Most of us have heard of Flexible Spending Accounts. Many employers sponsor them. These accounts allow employees to pay out of pocket healthcare expenses with “pre-tax” dollars reducing their taxable income, and therefore their taxes. To accomplish this they must simply elect to have a portion of their paychecks deferred for the purpose of paying for those expenses. The problem is that many employees don’t enroll because of the use it or lose it rule. This rule states that whatever money in your account you do not use is lost at the end of the year. Because of this fear many employees lose out on this wonderful benefit.
All that anyone considering contributing to an FSA needs to do is estimate his or her out-of-pocket expenses. This isn’t really very difficult. Pretty much everyone gets some prescriptions during the year. Each copayment is payable out of an FSA. How often do you or family members go to the doctor? Those copayments are payable as well. As are most dental and vision services. When you think about it, it’s not too difficult to come up with a few hundred dollars in definite expenditures that you can defer pre-tax!
If you are careful the FSA is like a Christmas club, except that the money is available throughout the year.
Under the guise of “Simplification” Empire Blue Cross just announced they will be eliminating their most popular insurance plans.
As a preferred broker, we received a call just the other day from our Empire Blue Cross representative notifying us that the coverage’s we have been selling and employers and their employees have been enjoying are being terminated. In their efforts to “Simplify” their product line only a handful of choices will remain; the majority of which are not too popular.
The plan terminations officially become effective April 1, 2012. At this time we believe the affected companies should start investigating their alternatives.
We can help anyone who would like to review their options. There is no obligation. Call 914-591-7111 and ask for Chris or Cliff.
Has anyone gone to a non network doctor recently? Chances are you will be paying quite a bit more than you are used to. This is because many of the insurance carriers are reimbursing these charges based on the same allowance as Medicare perhaps adding a small percentage. This can cause quite a balance due.
What can you do? In this environment, doing a little bit of homework can go a long way. It is important to know the provisions of your plan and how out of network providers will be reimbursed. If you must use an out of network provider contact them prior to services being rendered to find out what they will charge. You can then contact your carrier to see how the charges will be reimbursed. Of course the preference is always to use the network but when you can’t you do not want to be caught off guard.
Recently we had a focus group conducted to determine when and if consumers would use our AskMaxon service. What we found is that our service is misunderstood. Some felt it was a back door to try to sell insurance, others felt they could use their insurance company, broker or human resource professional to get the answers they need. Why would they pay a company like ours a fee to get something they could get for free?
These are all valid questions, and many times those resources are enough; but many times they aren’t. This service is not for everyone and not for every scenario. It is for those people who do not know the questions to ask, cannot maneuver the system, do not know what they are entitled to or do not have the time. AskMaxon may not be the first place to go but it should be the last. It is an advocacy service.
We have spent hours trying to straighten out over $10,000 in outstanding medical bills for one of our clients. This client has a limited medical plan with an extremely low reimbursement level. He came to us seeking help. We have been negotiating directly with his providers to obtain a reduced fee and have already received a 50% reduction from his surgeon. Our time investment has been well in excess of the 2 hour fee we charged and we are not yet finished. This scenario is not all that uncommon especially for the many individuals who do not have coverage and who are uncomfortable asking for a reduced fee from a provider.
AskMaxon is designed for those who have exhausted all available options. It is not intended as a way to sell insurance. It is to advocate on your behalf.
We were recently approached by a woman who was interested in buying health insurance for herself and her husband. She was very concerned because she had been laid off from her job 3 months earlier and hadn’t had any insurance. To complicate her situation she had a pre-existing condition. Could we help? It didn’t take us long to realize this woman had been eligible for Cobra. She didn’t really know what Cobra was but she knew she hadn’t been offered anything by her ex-employer. The problem was she should have been offered it 3 months earlier. What can be done now?
Cobra is a Federal Requirement. Companies employing 20 or more employees that offer health insurance must offer Cobra for terminated employees and their covered family members. Cobra is offered based on qualifying events of which termination is one. Other examples include divorce and aged dependents.
In the situation of our client, we contacted her prior employer. They actually had out-sourced their Cobra administration and we contacted that company as well. It took many phone calls and polite pressure but our client was offered the Cobra benefits she had been entitled to back to her termination date.
Federally mandated loss ratio standards are going into effect for insurance companies in 2011. These standards will mandate that insurers in the small group market have a loss ratio of no less than 80% and insurers in the large group market will be required to have a loss ratio of no less than 85%. The theory is that if you reduce insurance company expenses and profit, rates will decline.
Unfortunately the new loss ratio standards, along with other Health Reform initiatives, may have the unintended effect of causing premium rates to increase at an accelerating pace. How can this be? Here’s how:
- Insurance companies, the largest of which are publicly held, will be required to limit their expense and profits to what appears to be a lower percentage than is currently required by most state insurance departments.
- Simple arithmetic tells you that a smaller percentage piece of a bigger pie can be a bigger absolute piece. Therefore while it is in the insurance companies’ interests at present to aggressively combat medical trend because it helps their bottom line, I submit that those interests will quickly change under the new rules. Why control medical costs if the end result is that profits go down? You can argue that because all states have loss ratio standards currently the same analysis should apply right now, and there is some merit to that argument. However, the more such ratios are compressed the less room there is for profit growth and the less incentive there is to control medical costs.
- Finally, and probably the most compelling reason why premium rates will not decline is that the Federal Government has taken over the mantle from the states as the health insurance cop. The Feds are requiring that plans provide substantial minimum benefits. For example preventive care is mandated to be covered at no cost to the patient. While over time this should help keep people healthier and consequently keep costs under control the time horizon for the aggregate beneficial effects is probably well after 2014, when health reform takes effect in its entirety. Additionally the mandates regarding preexisting conditions, adult dependents, and unlimited benefits, will cause increasing costs for all plans.
Are the Feds clueless? Not at all, I think that they know exactly what they are doing. As rates continue to rise the current party in power will ignore the fact that it is the law causing the problem and blame private plans, in an attempt to give credence to its desire to move to a single payer.