On Health Insurance, part 1 of ?

17 Feb

Do you live in the United States and: watch the news? Listen to the radio? Skim the internet? Have ears and/or eyes?

If you answered yes to any of the above, you’ve probably heard about the Healthcare Reform Law or whatever the heck it’s actually supposed to be called because Healthcare Reform is kind of a misnomer when it only really addresses health insurance. Have you? Yes? Good. Now that I’ve brought it up, I’m never going to mention it again. I only mention it at all because it sort of ties in to the reason for my post, given that, should it not be knocked down in some way, it does mandate that you, the US citizen, must obtain health insurance of some sort by some time in the future that I forget. Given that a lot of people who currently have insurance do not understand how to use it correctly, I thought it timely and appropriate to do a few explanations of how this whole insurance thing actually works. Also, it’s something I’d been considering doing on my failed blog for over a year. (Please note that failed blog is different than FailBlog.)

A word on my qualifications to educate you: I work in collections at a health services company. This fortunately does not mean that I have to call patients and demand money (we have a much nicer term for those people; we call them ‘patient advocates’), but rather that I have to call insurances and demand that they pay the claims they have denied for one reason or another. I have done this job for over two years now, which means I’ve gotten quite the field education on various terms, types of plans, and large, glaring errors made by patients, providers, and insurance companies.

Did I mention that I’m going to school to try and go into another field?

Anyway, with that laid out and you welcome to trust me or not, I’m going to deliver my first post that I’d like to call:

OMGWTFBBQ: Initialisms in Insurance

HERE BEGINS the epic, thrilling, heart-pounding list of common initialisms* you will probably see while enduring the process of procuring and using health insurance. READ ON, IF YOU DARE!

HMO: Most of your garden variety commercial health plans are going to be either this, an HMO, or a PPO, which I’ll explain next. HMO stands for Health Maintenance Organization.
How does it work?: Any insurance plan is going to have a network of contracted providers. If it’s an HMO, you’re going to have to choose a PCP (yes, I’ll explain that one too) within that network. Your PCP is going to be a general practitioner, and unless you are actively bleeding to death, you have to get in to see him before going to see any other sort of doctor. Is your ear plugged up? No, you can’t go straight to the ear doctor. You have to go to your PCP, who must give you a referral to go see an in-plan ear doctor if he can’t pull the beans out on his own. Heart problem? Go see your PCP before you even think about a cardiologist. And if you go out of network, ever? You can probably forget about getting any coverage at all on that visit.
PRO: An HMO is probably going to be your cheapest sort of plan; because the trusted PCP has a tight rein over your healthcare usage, it’s cheaper for the insurance, and therefore cheaper for you. Your insurance rates will be lower, and they’ll cover more of your costs per visit.
CON: You may get very, very tired of your PCP.

PPO: This is your other most common type of insurance plan. It stands for Preferred Provider Organization.
How does it work?: Like the HMO, it has a network of providers that it would prefer you use, because it’s contracted with them so they pay lower prices to the providers. However, a PPO usually isn’t going to make you choose a PCP. In this type of plan, they assume you to be an intelligent being capable of deciding what kind of care you need, and you can go to whatever doctor you want. If you go to a contracted provider, you’ll get covered at a higher rate than if you go to one with whom they’re not contracted, but on the whole, a PPO will pay at least something no matter who you go to.
PRO: Freedom, woot! You’ll spend less time with red tape.
CON: A PPO is going to end up more expensive for you. Read the fine print; you’ll have a higher deductible (many HMOs don’t have one at all) and much higher per-visit costs, along with paying more to the insurance company in the first place.

HDHP: High Deductible Health Plan. These are on the rise.
How does it work?: This is actually a type of PPO plan. All of the above will apply, with one caveat: You have a maaaaaaaaassive deductible, starting as low as $1200 if you’re by your lonesome, and going up over ten thousand dollars. I’ll talk more about deductibles in another post, but basically, the deductible is the amount that you have to pay out of your own pocket before your insurance will cover a damned thing. That means until you’ve run up thousands of dollars in bills, you’re on your own here. So what’s the point? Well, with an HDHP, you’re allowed to have an HSA. See next.
PRO: Cheaper than either an HMO or normal PPO, usually. Plus, an HSA is a handy thing to have. This kind of plan is great if you’re young and healthy and just want coverage in case a meteor falls on you.
CON: It covers as much as a lace teddy.

HSA: Health Savings Account.
How does it work?: As I mentioned, this goes hand in hand with an HDHP. Every year that you have that kind of plan, you can put money away in this special kind of bank account that works kind of like a retirement account. You can only put a certain amount of money into it each year, but as long as you use it only for health care expenses, it’s tax-free. That’s right. You can deduct money you put in there from your taxes (if you have this sort of plan through your employer, you might even get pre-tax payroll withholding so it’s never taxed in the first place), any interest it earns is not taxed, and when you take money out, it’s only taxed if you don’t use it for health care. Even if you stop using your HDHP? You can keep that account and use the money in it for healthcare expenses. You never lose it. You just can’t put any more in.
PRO: Hey, everybody likes tax-free money, right? It’s a great way to put money aside for when you’re old and on Medicare (as though we’re still going to have Medicare when we’re old or something).
CON: You have to have an HDHP to do it, and if your deductible is over the amount you can put into your HSA each year (which is regulated by law, see above link), then the rest of it can get messy. It’s also important to remember that any health expenses you pay for with money from your HSA cannot be deducted on your taxes, since you’ve already gotten the tax savings. Plus, you may have to prove that you actually spent the money on healthcare, so keep your receipts.

PCP: Primary Care Physician
How does it work?: As discussed with the HMO, your PCP is your chosen healthcare dashboard personified. You go to him or her before going anywhere else, and s/he tells you who to go to. If you’re a woman, it’s important to know that most plans will also let you choose a primary gynecologist, so you do not have to go get a referral every time you need a pap smear.
PRO: Having someone in charge of your health care who knows your history and knows what you need can be pretty boss when you’re sick and don’t know what the heck you’re doing.
CON: It can also be a drag to have to go there when you know you just need to go to a podiatrist, ffs.

FSA: Flexible Spending Account. Please note that this is an entirely different entity than an HSA, though they do have similarities.
How does it work?: An FSA is a benefit your employer might offer, and it’s excruciatingly important to know how it works. Basically, it takes money out of your paycheck and sets it aside in this account. You say how much you want to put in there at the beginning of your benefits year, and BOOM, it’s there before you’ve put it in. That money is untaxed money that you can use to pay for health care expenses (which you then cannot deduct). Sounds kind of like the HSA, right? Ah, but here’s the rub: Any money you put in there that you don’t use vanishes at the end of the year. That’s right. Gone. Not yours. Poof. So if you do have an FSA, it’s vital to get that money out and into a physician’s grubby hands before it turns into a pumpkin.
PRO: Tax-free money for healthcare expenses without the pain of deductions! Plus you usually get a nifty debit card for it.
CON: The magic fairies will only keep your money around for so long, so don’t laze about, grasshopper.

That’s all for today. Tune in next time I bother to write about something useful for a closer look at deductibles, copays, and co-insurance.

*It’s not an acronym unless it makes a word out of the letters.

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2 Responses to “On Health Insurance, part 1 of ?”

  1. Caulle February 18, 2011 at 1:45 am #

    Oh man, that was too much to absorb. Your health care system is just FAR more complicated than it needs to be. It’s actually a HUGE culture shock to live in a country with free health care for 28 years of your life and then suddenly permanently move to the US.

    I know a lot of Americans are jealous that we get free health care in Canada, but the system there is just as flawed. Let’s say you have a cough, and you know that trip to the emergency room isn’t going to cost you anything to get it checked out… How many other people do you think will also be at said emergency room because they also have a cough? A fucking lot.

    For example… I tore all the ligaments in my knee during the summer of ’98. It was a full year before I got surgery. I couldn’t just go see the orthopedic surgeon in town, I had to get a referral from my GP. One month wait time to see her. From there it was a 3 month wait time to see him. Oh, but he doesn’t do surgery anymore so I’m being sent to Ottawa to see one there. Another 3 month wait time, and all he did was pull on my knee and confirm what the first doctor said. I was put on a waiting list and it was another 6 months before they could schedule me in for surgery. And yet another 2 months before said actual surgery.
    Total time spent? 14 months.
    Total money spent? $0
    (Though I should mention we pay about 35% in taxes.)

    Before i moved to the US I was informed I had an ovarian cyst that should be taken care of. I had Premera Blue Cross coverage through my husband’s work. I found a random OB through Premera’s website and made an appointment. No referral needed. However, she was semi-retired in the surgical department so she referred me to a colleague. I got in to see her a month later, and 2 months after that I was on an operating table.
    Total time spent? About 3 months.
    Total money spent? $2500 deductible.

    Neither system works really. You end up paying in one form or another.

  2. Anna February 18, 2011 at 10:42 am #

    I’ve been fortunate, as my parents both work in the health care industry, to have good advocacy in that department. The thing that the “plan” doesn’t really make clear though, is that you may only have one kind of doctor that you need in your area that your plan decides is worthy of being on The List.

    In my case, when I busted the ligaments in my knee in the summer of 1999 (Hi Caulle!), the only sports medicine orthopedic surgeon covered by our plan was a) a giant raving egotistical douchenozzle b) creepy as fuck c) didn’t care to treat me as a person and d) had five former patients that I knew who all walked with a permanent limp post surgery.

    So I had major reconstructive knee surgery… from an out of plan orthopedic surgeon. (Thankfully we were on a PPO, and so they covered, I think, 60% of costs after the deductible) I have no residual pain or obstruction from the surgery, and my doctor was wonderful and everything, but I’m not sure a day went by for about 6 months that my mom wasn’t on the phone with the insurance about it. I can’t imagine someone without a working knowledge of the system trying to get anything covered at all.

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