Apply for health insurance: Specific questions

[teejayevans]

I could be working overseas on a one year contract while this was going on, though.

Kramer

Kramer, did you ask the companies about coverage outside the USA? For me this will
be a key issue.
Tom

 

[kramer]

Kramer, did you ask the companies about coverage outside the USA? For me this will
be a key issue.
Tom

Tom, So far I have seen nothing about foreign coverage and am assuming it is either not covered or minimally covered for a short period of time. In fact, I have not seen an actual policy -- only web site overviews, which is a little frustrating. I should probably call and ask that question.

But I figure I need a separate policy for foreign coverage anyway. I am probably willing to go bare during travel. I can afford to pay out of pocket in those situations -- my main concern is just proving to a hospital that I can pay, but a credit card goes a long way toward that (other travelers confirm this). If I am *living* in another country, then I will get separate coverage there.

I think my current Kaiser policy covers me for the first 30 days outside of the country. Also, they only cover you for six months outside of your primary residence area, supposedly (i.e., snowbirds within the US). My dad was traveling when he got sick in an emergency (he died). When Kaiser reimbursed the hospital, the hospital still required more from my mother as they paid their customary charges which were not enough. I think they wanted about six thousand more dollars.

Kramer

 

[chinaco]

If California goes "guaranteed issue" the likely outcome is that most of the the individual insurance carrier(s) will drop out of the state.
...I wonder how they are going to FORCE people to buy insurance

California has a large population and therefore a huge profit potential. I am sure someone will work something out... you are correct, several ins companies will exit the market. Plus prices will rise.

I believe if the ins must offer the policy, that all must participate... otherwise adverse selection will screw all of us that normally would pay.

It could be easily enforced. If you show up to the hospital, you better have insurance or your scr3wed. For those people that attempt to evade... you are a resident and qualify for the plan or not a resident and therfore do not.

If people choose to enter the plan... they could have a pre-existing condition clause. It could extend for up to 18-24 months. Plus on pre-existing conditions, they could jack the person's personal contribution needed for an elimination period.

There are a number of ways to make a workable and affordable plan. For people that are looking for the least expensive route, an HMO would probably work.

I hope Cali tries something! It seems that the state lead the way where the Fed sits back and waits.

 

[mykidslovedogs]

It could be easily enforced. If you show up to the hospital, you better have insurance or your scr3wed. For those people that attempt to evade... you are a resident and qualify for the plan or not a resident and therfore do not.

If people choose to enter the plan... they could have a pre-existing condition clause. It could extend for up to 18-24 months. Plus on pre-existing conditions, they could jack the person's personal contribution needed for an elimination period.

Boy, if they made it so you were required to have insurance in order to receive treatment, then most everyone would have insurance in our current system, too! The problem is, that will never happen. Doctors take the oath that they will save the life, regardless... The tort sytem will ensure that that people will not be required to have insurance in order to get treatment.

NY has a pre-existing condition clause, too, but that didn't stop carriers from fleeing the market, nor did it help keep prices down (avg $700/mo for individual insurance (one person in NY)

Here are some USA uninsured stats:

43.6 million Americans, 15.2%, lack insurance, but about 1/3 qualify for gov't coverage through low-income children or medicaid and haven't signed up for it, and 1/3 are in households with more than $50/k yr (people who probably could afford it, but choose not to buy it). Therefore, only about 14.5% of the uninsured are uninsured because they truly can't afford it, and of those 74.7% will get insurance within the year. Only 2.5% will remain uninsured for more than 3 years. (Devon Herrick, 'Uninsured by Choice: Update' Brief Analysis no 460, National Center for Policy Analysis, Oct 2003)

 

[kramer]

Thanks everyone for all your help on this thread (and others) to answer so many of my questions about health insurance. Especially to MKLD, who really helped me with a lot of specific issues.

Today I received confirmation that I got approved for health insurance with Aetna I only applied on Sunday evening (on-line), so that was pretty fast! I made sure to fill in every detail on the application so that they wouldn't have to ask me for more information. The application is so detailed that there is no way you can fill it out without complete health records so prepare accordingly!

My policy is $5K deductible, HSA-eligible, $10K deductible out-of-network, and no pesky limits on things like outpatient procedures and prescriptions. It also pays for most of a routine annual checkup (this is outside of the deductible). The policy is portable to other states where Aetna operates (and they operate in most of the places that I care about -- they are also expanding, partly thanks to the AARP deal announced last week).

Incredibly, the policy is only $85/month (I am 41 years old and single). The rate is locked for only six months, however. I have not had any major health issues in the last ten years (the look back period for most health issues on the Aetna application), thankfully. In the last two years, I had borderline high blood pressure which is better now, I had a benign skin tag removed, and I had a swollen elbow bursa that had to be drained (leaning on it too much at my desk at work).

In June I will place $2850 in an HSA, and this year that will yield a $712.50 tax savings. This will also effectively pay for my premiums for the rest of the year. In future years the tax savings will be less if I am not working but useful, nevertheless.

Wow, this is a major weight off as I begin semi-FIRE (today is only the 11th day!). I am very thankful. Now I just have to avoid getting sick before the coverage begins on May 15.

Kramer

 

[kramer]

By the way, I was going through the age-based rates for Aetna policies. A rough approximation of rate increase for a middle aged male is 6%/year based on your age. The rates actually go up a little more slowly for lower deductible policies, since older folks are much more likely to exceed the deductible causing high deductible premiums to increase more quickly.

So if one assumes modest nominal health care services inflation of 6% (CPI plus 3.5%) and then age-based inflation of 6%, you end up with about 12% annual inflation. This means one should expect their premium costs to double every 6.1 years (actual out-of-pocket should decrease less rapidly for a fixed deductible). And "real" CPI-linked doubling (12%-2.5%) to happen about every 7.6 years. And this is just what one should expect if things are normal. It does not mean that costs are out of control, this is what one should expect and plan for.

This would mean that in 20 years in today's dollars (in my early 60's) I should expect to be paying $522/month for the same policy for which I just got approved. Someone age 41 should expect to pay double what a policy would cost today. I guess this is just part of the price for medical advances -- purchasing 1990 or 2001 health technology for your insurance plan is not really an option.

Kramer

 

[mykidslovedogs]

Congratulations, Kramer!

If it makes you feel any better, it has been my experience that most annual rate increases in the individual market have been much lower than your projection. Just off the top of my head, I would say average has been about 5% per year for most of my clients. It does get worse as you get older. Assurant Health is the absolute worst with rate increases. They take them every 9 months, plus when your age changes, while most other carriers only take increases once per year. That's why I really recommend taking advantage of the 3-year rate guarantee option if you apply with Assurant.

FYI Kramer, I have been writing a lot of business with Aetna lately. I think they are trying to "buy" business in order to build up their standing in the indiv. market, so don't be surprised if your first renewal takes a pretty big hit. Al lot of carriers come in too low when they first enter the market, and then take a huge rate bump at the first renewal. Today, Humana released their new product line, Portrait, Autograph and Monogram with lots of new options to choose from, including the option to raise your lifetime max, the option to purchase supplement accident coverage, and the option to reduce your Rx deductible. They now offer a $7500/100% deductible catastrophic plan (Monogram) with a prescription drug card that has a 0 deductible and $15.00 copay on their level one prescriptions (mostly generic). The Monogram plan is not HSA compatible because of the drug card, but it is a really good catastrophic option for those who don't really want an HSA, and the premiums are very low! In Colorado Springs, the premium is only $37.00/mo for a 37 year old male.

 

[kramer]

MKLD, yep I am expecting a big first hit. My region (to which I will be moving) was lower priced compared to Aetna's prices in other regions by about 15-20% than anywhere else in the state. And it was that much cheaper than most other similar policies. So I figured they were buying some business.

I hope that you are right about the rate increases not being too bad in the long run. Basically, I am pretty good about planning. So naturally I am just trying to get a grasp on future expected expenses. I think I will be planning for my overall health expenses (dental, eye, insurance, deductible, prescriptions) to increase about 8% faster than inflation until I am 65.

An HSA will allow me to sock cash away to partially even out my increased health expenses as I get older. And doing these calculations gives me an idea of how prepared that I am.

RE: $37/year in Colorado
That is incredible!

Also, it is great to hear that more products are coming out to increase competition in this market. I know that even 18 to 24 months ago it was not easy to find a proper HSA-eligible policy -- now there are lots to choose from.

Kramer

 

[FIRE'd@51]

I don't want to rain on anyone's parade, but I do have a question. When you are talking about holding a policy for 20 years, what happens to the lifetime cap? Ten years ago, insurance companies were issuing policies with lifetime caps of $1-2 million. Now, I think many have lifetime caps of $5 million. Twenty years of 6% health care inflation, makes a $5 million cap equal to about $1.6 million in today's dollars. Sure, insurance companies may be issuing policies with $15 million caps then, but good luck switching if you have developed a "pre-existing" condition. Are any of these lifetime caps indexed to inflation?

 

[kramer]

I don't want to rain on anyone's parade, but I do have a question. When you are talking about holding a policy for 20 years, what happens to the lifetime cap? Ten years ago, insurance companies were issuing policies with lifetime caps of $1-2 million. Now, I think many have lifetime caps of $5 million. Twenty years of 6% health care inflation, makes a $5 million cap equal to about $1.6 million in today's dollars. Sure, insurance companies may be issuing policies with $15 million caps then, but good luck switching if you have developed a "pre-existing" condition. Are any of these lifetime caps indexed to inflation?

No, the cap is not indexed. It is not perfect but very, very good (and I would be comfortable with a lower cap). Also, one should look at the average expense-weighted inflation (say, the figure in 15 years -- that would be $2M in today's dollars), not just what the cap is worth in the final years before Medicare, since many of the earlier expenses before the cap are before 20 years of full inflation have set in. I definitely see the glass as half full here -- way, way more than half full.

If one "only" has an umbrella policy for twice their net worth, they are in mostly the same situation. We can't eliminate risk in life.

I am much, much, much more worried about getting sued for hitting or paralyzing someone with my vehicle (I cannot easily get umbrella insurance and my car insurance won't let me crank up the limits any higher).

Because I am a crazy researcher, I did look up the cost of organ transplants and they were way below these numbers. Most in the quarter to half million dollar ranges with varying ongoing medication costs.

A much bigger risk, IMO, is if you have ongoing medication costs or an expensive chronic condition and so you end up paying the full deductible each year in addition to the premiums. I have tried to budget for this possibility.

Kramer

 

[FIRE'd@51]

If one "only" has an umbrella policy for twice their net worth, they are in mostly the same situation. We can't eliminate risk in life.

Poor example. You can always get a bigger umbrella policy. AFAIK, there are no pre-existing conditions involved here.

Also, any expenses that you have been re-imbursed for over the twenty year period count toward the lifetime cap.

 

[kramer]

Poor example. You can always get a bigger umbrella policy. AFAIK, there are no pre-existing conditions involved here.

Also, any expenses that you have been re-imbursed for over the twenty year period count toward the lifetime cap.

Yes, of course I understand that cap is cumulative. However, my point was that a rare, very expensive event is still a long, long ways below the present cap, even a maximally inflation-adjusted rare event.

As far as I know, your preexisting conditions do not affect the cap level on a policy. You either qualify for the policy or you don't. The policy that I got did not let you choose the cap. Also, I had heard that California had a minimum cap of around $5M, but then my research turned up policies that had lower caps than this. Based on my own research, I feel very, very comfortable with a $5M cap.

Kramer

 

[kramer]

Also, if this is an area of concern for you, I did see some policies with $8M caps. I think Assurant Health offered one like that. The older you are and the better idea you have about your health condition, the less necessary a high cap is. It is more important the younger you are, both because you have less knowledge about your future health and because it gives inflation longer to compound.

Kramer

 

[Peter]

Because I am a crazy researcher, I did look up the cost of organ transplants and they were way below these numbers. Most in the quarter to half million dollar ranges with varying ongoing medication costs.

OK, but my late wife's final illness cost the insurance company well over $1MM over a 2 year period. That was 10 years ago ... so the point about caps is a good one.

However, you may find that you need to change policies anyway. Elsewhere, Martha has pointed out how insurance companies increase rates for sick people .... basically the trick is to increase rates dramatically for the whole group. Healthy people then switch to a less expensive policy, leaving the sick guys with higher rates. Then the process repeats.

And, by the way, you don't have to be all that sick. Slightly elevated BP will do it for sure. So will recreational Viagra

Peter

 

[FIRE'd@51]

As far as I know, your preexisting conditions do not affect the cap level on a policy. You either qualify for the policy or you don't. The policy that I got did not let you choose the cap. Also, I had heard that California had a minimum cap of around $5M, but then my research turned up policies that had lower caps than this. Based on my own research, I feel very, very comfortable with a $5M cap.

I don't mean to belabor the point. I'm sure the policy you are getting is "state of the art" for today. My point is, if you feel you need/want a bigger lifetime cap down the road, it will probably be impossible to switch to the new policy if you have developed a "pre-existing condition" in the interim. So you are basically "stuck" in the policy you purchase today unless you remain healthy. I wasn't even able to convert my $5K deductible, completely portable, "fee-for-service" policy to an HSA, because a switch to an HSA-qualifying policy required underwriting, which, unfortunately for me, I couldn't pass.

 

[kramer]

OK, but my late wife's final illness cost the insurance company well over $1MM over a 2 year period. That was 10 years ago ... so the point about caps is a good one.

However, you may find that you need to change policies anyway. Elsewhere, Martha has pointed out how insurance companies increase rates for sick people .... basically the trick is to increase rates dramatically for the whole group. Healthy people then switch to a less expensive policy, leaving the sick guys with higher rates. Then the process repeats.

And, by the way, you don't have to be all that sick. Slightly elevated BP will do it for sure. So will recreational Viagra

Peter

Well, I can hope for the best. I am not sure what else I can do. Also, I will be accumulating a reserve in my HSA as a buffer against future health care costs. It is like everything in else in life, I guess -- there are just things that I can't predict now and I will try to be flexible in the future.

Kramer

 

[kramer]

I wasn't even able to convert my $5K deductible, completely portable, "fee-for-service" policy to an HSA, because a switch to an HSA-qualifying policy required underwriting, which, unfortunately for me, I couldn't pass.

Yes, and for a high deductible policy like I have -- there is no way I could ever switch to a low deductible policy without underwriting or to a higher cap. I do feel very comfortable with this level of cap.

I see the higher risk areas as: insurance company going out of the business, the pool gets messed up or arbitraged like Peter mentioned, I get a chronic condition that requires payment of full deductible (plus a few uncovered costs) each year, and the highest risk factor of all that I see is California fundamentally changing their health insurance laws possibly causing companies to leave the state or significantly raise their premiums. I can only try to remain flexible as I can be for any of these situations.

As a super backup plan, I have familiarized myself with the private health markets in developed countries with efficient, inexpensive private health systems (Mexico, Thailand).

Kramer

 

[FIRE'd@51]

Well, I can hope for the best. I am not sure what else I can do. Also, I will be accumulating a reserve in my HSA as a buffer against future health care costs. It is like everything in else in life, I guess -- there are just things that I can't predict now and I will try to be flexible in the future.

I agree that you have diligently done your homework and found what appears to be the best possible solution, so please don't think I am criticizing you, because I am not. This is just another one of those "quirks in the system" that MKLD likes to pretend doesn't exist. Also, I am not criticizing her. She is very knowledgeable and conscientious, so far as I can tell. If I lived in CO, I would want her for my agent.

It's just that this health insurance situation has been the biggest "bug-a-boo" for me in my life after FIRE. I described my experience with Mutual Of Omaha in a post above. I just haven't found a way to adequately hedge the many things that can go wrong.

 

[kramer]

This is also a reminder to always be aware of the state high risk pool regulations, fees, and limits in your particular state. You never know when you may need it. And to also make sure that you have saved enough to confront most situations to reduce risk, even if the risk can never be fully eliminated.

In fact, looking at the risks, I have found that my biggest risk reducer is simply a willingness to move. Not everyone is willing to do that.

I knew that I was taking some risk when I semi-FIREd recently. (Semi)Retiring early is a privilege, not a right. But it sure beats the alternative And it probably would not have been possible this quickly had I been born in any other country. Or if I had been unhealthy. I am very thankful.

Kramer

 

[teejayevans]

The application is so detailed that there is no way you can fill it out without complete health records so prepare accordingly!

Kramer,
Congrats on the getting approved! Can you be more specific on health records??
Do they ask for your LDL, HDL levels?? Specific questions that required you to
contact your physician? You said they only go back 10 years? I ask because I was
hospitalized 30+ years ago and couldn't tell you anything about it.
BTW, if you are still in good health and the insurance company starts increasing your
rates, nothing stops you from switching, right?
TIA
TJ

 

[mykidslovedogs]

It's just that this health insurance situation has been the biggest "bug-a-boo" for me in my life after FIRE. I described my experience with Mutual Of Omaha in a post above. I just haven't found a way to adequately hedge the many things that can go wrong.

The whole thing with Mutual of Omaha stinks, and I do realize that these things do happen. I just don't think nationalization is a good solution, as IMO, just as in your situation, nationalization will eventually hurt more people than it helps.

It's very unfortunate that poorly-thought-out legislation fails to take into consideration the consequenses to the masses of people. The short-sightedness of today's legislation scares me. It's always well-intentioned, put into place to help the small minority of people who, by no fault of their own, ended up in a bad financial situation with their health. But legislation like community rating is always put into place without regard for the vast majority of people who will be aliented after the legislation passes (as happened in the case with Mutual of Omaha).

No, Mutual of Omaha did not leave the market because of greed...they left the market because someone thought it would be a good idea to force community rating on them, which left the individual market unprofitable for the company. I'm sure community rating in Virginia and a few other states helped a quite a few people....meanwhile, it left a larger number of responsible people uninsured when their insurance company could no longer be profitable in the market because of the legislation.

BTW - State of Colorado Senate just passed community rating for small group insurance (HB1355). A sad testament for the market. First, they are going to take away carrier's ability to charge up to 10% more for the unhealthier groups. This will simply result in higher indexed rates for all groups. Next year, they are going to take away the ability for carriers to offer up to 25% off for the healthiest groups. This will result in huge rate increases for the 62% of groups that are now getting discounts. Many of these healthier groups will leave the market due to cost, so rates wil again rise at that time to compensate for the loss of healthy lives from the group markets.

I'll let all of you know the progress as we begin to lose competition. I am sure we will have lots of carriers leaving the market soon, and rates will rise in response to loss of competition. In this case, everyone will lose, including the people the bill is supposed to help!

 

[kramer]

Kramer,
Congrats on the getting approved! Can you be more specific on health records??
Do they ask for your LDL, HDL levels?? Specific questions that required you to
contact your physician? You said they only go back 10 years? I ask because I was
hospitalized 30+ years ago and couldn't tell you anything about it.
BTW, if you are still in good health and the insurance company starts increasing your
rates, nothing stops you from switching, right?
TIA
TJ

TJ, basically the form I filled out asks for anything that was abnormal during the last ten years by category of body function (circulatory disorders, skin disorders, etc.) So if anything happened in the last ten years, they would want to know about it, even if you are better now (the form asked you to estimate percentage recovered). If something happened more than ten years ago, it is only relevant if it was still a problem during the last ten years.

For instance, I was hospitalized for an infection from a bike fall about 12 years ago. But that did not go on the form because I was completely cured and it happened more than 10 years ago.

No, they didn't ask for BP or LDL/HDL. But they ask that if you have a condition that a doctor diagnosed or gave a recommendation about, or if you have a condition that a prudent person would seek medical treatment for, you should report it. So I wanted to look on the form to see if my doctor actually mentioned my BP (which was only 141) and he did mention it.

You need your medical records because they ask for doctor name, phone numbers and address for each issue that you reported. They wanted a list of medications, including non-prescription, for the last two years and how much medication and for what time period. For instance, I received a typhoid oral vaccine before an international trip, and technically this was a medication prescribed by a doctor, so I included it (along with medication name, amount, and duration) . I even included ibuprofen which I was directed to take by a doctor for my elbow problem.

You can go to insurance company web sites and download their application forms to get an idea.

It is like your taxes. A lot of the work is just getting all of your records together.

Kramer

 

[FIRE'd@51]

But legislation like community rating is always put into place without regard for the vast majority of people who will be aliented after the legislation passes (as happened in the case with Mutual of Omaha).

No, Mutual of Omaha did not leave the market because of greed...they left the market because someone thought it would be a good idea to force community rating on them, which left the individual market unprofitable for the company. I'm sure community rating in Virginia and a few other states helped a quite a few people....meanwhile, it left a larger number of responsible people uninsured when their insurance company could no longer be profitable in the market because of the legislation.

If this is the case, why didn't MOH just leave NY and the other community rated states? That's what other insurance companies did. Why did MOH exit the entire individual insurance market nationwide, including all the non-community rated states as well? BTW, Virginia is NOT a community-rated state. Virginia is a very free market oriented "red" state with a number of insurance companies offering competitive policies there (e.g. Anthem, Assurant, Golden Rule just to name a few).

 

[mykidslovedogs]

If this is the case, why didn't MOH just leave NY and the other community rated states? That's what other insurance companies did. Why did MOH exit the entire individual insurance market nationwide, including all the non-community rated states as well? BTW, Virginia is NOT a community-rated state. Virginia is a very free market oriented "red" state with a number of insurance companies offering competitive policies there (e.g. Anthem, Assurant, Golden Rule just to name a few).

This is as per an interview with Mutual of Omaha spokesperson, Nolan:

Health-care costs are increasing 20 percent faster than the general inflation rate, he said, and the cost of prescription drugs is rising more than 20 percent a year.

Nolan said state governments require more than 1,000 specific medical coverages on policies sold in their states, and many have agencies that control premium rates that companies can charge.

"Mutual of Omaha delayed this decision as long as possible," Nolan said, "staying in this market longer than most of our peers and working proactively on the legislative, regulatory and product fronts."

"It is extremely ironic to look to the government for an answer in the form of national health care when ill-advised legislation and policy played a significant role in creating the situation we face today."



...Based on what he is saying, it is the gov't mandates on specific things that must be covered in combination with legislation controlling premium rates that led to their demise in the industry. He doesn't name the specific states, but apparently, they didn't have enough business in the other states to make up for the bad legislation in states where they had higher levels of enrollment that caused them to leave the market altogether.