Thursday, November 7, 2013

The Future of Health Insurance

My husband works for a small company - less than 15 employees - so we sometimes get unusual insight into business decisions. Here's one that affects us in a big way: his boss is thinking about terminating the health insurance coverage that he offers to his employees, with a commensurate raise in take-home pay so that they can all buy a comparable plan on their own.

It's not really a financial decision on his part, just something that he doesn't want to deal with for all of his employees. (He outsources payroll but that's about it - everything else is something that he manages which takes time away from his actual job of bringing in clients and whatnot.) He floated the idea by Peanut, since he knows that we are interested in both money and health insurance, and we used 99% of all health services used by all the employees in the last year.

At first I kind of panicked about this, but I did a little bit of research and I think it would be a great idea. First, it would mean that our health insurance is no longer tied to Peanut's job, which would make things much less stressful in the even that he were to leave - changing policies would be totally up to us, and not to business decisions. Second, it would give us more power with the health insurance company - if WE are the customer, we have the ability to walk if we don't like what we're offered. Third, I think it's the wave of the future, so we might as well get on board with it now, and help it gain critical mass.

I did my research on our state health insurance exchange, MNsure.com*. I know there have been a lot of problems with the insurance exchanges at the state level (and definitely at the federal level) but that wasn't true of Minnesota - the site worked great. There are some bugs to be worked out in terms of the information that's offered but it was clear where things were still "coming soon". I was able to find a comparable plan with the same insurance company that would cost us around $600 per month, which seems reasonable (and is slightly cheaper than what the boss pays for us right now, actually).

The plans were so cheap because I was looking only at what's comparable to what we have right now, which is a high-deductible, low(ish) max out-of-pocket plan. If I was looking for something where I never had to pay a doctor's office bill, our monthly fees would be much, much higher. I like high deductible plans for a number of reasons - one, fees that go towards premiums are not deductible on your taxes, but fees that go towards deductibles are. Two, right now Baby M receives state aid based on her health status that covers anything that would hit our deductible, so any expenses of hers will not actually come out of our pocket until sometime next year. And three, I would MUCH rather pay a known high deductible of $6,000 and then have insurance cover 100% of everything else than to be responsible for only a $500 deductible but then 20% of Baby M's $1,200,000 hospital bill.

If it seems like Peanut's employer is definitely going to cancel the health insurance, then I'll have to investigate other plans - it might be worth it to pay $1,800 a month if we only ever have to pay a $20 co-pay for example. Ultimately I'm looking for the best coverage at the lowest combination of annual premiums plus max out-of-pocket.

Have you noticed any changes in your health insurance situation in the last few months?


* This post is NOT sponsored by MNsure or anyone else.

6 comments:

  1. I would MUCH rather pay a known high deductible of $6,000 and then have insurance cover 100% of everything else than to be responsible for only a $500 deductible but then 20% of Baby M's $1,200,000 hospital bill.

    This was a big reason that I chose a high-deductible plan a couple years ago. That, the $0 premiums, and the employer contribution to the HSA -- free money! I figured I was covered for anything catastrophic, and if I ended up not needing much care (which has been the case), I'd have cash socked away for future health needs. When I reached the deductible amount saved in my HSA, I felt so much security.

    We've just entered open enrollment again, and my employer is changing plan offerings, so I'll have to re-evaluate and make some new decisions about what kind of coverage I need now and how much is right to pay. I might switch to an HMO plan with $0 premiums and the same deductible I have currently rather than pay monthly premiums for PPO options. I don't have a doctor's office at the moment, so I'm open to switching to someone new.

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    1. Yes, free money! We have an HSA but no employer contribution, so we've just been transferring the money in as we have expenses. I'd like to be able to use it as a savings account when we have more flowing in.

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  2. How is your baby on Medicaid? Other people in MN that I know who have had preemies with health issues had to pay for their health coverage for their babies if they made more than the welfare minimum?

    Our health insurance will be getting more expensive or be taxed at 40% because we have what's considered a Cadillac Plan. If I was 55, I would be required to pay for maternity coverage but because my health insurance is too good, we will be taxed heavily or have our coverage reduced.

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    1. Baby M does not receive Medicaid but state Medical Assistance, because she is considered disabled. I'm not sure when they will re-classify her or start taking our income into account - I send them our financials every three months and they have access to her medical information as well. I suspect as long as she is tube-dependent she may be considered disabled and thus receive MA and WIC (which pays for her prescription formula), but I don't really know.

      I had no idea that health insurance could be "too good"! That's just ridiculous. I felt like we had hit the jackpot last year because our insurance covered everything after the deductible, and we had already used up the deductible with my pregnancy and delivery. I assume that any plan offered on the exchange is not "too good" but I'm going to look into this!

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  3. "I would MUCH rather pay a known high deductible of $6,000 and then have insurance cover 100% of everything else than to be responsible for only a $500 deductible but then 20% of Baby M's $1,200,000 hospital bill."

    Hm. I have to disagree with this point just because, in my experience, out-of-pocket maximums haven't been high enough to offset a $6,000 deductible. For example, my current health insurance has a $500 deductible. After that's met, my plan pays 80% of medical expenses until I meet the $3,000 out-of-pocket maximum. After I meet that limit, it pays 100% of my medical bills. (And thank goodness, because the gamma knife treatment for my AVM was billed at half a million!) So there's the possibility that I'll pay $3,500 in a year if I have a lot of medical bills. If I don't have a lot of bills (like this year), I'm paying much less than I would with a high deductible plan.

    I'm also really drawn to the idea of having health insurance that isn't tied to my employer. Any time work begins stressing me out in any substantial way, I'd think, "But I could never leave, or if I do leave, I'll have to make sure I find a job with comparable benefits!" I'm still waiting to see how the insurance companies we're shopping come out this year, but I'm hopeful!

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    1. Before Baby M's birth, I would have balked at expecting to pay the out-of-pocket maximum as well, but she will be an expensive baby for years to come, so it's nice to know that there's a set limit to what we might be expected to pay in a year. Currently, our deductible is $3,200 with an out-of-pocket max of $6,400 - to me, that is infinitely preferable than being responsible for 20% of her bills after a $500 deductible in case she is hospitalized again. At one point, her bills were $10,000 PER DAY.

      I feel like the high deductible/out-of-pocket works for us because it averages out in the long run. In a year with few medical expenses, we probably wouldn't even hit the deductible, but our out of pocket would still be cheaper than if we were paying premiums on a low deductible plan. In a year with major expenses, we are covered and will spend much, much less than we would otherwise be responsible for.

      This is actually another reason why I like the idea of individuals or families purchasing their own insurance - everyone's needs are so different, but most companies offer maybe three plans to choose from, and they probably won't meet everyone's needs. Thanks for sharing!

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Thanks for commenting!