Ask Kim
Three Health Insurance Mistakes to Avoid
Don't pay more than you have to if you have a high-deductible plan and health savings account.
By Kimberly Lankford, Contributing Editor, Kiplinger's Personal Finance
January 29, 2009
I just switched to a new health insurance plan through my employer, which took effect on January 1. It's the first time I've had a high-deductible plan and a health savings account. What do I need to know to make the most of this kind of health insurance?
Switching to a high-deductible health plan account can save you a lot of money in premiums, and you get tax breaks for using a health savings account. But you also need to become a much smarter health-care consumer to make sure the insurer gives you credit for everything you deserve. Here are three mistakes to avoid when you have a high-deductible health insurance policy.
1. Not searching for the best health-care deals. People with low-deductible policies usually don't spend much time thinking about their health-care costs -- especially if the insurer picks up most of the tab. But when you have to pay for the first thousand dollars or so of medical expenses, it becomes much more important to find good deals.
The following steps can make a big difference in your out-of-pocket bills: Go to a convenience-care clinic instead of an urgent-care center or an emergency room, when possible. Emergency-room visits tend to cost $300 to $1,000, compared with $150 at an urgent-care center and $35 to $45 at a convenience-care clinic. And make sure the facility and the provider are in your health plan's network so that your payment counts toward your deductible. For non-emergencies, it pays to call your insurer's 24-hour advice hotline for guidance on where to go for care. Having your call on record can help if you need to appeal a denied claim.
You can also save a lot of money by switching to generic medications or other low-cost equivalents. Most insurers' Web sites show the cost of various options. Or visit DestinationRx's Web site, and use the Medicine Cabinet feature to compare prices for similar drugs, as well as the cost at pharmacies in your area compared with mail-order pharmacies, which tend to be cheaper.
Most insurers also have Web tools to compare prices for hospitals and providers based on quality and cost. Also check out the cost for freestanding imaging centers, which tend to charge a lot less than hospitals for tests, such as MRIs and CAT scans.
2. Not getting charged the right rate. People with high-deductible policies who pay the full amount for many health-care services out-of-pocket (until they satisfy their deductible) are often mistakenly charged the more-expensive, uninsured rate rather than the rate that the insurer negotiates with health-care providers, says Tom Bridenstine, the managed-care ombudsman with the Virginia Bureau of Insurance. When possible, talk with the provider's billing office beforehand to make sure you're being charged the appropriate rate, even though you'll be paying the bill yourself.
3. Not getting full credit toward your deductible. Verify that all of your eligible out-of-pocket payments are credited toward your deductible. And find out the details about the deductible rules before you choose your provider. Some plans have one deductible for in-network providers and another for out-of-network providers, says Bridenstine. And if the out-of-network provider “balance bills” you -- which means that it charges you above the amount the insurer will pay -- ask whether that counts toward your deductible? (It usually does not.) Also find out if any benefits have first-dollar coverage. Some plans, for example, cover routine care and pharmacy benefits even though you haven't reached your deductible.
Reader Comments (2)
Posted by: Judy at 01/30/2009 10:26:08 AM
I must say that today a $1,000 deductible sounds terrific! After 20 years in the same position, my husband's employer (an orthopaedic physician group no less) stopped paying his premiums and dropped the group health insurance, which over the years, had dropped our deductible back (again) to $250 - the rate we enjoyed back in the 1980s!! All dropped in order to save the docs roughly $50,000 in group health insurance premiums per year. I believe six employees were covered, and the docs I suppose. We were fortunate that after about four months of COBRA, my employer picked up the slack with a policy that now pays 100 percent after our $4,000 annual deductible. I was hospitalized for a week beginning Christmas Eve and for another week this new year. It is truly a challenge to track all of my expenses, and in a perfect world, wish for our entire deductible to be owed one place - logically, the hospital. But instead, we will owe a few hundred to the Radiologist, another few hundred to Pathology, something to my physician and the surgeon, and eventually I presume the hospital. Because we've not yet received an EOB from the hospital for 2009, I don't dare order any meds because the cost will come straight from my checking account. So in an effort to keep our deductible somewhat "consolidated", I'm waiting as long as I possibly can to order medicines. I was dismissed from my 2009 hospital visit three weeks ago today. We are astounded albeit grateful that our providers have agreed to a discount rate with the insurance company once our deductible is met. Yet we are required to pay the FULL amount out of our pocket! Where is the justice in this?! Our kids are grown and gone and we would otherwise now be in a position to do some travel, fix up the house, or, here’s a novel idea – save some money. Instead, we are paying $4,000 per year in deductibles, PLUS I pay a premium each month to have my husband as a dependent on my plan. This amounts to an additional $5,112 per year out of pocket for health insurance premiums for him. Thankfully my employer pays my premium. Additionally, while I'm on my soapbox, my husband is a Vietnam War hero. He qualifies for 100 percent health care coverage through the Veterans Administration. However, the nearest veterans hospital is about four hours away. So we really don't dare leave all his health care costs to the VA. He had same day surgery (locally) in December, and without my health insurance plan, we'd have had to travel at some expense, miss more work, stay in a hotel, etc. Surely something can be done soon to help people like us who are too young for Medicare and are going broke with health care costs and the cost of insurance! Thanks for listening! Judy R
Posted by: respy at 02/02/2009 12:04:35 AM
Judy, Gathering all the details from your post took a read or two, but I think I have a basic grasp. Your employer went with a high-deductible health care plan to keep costs down. He/She certainly is doing what they can because they they need to stay in the middle ground between having an unnattractive benefits package and having to do with fewer employees to make up for a more expensive package. From your standpoint, managing the high-deductible is causing confusion. Is this high-deductible plan accompanied by an HSA (Health Savings Account). At least then, the money that you put into it is not taxed as income. Thinking that your health care dollars might have been instead a home improvement project is probably a little too hopeful. It might be more apt to think that if your employer had opted for a typical 20/40 plan... you might not be employed at all. We need health care when we need it. It costs money to provide that care and pay for the lawyers that defend against all the lawsuits brought against those institutions (not to mention the money paid out in settlements and suits). "Free Health Care" isn't free. The care costs the same, just add on the cost of the government beurocracy. Waiting for something to be done "for you" is probably not going to get you anywhere and by the time you are eligible for Medicare... it will most-likely also be broke (actually, it already is - see: Unfunded Liability).