Daily Archives: December 27, 2014

High deductibles and skipped care

Skipped care a side effect of high-deductible health plans | Local News | The Seattle Times.

Cammi Chase was thrilled to think she had solved the conundrum that is individual health insurance. Thanks to the Affordable Care Act and federal subsidies, last December Chase moved her family from an $800-a-month plan to one that cost about $240.

“I felt like we hit the jackpot,” she said.

But last spring when Chase was struck with an unexpected illness, the Seattle woman was shocked to realize how little her new health insurance plan — a Health Savings Account (HSA) with a deductible of roughly $5,000 — would cover.

Sorry, I’m confused. Why was she shocked? Does she not understand that a plan with a $5000 deductible means that the first $5000 is coming out of her pocket? Does she not realize that $5000 is a large amount of money?

The problem is that most clients can’t or won’t allow themselves to imagine that their health can take a turn for the worse, either via an accident, an unexpected illness or the development of a chronic condition. It just happens to other people. They see the low premium, which of course is a fixed cost, get an insurance card, avoid the penalty and they’re happy. They either believe they won’t become seriously ill or injured in an accident OR they think the insurance plan will change into a better plan if something happens to them.

Reading on, we see that Cammi was “banking that her health would be good”…

“I heard from the rumor mill that an HSA was the way to go because I’m self-insured,” Chase said. “I was really banking that my health would be good.” (emphasis added)

In the spring, after experiencing memory problems and swollen joints, Chase was diagnosed with latent Lyme disease.

“Immediately it included a lot of [doctor’s] visits and a lot of medication and monthly tests and lab work,” Chase said. And most of it wasn’t covered by her plan. “Every time I walk in I pay for the office visit, which is $165 each month.”

Let’s stop a moment here and note she said “most of it wasn’t covered by her plan.” Most likely that is not technically correct. I suspect the following occurred:

  • She received a network discount for the cost of her treatment
  • The amount she paid was applied towards her $5000 deductible

Of course, this situation could have been further complicated if she was seeing out of network doctors, but that’s an issue for another day.

For 2015, she used an agent, which is a path that I (of course) endorse and the result…

A financial person at her doctor’s office referred Chase to Sarah Freeman, a Seattle insurance broker who helped her find a new plan for next year. At $325 a month, the Premera Blue Cross plan she found costs a little more than her current plan, but it will pay more of her bills.

For now the family can afford the higher premiums, Chase said, but “I just hope it doesn’t continue to rise.”

A different broker mentioned in the article comments…

Despite the risks, Feltzs predicted the cheaper plans with higher deductibles will still be popular.

“I sell them all day because those plans do work for people who say they don’t go to the doctor or they rarely go,” said the broker. “They say, ‘I want to avoid the penalty [for being uninsured] and in the event that something does happen, I don’t want to break the bank.’?”

Which is a story I hear everyday as well. In the future I’m going to send this article to clients that are looking at bare bones plans.

One final note, it may seem that I’m being harsh on Cammi. I wish her nothing but the best, especially since Lyme disease can be a very serious condition with expensive medications. She is a very good example of an issue I encounter many times a week.

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ALERT: Obamacare Trifecta: Subsidy, Penalties and Taxes

Affordable Care Act’s Tax Effects Now Loom for Filers.

For most taxpayers, this will simply mean checking a box on a tax return indicating they had insurance for the full year. But millions of others will have to grapple with new tax forms and calculations that may generate unexpected results.

For instance, most of the 6.7 million people who bought insurance through the exchanges received subsidies, which reduced their monthly premiums. But those subsidies were based on previous years’ income — so people whose incomes have changed will inevitably have to pay some of that money back, while others may receive fatter refunds.

I’m not sure why they say a subsidy was based on someone’s previous years income. The subsidy is based on the applicant’s ESTIMATE of his income for the tax year in question. Also, it’s not clear to me that “most” of the 6.7 million people received subsidies on a monthly basis or received subsidies at all.

The subsidy you receive is reconciled on your tax return to determine if you receive too much, too little or if the account was just right….

RECONCILING People who bought subsidized insurance on the exchanges received what is actually an advance on a tax credit. Since the amount of help taxpayers received was based on 2012 income (Ed note – simply not true), it will need to be reconciled against what they actually earned in 2014 — particularly if they earned more or less and did not update their income data on the exchange.

Some people will be surprised that they must pay some of that money back, or at least have it deducted from what they would have received in a refund. Conversely, people who earned less money in 2014 — and who received subsidies that were too small — may receive money back. Changes in life circumstances — a divorce, marriage, a new child — can also affect those numbers.

“This is the part that can be very complex,” said Kathy Pickering, executive director of the Tax Institute at H&R Block. “People think of the tax credit as a discount on their premium. But realizing it can be something you repay a portion of is going to be a surprise.” (emphasis added)

Let me get this straight, we have a very complex tax return for the lower income portion of the population. Can you spell “RECIPE FOR DISASTER?”

The article also discussed the Obamacare penalty for not having compliant coverage.

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Connect for Health 1st month open enrollment statistics

Connect for Health recently (Dec 17) released enrollment statistics for the 1st month of the 2015 open enrollment period (Nov 15 – Dec 15). They are as follows:

  • Total enrollment: 136,315
  • Medicaid: 7,306   27,306 (corrected 12/29 @ 18:24p)
  • CHP+: 932 (Medicaid for Children)
  • Connect for health (Commercial insurance): 108,077

Although beside the point, I sure wish I know why Connect for Health Colorado calls private individual insurance “commercial” insurance. Never once have I ever told a client I am selling them “commercial” insurance.

Moving on…

I call out the CHP+ enrollment number as bogus. Why? Because the discrepancy between Medicaid and CHP+ is too large. For an adult to qualify for Medicaid, the family (or individual) income must be < 133% of the Federal Poverty Level (FPL). However, for children to qualify for CHP+, the family income only has to be less than 250% of the FPL. Thus it is substantially easier for children to qualify for CHP+ then it is for adults to qualify for Medicaid. In the real world what occurs for families with income between 133% and 250% of the FPL is the children are enrolled in CHP+ and the adults receive a subsidy and select coverage through Connect for Health Colorado.

If the CHP+ enrollment numbers are “bogus” that places the validity of the other enrollment numbers into question as well.

 

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Warning, Medicaid payment cuts may affect access to healthcare

As Medicaid Rolls Swell, Cuts in Payments to Doctors Threaten Access to Care – NYTimes.com.

 The Affordable Care Act provided a big increase in Medicaid payments for primary care in 2013 and 2014. But the increase expires on Thursday — just weeks after the Obama administration told the Supreme Court that doctors and other providers had no legal right to challenge the adequacy of payments they received from Medicaid.

The impact will vary by state, but a study by the Urban Institute, a nonpartisan research organization, estimates that doctors who have been receiving the enhanced payments will see their fees for primary care cut by 43 percent, on average.

Medicaid works fine as long as everyone is healthy. Color me cynical, but somehow I don’t believe my daughter would have received the same level of care at Children’s Hospital for her 7 admissions if she had been on Medicaid.

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