Health Savings News - Episode 15: The Role of Health Insurance

Note: This is a rough transcript of episode 15 of Health Savings News and has been lightly edited for clarity. Copy may not be in its final form.

Evan (00:09):

Hello, and welcome to Health Savings News: the podcast about healthcare costs in America and how to save money on the often expensive care all kinds of people need. I’m your host, Evan O’Connor, joined by retired doctors, Rich Sagall and Mike Woods. How are you guys doing today?

Rich (00:23):

Doing great.

Mike (00:24):

Good, good.

Evan (00:24):

Each episode we discuss healthcare costs in America, offer tips for saving money, and relevant news that affects and reflects the expensive landscape of healthcare in America. This week’s topic is the role of health insurance. We’ve talked about health insurance and previous episode,. how the current system was formed, how insurance negotiates prices with hospitals, how it’s paid for. Today, we’ll get deeper into the role of insurance, how to save money, and what to look out for to avoid unnecessary expenses.

Rich (00:51):

Well, I’ll start. There are four facts of health insurance that we feel people should understand. Number one is you always lose with health insurance. There’s only two outcomes: either you get sick or you spend money for insurance and get nothing from it. So in a sense, you always lose with any insurance. Number two, the reason you have health insurance is you’re buying, or you should be buying peace of mind that you won’t go broke if you get sick. Now, we know that that’s not always the case. Something like 50% of middle class bankruptcies are due to health expenses, but that’s what you should be buying is that reassurance you won’t go broke if you do get really sick. It’s also important to remember that there’s no such thing as a free lunch. It’s all a matter of cost shifting. So if you spend a lot of money and have to draw on the health insurance, others have to pay in and get nothing to cover the costs. And lastly, it’s important to remember that health insurance does not limit your options. It limits what it will pay for.

Mike (01:46):

There’s one thing I’d like to sort of just let people go is that this actually may not apply to preventive healthcare. I think in a lot of cases money spent on preventive healthcare is money well spent.

Rich (02:01):

That’s true, and I know we’ll be talking about that as we go down this list. So now I think we’ll get started and Mike is gonna talk a little bit about choosing the right policy.

Mike (02:10):

Yeah, that’s where it all starts. You really have to spend the time with you, your family, and your insurance agent to really pick the right policy for you. It primarily comes down to your health and your family’s health. The more illnesses or healthcare visits you expect, the more you’re gonna be expecting to pay out of pocket expenses. If you have a lot of medical conditions, you may actually be better off getting insurance with a higher premium that allows you to have much lower out of pocket limits. Your medications are in the same category. The more medications you’re on, the more you’re gonna have to pay for them. And again, higher premiums may result in lower out-of-pocket expenses for medications. You also have to consider what type of medications you’re on. If you don’t really have specific branding medications or other prescriptions or highly specialized medications, you’re probably okay with a standard policy. But if you are really taking a lot of these type of medications, you may be better off in a healthcare policy that has a much more expansive formulary. We’ve discussed formularies before, this is really just the drugs that your insurance company would prefer that you use and that you pay less for. You also need to take into account your own financial situation. One of the most important things to consider is if you are low income, you really should check in, see if you qualify for some form of government program, which we’ll discuss later. You also need to take into account risk factors. I mean, if you can financially afford higher premiums, that puts you at less risk for financial devastation if something bad happens, that may be the better way to go. But if you are on a limited budget, you may have to take the risk of paying a low insurance premiums in hope that nothing devastating happens to you medically that would put you into debt. You also have to take certain preferences into account. The three general type of health insurances really are based on the network. An HMO has a limited network, which is good for the patient with typical medical conditions or typical health status. PPO or preferred provider organization also has a restricted network, but less so than the HMO. And the fee for service networks. There were no restrictions on the physicians you see, and if you have a lot of medical problems — especially chronic or complicated ones — this may be a better choice for you. So you also have a choice between employer sponsored and insurance available through the Affordable Care marketplace. You have to go through the financial details of each of those as far as premiums, out of pocket expenses to try to decide what you are better off with going with your employer or going out on your own through the financial marketplace.

Just in summary and looking at medical policies, what you need more than anything else is a plan that meets your medical needs. You don’t want to be left wanting if you have a lot of medical problems that may put you into debt. If you are otherwise well, you may not need all the benefits that come with high premium policies. So you actually have to cone down into the differences in the policies. We talked about needing adequate networks to go along with your medical needs. Not many medical needs, a small network is fine. A lot of medical needs may be better off with a wider network. Now, the other important thing is once you’ve decided on this policy, really get to know your insurance policy and follow the rules. I know we’ve talked about this in other podcasts, but I really want to stress this again: know what benefits your healthcare covers, know your restrictions as far as networks’ formularies, whether or not you are confined to one annual physical, or if your policy has annual limits. For instance, a lot of policies limit the amount of physical therapy visits you have on a yearly basis. Once you exceed this, if something new happens and you’ve already gone over your physical therapy limit for the year, you’ll end up paying for your physical therapy. Know when to submit your reimbursement requests for emergency visits and service from non-network providers. However, it is better if you can actually anticipate those and work with your primary care health provider to get referrals, prior authorizations, or other permissions, so to speak, to go to a particular specialist. And keep track of everything that changes throughout the policy and for next year’s policies. Most of the time you’ll be notified through mail, but when you renew your policy, you may have to read deeply into the policy to figure out what has changed from last year and if indeed your policy still does suit your situation.

The last thing associated with this is, we’ve talked about this over and over in our podcast: Choose your healthcare wisely. Whether that’s asking your physician if you need this medication or this visit, or if you really need this study, do I have to go to this person? Et cetera, et cetera. So if you’d like to, just go back and maybe listen to some of these old podcasts about ways to help you choose your care wisely.

Rich (07:50):

What I would like to do is discuss some specific things to think about. One of the most important is you want to find an acceptable degree of risk. Think of an automobile insurance where you might have a $500 deductible or a thousand dollars deductible depending upon the car you drive, your driving history, et cetera, how much you’re willing to pay outta pocket versus how much you save on your insurance. And it’s the same thing with health insurance. If you’re young and basically healthy, you may want to have less coverage and buy what’s called a catastrophic type of coverage. If you’re older, like Mike and I, you may want to get one that has more coverage because you’re more likely to need the insurance.

Mike (08:30):

Speak for yourself, <laugh>

Rich (08:34):

I’m speaking, statistically.

Mike (08:37):

<laugh>.

Rich (08:38):

If you’re basically a healthy person with no problems, you may want to, again, have more of a catastrophic type of coverage. And you also need to look at the cost of your current medications, whether you think they’ll be covered or not, and what you can afford to pay out of pocket. The second thing is do shop around. Just like the prices of drugs at the drug store vary from store to store. The similar type of health insurance may vary from provider to provider, so you do want to check around. You want to be leery of any plans that promise you the moon and the stars and everything. We’re in the Medicare age group and you see many advertisements on TV when there’s open enrollment where they highlight the programs that have no copays, no monthly payments, et cetera. They may exist, but when you look into it, it may not be the sort of coverage you want to have. So you have to be leery. The more they promise, the lower the price, the more likely it is not to be what you really want.

Mike (09:31):

Yeah, the less services that will be available to you without paying out of pocket.

Rich (09:36):

Right. You also want to be careful when you’re consulting a quote advisor to help you find the best policy. Many of these people actually work for an insurance company or they’re lead generators. And a lead generator is an organization or a website that finds people and refers ’em to an insurance company to have them sign up. So there are legitimate consultants out there, but they all make their money based upon how many people they enroll into the plan. And this is important. Don’t assume that a website that ends in .org is really a nonprofit organization. Anybody can get an org suffix for their website, and that applies to any websites you see. But we see lots of private businesses looking to make money as a lead generator with an org designation.

Mike (10:23):

One of the important things is to be a good financial manager. You really need to keep track of your deductible, which is how much money you need to spend for medical care in a given year before your insurance even begins to pay for it. And your out of pocket expenses, which are your copays, et cetera, and what your yearly limit maximum is, which is how much you will pay before your insurance will stop paying for a hundred percent. Most likely the insurance company will keep track of these numbers, but it really behooves you to keep track of them yourself, to know when you have to stop paying for any medical care at all.

Rich (11:05):

It’s also important to consider what actually counts as a deductible. So if you buy a medication on your insurance plan, which you pay counts as a deductible. However, if you use a drug discount card such as the NeedyMeds drug discount card because it gives the price better than your co-payment for the drug, the money you spent on that drug does not count against your deductible. So you have to be sure that you know what counts and what doesn’t. Another important thing is you may be eligible for certain assistance programs. There’s low income subsidy programs, Medicaid, Medicare, the Child Health Insurance Programs, and this is where advisors may be of value to you. Many hospitals have insurance advisors on staff and many social service agencies also have advisors who can help you find the best plan and sign up for any subsidies or assistance you may be eligible for. You want to think about continuity of care. Mike mentioned the different types of panels and will you be able to continue with your current specialist or primary care doctor if you switch insurance? Sometimes you can, sometimes you can’t. So again, you need to consider that as a factor in making a decision. Another important factor is the area of cover. In other words, does it just cover care you get in your local region where you can stick with the plan, or if you’re traveling across country and you’re 3000 miles away and need emergency care, will it cover that? So you need to decide: are you a frequent traveler or you are a homebody, and what sort of coverage you get when you travel.

Mike (12:39):

That also applies to specialists when you’re living in rural areas. How far will you need to travel if you have a very limited access to specialists and you need to travel hundreds of miles to see one even though there were ones that are closer that aren’t in your network?

Rich (12:56):

Or if your specialist that you’re seeing is covered. I had a situation where my employer changed insurance and I was in the middle of looking into a surgical procedure and the doctor I was seeing was not covered. I appealed it and they let me finish with the current physician. But that’s something you need to consider also.

Mike (13:15):

Yes, appeal is very important thing to remember about saving money. When you get rejected, Don’t give up.

Rich:

True.

Mike:

Keep checking with the insurance company and keep applying for an override. Most of them are successful, so just don’t give up.

Rich (13:32):

I totally agree. You want to look at the formulary that is offered by the insurance coverage to make sure it matches with your current medications and if it doesn’t, but otherwise the program is appealing. You may want to look into the appeal process and see what happens and how it works, how quickly they give you an answer.

Mike (13:50):

Yeah. One of the things that I found from insurance companies from experiences with my wife, is insurance companies don’t really understand the subtle difference between similar medications and the same classification. Sometimes you can even see this with antidepressants. One will work well for one person while another one will only work for another person, and if you change insurances, the company just doesn’t get it that the one you’re on is the one that works well for you. Yet, in a lot of cases, they make you go through switching to the formulary one and until you eventually end up on the one that actually works. The same applies to a lot of the biologics as well for autoimmune diseases. They just don’t understand the subtleties between the different monoclonal antibodies for different conditions.

Rich (14:43):

Another thing you want to look at is the length of coverage. There used to be insurance programs where you made a monthly payment and you thought that you were just continuing with the insurance policy you had, but what you were actually doing was being buying a new policy every month and if you got sick, they would not accept you when the month rolled around. I think those insurance policies are now gone, but that’s just something to be aware of.

Evan (15:09):

Just to say, there are still short term policies.

Mike:

Yes.

Evan:

There has been some restrictions in the Biden administration against them, but they definitely were– they were brought back in the previous administration for sure. For short term, low-benefit, can cut you off for preexisting conditions, and don’t offer the same essential health benefits that Affordable Care Act plans are required to.

Mike (15:34):

Yeah, probably about the only time I would consider one of those is if you’re in an interval between abilities to sign up for long term healthcare insurance and you basically just need something to get to tide you over until you get a chance to sign up for more effective insurance.

Rich (15:49):

I would agree. Now, another important thing to consider is are you paying for services you don’t need. Many insurance policies have added on things like chiropractic care, acupuncture or gym membership, eye care, glasses, et cetera. If you don’t need help with those types of services or don’t believe in those services and yet they offer it, they may not be the right policy for you or you might be able to get a cheaper price if you don’t have that coverage. We also need to talk about health reimbursement arrangements. These are programs set up by the employer where there’s no employee contribution. It’s usually pre-tax dollars. It can be a health savings plan, a flexible spending account, and Mike’ll talk a little bit about those in more detail.

Mike (16:34):

One of the things that I wanted to discuss is it’s sort of a little bit of contrary to one of Rich’s comments, is that even though I very much agree with him about chiropractic and acupuncture, but before you turn something down, just look at your own situation. There really are some health insurance perks that will allow you to stay well and become healthier. So even if you are not inclined to go to the gym, but you just need a little nudge, maybe that reduced store free access to a gym or wellness program will help. Some of us do need be better off with discounts for care that’s not covered like eye exams and glasses if you’re having vision problems. Or financial incentive programs that will pay you back for healthy lifestyle changes are sometimes offered by some insurance companies, for instance. So, if you can prove to them that you’ve stopped smoking, lost weight, or if you are wearing a health monitor that monitors your blood pressure, your blood glucose, or even your activity level, these can sometimes decrease your premiums. Some insurances also offer classes and workshops and other counseling programs or fitness and nutrition that can otherwise help you improve your health. So by all means, if you don’t think you need these things, I agree. You may not want them as part of your policy, but for a lot of this these things could be very helpful.

One of the things that a lot of people don’t think about is there are actually ways to use your health insurance to reduce your income taxes. One that we’re probably all aware of is that employee contributions to your company health plan are all made with pre-tax dollars, which does reduce your income tax level a little bit. Both the health savings account, which is an employer matching account that you can use to pay for medical expenses is funded with pre-tax dollars. So in the long run it does save you a little money to use money from this account to pay for certain expenses. The health savings account, because you have paid into it, is portable. You can take it with you if you move to another company. A flexible account is slightly different. It is also offered by employers and you can contribute. It’s not necessary to, but unlike the health savings account, it is not portable and will not go with you to a new account. There are sometimes you can deduct premiums from your income tax. For example, if you get health insurance through a federal or state marketplace through COBRA, through Medicare parts B, D, and C, you can actually deduct those from your income taxes. If you’re self-employed you can also deduct premiums for both your health insurance and a qualified long term healthcare insurance policy. There are some healthcare expenses that are tax deductible, so it’s good to be aware of those. If you’re self-employed, all medical and dental expenses can be used as itemized deduction on your schedule A IRS form 1040. Also any medical expenses that are more than seven and a half percent of your just gross income. So, if you have a lot of expenses for that year, you can actually deduct some of those expenses that are over 7.5% of your income from your tax bill through either an itemized or standardized deduction form.

Rich (20:18):

I was going to mention if you have a health savings plan, you want to check out and see what is covered because many things you may not suspect would be covered. Often they give you a special credit card to use so you can keep track of the expenses.

Mike (20:31):

Yeah, we have a program that I have with my health insurance that’s nice to take advantage of that would be worth checking on is that I get a stipend for over the counter supplies of a hundred dollars every three months, which I use to stock up on bandages, Advil, antacids and other home supplies that you frequently need to get at the pharmacy.

Rich (20:59):

One other approach we should mention is can you be added to a family member’s insurance. They’ve extended the age that a offspring can be on the parent’s insurance, so you want to consider that many insurance policies will cover a significant other even if you’re not officially married, so you want to check that out also.

Mike (21:17):

I believe the age is still 26, which was the proposed age for the original Affordable Care Act, and I don’t believe that’s been changed subsequent administrations.

Rich (21:27):

I suppose one other thing to mention is you want to make sure you don’t have duplicate coverage. If a husband and wife both have different employers and both offer health insurance, you want to decide which one is the primary, which one is the secondary, and it may be a different payment because it is a secondary, so it’s just something to check out with the HR department. I think that about covers a list of items. If you can think of any more, listener, please let us know. Send them to us at NeedyMeds.

Evan (21:55):

The email for the show is podcast@needymeds.org.

Mike (21:58):

I just think to summarize the bottom line is, unfortunately in order to save money on health insurance and health insurance costs, it really does take a lot of work and research on your part to look over all of the alternatives and decide on what is the most cost effective health insurance plan for you and or your family.

Rich (22:21):

I agree, it can be quite overwhelming with all the different policies that may be available to different options, and you don’t have to save it down to the penny. You just need to make a good guess because there’s so much unknown in what’s gonna happen over the next year that you can’t plan for everything.

Evan (22:37):

At a time when less than 40% of Americans can afford an unexpected thousand dollars expense, it’s hard not to think how meaningless that amount of money is to some of the largest companies in the most profitable industry in the United States. The national uninsured rate has hit an all time low of 8% in 2022 representing roughly 26 million people without insurance. As discussed in previous episodes, insurance is often tied to employment. There are many people who have experienced job loss due to COVID-19 pandemic, whether from businesses closing or from experiencing long-term disability following coronavirus infection, who have lost access to affordable healthcare and insurance. As we’ve been saying even having health insurance doesn’t guarantee affordable healthcare. High deductibles can lead to higher costs than patients who are either forced because they’re uninsured or willing to pay the cash price and are often several times higher than what Medicare pays for the same services.

[segment break]

The last segment of each episode, we suggest some of the culture, art, entertainment and social causes we’ve been engaged with to each other and our listeners. This week, I have the podcast Last Day hosted by Stephanie Wittels Wachs. It’s a podcast about what’s killing us. The first season tackled the opioid crisis (the host brother Harris Wittels as a writer and comedian who overdosed in 2015), the second season looked at rising suicides and the third season, it is about guns in America. The subject matter is heavy, but is confronted with humanity, wit, and the quest for progress.

Thank you so much for joining us for this episode of Health Savings News. Please subscribe, rate, and review us on Apple Podcast or wherever you’re listening to the show, it really does help. You can follow @NeedyMeds on Twitter, Facebook, Instagram, LinkedIn, YouTube, and you can follow @HealthSavingPod (no S at the end of saving) on Twitter for updates specific to this podcast and send questions, comments, and topic suggestions to podcast@needymeds.org. Our music is composed by Samuel Rulon-Miller. His music can be found at musicisadirtyword.bandcamp.com. The Health Savings News podcast is produced by me, Evan O’Connor. All the sources we used in our research can be found in the episode’s podcast description on our website or your podcast app of choice. Health Savings News is not intended to substitute for professional medical, financial, or legal advice. Always seek the advice of a qualified healthcare professional, or appropriate professional with any questions. Views expressed on Health Savings News are solely those as the individuals expressing them. Any views expressed do not necessarily represent views in Health Savings News, other contributors, the NeedyMeds organization, or staff. Thanks again for listening. See you in two weeks with our next episode.