes ! - But I've made more radical choices in my life? Worried? - No ! -

I have friends that have terminal Illnesses that no amount of money can solve. Their only Health Insurance at this point is a .410 Shotgun in the Closet and a few shells in the nightstand!

 

[unclemick]

I haven't had any health insurance for ten years(single). Girlfriend(thru union retirement) and widowed mom(medicare plus supplimental).

I deliberately avoid American doctors - they can get someone else to pay their med school loans - and malpractice insurance. Foreign doctors don't overtest, overconsult. and over worry as much - American doc.'s in some ways are in as bad a bind as their customers.

Age 49-60 without any insurance is pushing the envelope and I've spent $200 over the years(hairline wrist fracture).

I don't recommend my path to anyone - one more worry about systemic risk to the portfolio.

I may do some insurance shopping this yr but I think most high deductible is capped at 10k which is too low.

 

[Roger_R]

This is the skinny on HSA accounts.  Contributions to an HSA are deductible from your taxes even if you don't itemize your expenses. Withdrawals from an HSA for medical purposes are tax-free.  You have to be under age 65 in order to be eligible to make a contribution. In addition, you must have a "qualified health plan."  This means you will need to have an insurance policy that has a minimum deductible of $1,000 for a single person and $2,000 for a family.   In addition to this high deductible, the cap on out-of-pocket expenses has to be a minimum of $5,000 for a single person and $10,000 for a family policy.  You are allowed to contribute annually to the HSA up to 100 percent of the deductible amount on your health plan. However, the annual contribution is a maximum of $2,600 for a single individual and $5,150 for family policies.

 

[Roger_R]

Cut-Throat,
I can appreciate your approach to an extent, but I know it's not for me. I guess it is a calculation of risk vs. return and the insurance companies wouldn't be playing the game if they weren't making money. So maybe the stats are in your favor. In my mind it's not a choice of nothing or $7,000+ insurance expense, but many choices in between. And also high hospital bills are not all from terminal disease. I've spent a fair amount of time in hospitals with sick parents over the last year. There are a surprizing amount of younger people there. One that I recall most relative to this discussion was a 42 yo fellow who had hiked the grand canyon earlier in the year. He had a stroke and was facing months of hospital and therapy. Healthiest looking guy you could imagine, but at three weeks he could barely speak and walked with a walker. I know it's a game of odds, but the stakes are a little too high for a guy like me.

 

[Cut-Throat]

I  know it's a game of odds, but the stakes are a little too high for a guy like me.

Roger,

Don't forget - That we are all dead in the long run! - This is the most important fact to live life well

I knew that I would not have a lot of followers on this one, and this is mostly the reason the Medical and Insurance Industry have been allowed to charge such high prices. - Because people are willing to pay them!

 

[Roger_R]

Don't forget - That we are all dead in the long run! - This is the most important fact to live life well

Good words Cut-Throat, and worth considering more than just reading. We make many choices with our money and time that are (mis?)-directed to preserving a life that is not optimal. When you're out on those fishing days, remember to wear you sunscreen

 

[Telly]

For those of you who self insure for health insurance, I'm wondering mostly, in generalities right now, your apprehensions with private policy health.   Do you worry about being cancelled out if your insurer dicontinues area coverage?  Did you shop through an insurance broker  or on your own?  High deductable vs. low?  Seems like I recall that a person can set up a tax defered account to cover eventual deductables, but don't recall the details and whether it might be a big advantage.  Other things to consider?  Is the three year wait worth it if it might be mainly for access to a group health policy?

Hi Roger, I think the proper term is individual health insurance.

I'm on it.  Here a my comments, FWIW:

Q: Do you worry about being cancelled out if your insurer dicontinues area coverage?

Very little, but it certainly could happen.  But I think you can greatly reduce the chances.  By looking at ins. co. with solid financials (less likely to need to cut back on areas because of financial troubles).  Who has that info, was it AM Best?  A many state coverage company that has been at it a long time is a plus.  A flash in the pan great rates newby could get in over their head and cut back.  State insurance commision regulations have an effect on ins. co. business climate, and whether they will stay.

Q: Did you shop through an insurance broker  or on your own?

On my own.  Web mostly. and telephone or email for questions.

Q: High deductable vs. low?

High.  This can have a tendancy to scare some non-ER types who say "I can't afford to get hit with a $200 bill at the doctors office!!!"  But I view it this way:  I could have gotten the exact same full coverage that I had when I was working.  For about $12-13k a year.  Or get a $2500 or $5000 deductable policy for a few $k a year.  Cover the smaller stuff yourself, but be insured for the biggee.  Comparing the two, I could be sure that I would be paying $12-13k a year with the former, just for the premiums.  For the latter, the much much smaller premium, and any small stuff.  The savings per-year are so high, that the savings can fund many years of small stuff!
It is like Consumer Reports comment on not buying appliance maintenance contracts, just pay yourself when and if needed.

Q: Seems like I recall that a person can set up a tax defered account to cover eventual deductables, but don't recall the details and whether it might be a big advantage.

I'm not impressed at all with the new HSA.  The cost of the insurance premium is EXCLUDED!  My biggest health cost is the premium!  And so it will be for most people who pay for their own individual rate coverage, and aren't terribly ill (or accident prone  ).

Q: Other things to consider?  Is the three year wait worth it if it might be mainly for access to a group health policy?

That is a tough one.  Some of it may depend on what exactly you would get through a group policy at work.  The same polcy that others working get?  At first that sounds good, but what would 40% cost of that policy be?  The wide coverage policies have been going up and up, and companies sharing more cost burden with employees.  There is nothing that prevents a company from changing its retirement benefits to future retirees.  They could boost your % cost before you get there.  And many companies can reduce/eliminate retiree health benefits, to existing retirees!  And some have in the past year, or announced intentions to do so.  So what you will get in 3 years may not be all that great.  But it is hard to tell.  You may still come out ahead with the company group plan.  I'm just thinking out loud here.

Clarification-
The $12-13k I mentioned above was for the family rate full-coverage group plan.  And the few $k was for $2500 deductable individual insurance for me and 2 kids, now down to me and one teen covered.

 

[haha]

Q: High deductable vs. low?

High.  This can have a tendancy to scare some non-ER types who say "I can't afford to get hit with a $200 bill at the doctors office!!!"  But I view it this way:  I could have gotten the exact same full coverage that I had when I was working.  For about $12-13k a year.  Or get a $2500 or $5000 deductable policy for a few $k a year.  Cover the smaller stuff yourself, but be insured for the biggee.

Telly, I have a question about satisfying the deductible. When I had individual insurance, I wound up paying the deductible amount at the Doc's sticker price, which was often grossly inflated from the price that Blue Cross, Medicare, etc. were paying. It seemed like the Doc was trying to balance those contracts by charging the hell out of me. This really annoyed me, as I reasoned that in many years I would spend more than the deductible. Hence it mattered at what rate I was billed.

When you are paying your deductible part, is it at the preferred rate negotiated by your insurance plan, or at the Doc's super special "let's cover our overhead on this guy's back" rate?

Mikey

 

[cute fuzzy bunny]

Couple of interesting bits:

- The majority of health care costs (in fact, the vast majority...last stat I saw was 70%) are incurred during the final year of life for someone over the age of 70. In other words, drastic measures to keep someones machines beeping. Drastic measures that by the very phrase "last year of life" mean they didnt work. Finding a way to help people (and more importantly, their families) to stop heroic and pointless efforts to prolong a life could cut insurers costs more than half, and therefore premiums. My girlfriend works in the night shift in the emergency room at the local hospital. Basically when you come in to the ER, you meet her first and she makes sure you're breathing and if you arent, does something about that. I hear a story every day about some of the crazy stuff people do out of emotions. A guy came in that was hit by a train. Parts everywhere. Barely recognizable as a human being. His family wanted the surgeons to do everything possible to save his life. That poor guy hung on, probably in enormous pain, for almost 5 hours while they tried to put his parts back together. She told me last night of a guy who attempted suicide by hanging and was discovered and cut down just before death. However he is fully and completely brain dead. His mother insists on maintaining him on life support indefinitely and comes in every day to care for him.

- Rack vs insurers rates. Some doctors will charge you the same rate as BC/BS does if you ask them. You can buy these cards for a hundred bucks or so that give you a list of doctors who will do this. Better still, go to the web site for the outfits selling the cards, look up the doctors in their "provider list" and see if one of them will do the work at the lower rate without the card. Fair warning, these may not be the very best doctors.

- Regarding the deductible at rack or insurers rate. I know BC/BS in california requires the doctors provide all service at BC/BS's negotiated rate. You pay the deductible but its at the lower rate.

One question in case someone has looked into it...I've heard that their are some groups (RVers, etc) that have banded together to obtain group coverage and by paying a fee to join, you can get into their coverage. Has anyone looked into this, what coverage areas do they have, and what are the rates like?

 

[haha]

Rack vs insurers rates.  Some doctors will charge you the same rate as BC/BS does if you ask them.  You can buy these cards for a hundred bucks or so that give you a list of doctors who will do this.  Better still, go to the web site for the outfits selling the cards, look up the doctors in their "provider list" and see if one of them will do the work at the lower rate without the card.  Fair warning, these may not be the very best doctors.

- Regarding the deductible at rack or insurers rate.  I know BC/BS in california requires the doctors provide all service at BC/BS's negotiated rate.  You pay the deductible but its at the lower rate.

Thanks, TH. This is what I was wondering about.

Mikey

 

[wabmester]

So has anybody actually found an individual insurance plan that offers an HSA?

 

[Telly]

When you are paying your deductible part, is it at the preferred rate negotiated by your insurance plan, or at the Doc's super special "let's cover our overhead on this guy's back" rate?

Mikey

You can select a PPO option, which results in a lower premium (all else being equal). With the PPO, the provider bills the agreed rate to the ins. co. The ins. co. checks to see if it is a covered expense, if so, compares it to the deductable total. If the deductable is met, they pay their part. If the deductable is not met yet, then they let you know, and you pay the provider. So the PPO benefits both the user and the ins. co. To the user, because it lowers the out of pocket $ required in a typical year. To the ins. co., because it will take longer for you to meet the deductable if the provider rates are lowered! And both benefit again with the lowered rates when/if the deductable is exceeded.

There are a bewildering array of choices out there, many different levels by the same companies. Whats covered, whats not, copay amounts, deductables, etc.

Just as an example on the billing, mine has a $2500 yearly deductable for covered expenses. Once reached, the NEXT $5000 of covered expenses is 80/20, so I pay 20% of those. Any covered expenses in the year ABOVE that $5000 is 100% paid by the ins. co.

So the worst case liability, per year of covered expenses, is:
$2500 + ($5000 x .2) = $3500

And so far for this plan year, I have had $0 expenses, so my cost has been the premiums only.

 

[John Galt]

Hello Cut-throat! Man, your posts on this topic are
some of your best stuff yet. That Florida trip must
have reactivated your writing juices.

We are still on a bit of a hybrid system. i.e. almost
everything is covered but "disasters" are capped.
So far so good. I don't have the guts to go bare.
My wife has sometimes covered both of us through her
employment, but not at present. When I first retired
I had an individual policy with a $10,000 deductible.
Very affordable as I recall. Then the wheels came off.
One insurer went belly up. I switched carriers several
times and while that was happening I developed
some chronic problems that made to persona non grata
with many insurance companies. BTW, the good genes
won't necessarily save you (although they can't hurt).
My parents are both in their mid 80s and fairly perky. My
paternal grandfather and great grandfather both made
100+. One brother in good health, etc etc. Unless
my wife changes employers, I expect we will keep what
we have until Medicare kicks in.

John Galt

 

[cute fuzzy bunny]

Yeah, I think medical plans are the only thing more complicated than cell phone plans.

I'm far from a dummy, but even after printing out all the different BC/BS options and making copious notes out of what each did and didnt have, I still felt uneasy when I made my choice that I missed some small detail.

It seems that they insist on making 10 changes from one plan to the next. I wish they'd just give you a form with drop down boxes for each "dial"; whether prescription meds are included, the deductable, whether untraditional services like chiropractors are included, etc. Let you choose your own buckets and the thing spits out a price, then you can spin the dials to get the best coverage that suits you at the price you want to pay.

 

[John Galt]

I must say that we would be way ahead of the game
by "going bare" since I no longer have employer paid
insurance. I'm talking a very large amount paid out for insurance vs. expenses incurreed. I can't
convince myself to do without. My spouse is not so sure. Anyway, I think about doing without every time I write a check. So far, we could have saved a small fortune in premiums.

John Galt

 

[unclemick]

At age 60, I'm thinking of chickening out after ten years of no insurance at all.

A. No health problems but I'm not getting any younger.

B. I can afford it (I think) using the income from my IRA.

C. After looking for health insurance - the process will make me sick enough to need it.

 

[cute fuzzy bunny]

Its probably a good idea to carry *something*. A car accident or unexpected major illness will wipe you out.

I keep hearing crazy rate quotes from people in other parts of the country. For comparison purposes:

A major HMO in this state, with coverage in some other states is Kaiser Permanente. Consumer reports gave them the highest HMO rating, and their overall rating was ahead of most PPO's.

Single rates for ages 40-49 are $171/mo with a $50 co-pay and $218 with a $25 co-pay. 50-59 rates are 281 for the $25 co pay.

BC/BS has a plan with a $1000 deductible, no prescription meds, no doctor visits, $25 physicals that is $75/mo for me at 42. Plans with $2000-2500 deductibles and 80/20 or 70/30 thereafter, that cover meds, doctors office visits and so forth run $120-$150/mo.

For medicare supplementary coverage, my dad has Kaisers supplement plan for about $70 with either a $25 or $50 co-pay (I forget which). This provides him with full coverage.

The risk pool insurance, if I remember right, is about 125% of normal rates. We also have cobra and hippa requirements that give you continuing coverage when you quit work and require one insurer to accept you if another already covers you.

On the other hand, our property taxes aint great. I'm paying about $1700 a year for a recently built 1800 square foot house on a quarter acre in a fairly decent neighborhood in a fairly cruddy city. My old McMansion at twice the size house and lot in one of the better towns was twice that.

Tradeoffs.

 

[Roger_R]

My coverage would probably be about the same as TH mentions. I went to insure.com for some basic price comparisons. My age group, 50-59, PPO, with $1500 deductable, 80/20 of the first $5000 and max out of pocket of $2500, and perscription benefits. Would cost around $200. I can run this up to $400 and maternity leave and indemity plans appear to be the ones that really tax on to the rates at the upper end. On the lower end, I could crawl under $100/mo with no presciption benefits, high deductable and $10,000 max out of pocket. I gotta say that I would think, as I see it, this lower end would be afforable and help avoid a big crisis for most.

If I run out about a $200/month rate for ten years, with 10% rate increase per year and a 3% opportunity loss, I'm looking at maybe $40,000 ten-year insurance expense with no illness (which I guess is totally contrary to the intent of things, but a starting point). The final year would be about triple the the expense of the initial year.

My father is paying about $200 supplemental on top of Medicare and doesn't have drug coverage. If you think that your highest medical expenses will occur in your final years, Medicare will not be your saviour.

At least one advantage I can see in addition is the "negotiated rates" you get with insurance coverage. With no coverage, you may or will find that you are paying a (much) higher premium for health care. Sad but true by my experiences.

 

[cute fuzzy bunny]

One last tidbit...your med insurance payments may be deductible on your tax return to the extent that it exceeds 7.5% of your adjusted gross. In my case it was.

 

[Peter]

So has anybody actually found an individual insurance plan that offers an HSA?

I've had an MSA since they were first introduced ... the new HSAs are basically the same deal, with less restrictive terms and conditions.

You don't have to have the insurance and the savings account under the same umbrella company. In my case, I have a Blue Cross health policy that meets the requirements, and the MSA is adminstered by Home Federal Savings. Home Federal has indicated to me that they will be doing HSAs as well, and that I can convert my MSA into an HSA.

So far, the arrangement has worked well. The BC plan gives me the negotiated rate, and doctor bills are effectively paid with pre-tax dollars.

Peter

 

[mykidslovedogs]

I haven't had any health insurance for ten years(single). Girlfriend(thru union retirement) and widowed mom(medicare plus supplimental).

I deliberately avoid American doctors - they can get someone else to pay their med school loans - and malpractice insurance. Foreign doctors don't overtest, overconsult. and over worry as much - American doc.'s in some ways are in as bad a bind as their customers.

Age 49-60 without any insurance is pushing the envelope and I've spent $200 over the years(hairline wrist fracture).

I don't recommend my path to anyone - one more worry about systemic risk to the portfolio.

I may do some insurance shopping this yr but I think most high deductible is capped at 10k which is too low.

World Insurance has a $25 K deductible, but the cost savings, IMO really isn't that much better than the $10K ded. Also, anything over a $5250K deductible for a single person is not going to be HSA compatible.

 

[mykidslovedogs]

Couple of interesting bits:
- Rack vs insurers rates. Some doctors will charge you the same rate as BC/BS does if you ask them. You can buy these cards for a hundred bucks or so that give you a list of doctors who will do this. Better still, go to the web site for the outfits selling the cards, look up the doctors in their "provider list" and see if one of them will do the work at the lower rate without the card. Fair warning, these may not be the very best doctors.

- Regarding the deductible at rack or insurers rate. I know BC/BS in california requires the doctors provide all service at BC/BS's negotiated rate. You pay the deductible but its at the lower rate.

One question in case someone has looked into it...I've heard that their are some groups (RVers, etc) that have banded together to obtain group coverage and by paying a fee to join, you can get into their coverage. Has anyone looked into this, what coverage areas do they have, and what are the rates like?

Association plans have rates similar to that of Group Insurance. The advantage is that they are guaranteed issue. The disadvantage, like with all guaranteed issue plans, the premiums are much higher than individual coverage.

With ALL PPO plan designs, you CANNOT be "balance billed" if you use an "in-network" provider. You've got to check the doctor directory before utilizing services. If you go outside the network, the bill for the "allowed amount" appiles to the separate, "out of network" deductible, and you get "balance-billed" above and beyond what the insurance carrier will not cover.