2012 > April

Monthly Archives: April 2012

Consumers – $1.3 Billion in Health Insurance Rebates are On the Way

For once, there is some good news from health insurers! In the next few months, health plans will be paying out an expected $1.3 billion in rebates to consumers.

You can thank the health reform law, and new rules it created involving the Medical Loss Ratio (MLR). According to the rules, health insurance companies are now required to spend a certain percentage of premium dollars on health care (as opposed to administration, marketing or profit). For large group plans, the MLR is 85% and for small group plans it’s 80%. And those plans that didn’t meet their MLR will have to give some of the premiums they collected back to its members.

A newly released study predicts that insurers will owe $541 million to large employers, $377 million to small employers, and $426 to individual consumers. (Note the study’s sponsor, the Kaiser Family Foundation, is independent from the Kaiser Permanente health plan).

Who Gets a Rebate

Only people whose plan exceeded its MLR will get a rebate. In some states, such as Vermont Rhode Island, and Hawaii, very few health plans broke the rules, so less than 1% of consumers will be owed a rebate. In other states, such as Oklahoma and Texas, close to 90% of consumers are expected to get some money back. But overall, one in three consumers in the individual market, and one in four in the employer/group market, will get a rebate.

How Much are the Rebates?

The amount of each rebate depends on how much your health plan overspent on administration and profit. For large and small employers, they’ll average $76 and $72 per employee, respectively. But for individuals, the highest rebates are expected to average $305 in Alaska and $294 in Maryland. Find your state.

When and How to Expect the Rebate

The rebates are due to consumers by August of this year. Individual consumers can expect a check in the mail but for employer/group plans, the rebate will be paid to your employer. In most situations, the employer must directly pass the savings on to employees, depending on the specific type of group (such as a private employer, government, or church).

Another exception? If your rebate is less than $5 as an individual, or $20 per person for a group plan, the insurer is allowed to provide it in the form of a discount on future premiums.

Enjoy the rebates while you can. They are not expected to be as large in following years, as insurance companies adjust to the rules. For more information on the MLR and other exceptions for plans: http://www.healthcare.gov/news/factsheets/2010/11/medical-loss-ratio.html

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Avoiding Big Bills in a Medical Emergency

No one really wants to be thinking about health plan rules in the middle of a family emergency. But then again, no one’s ever excited to receive a big unexpected bill for a trip to the ER—especially when it could have been avoided.

The key is to be prepared with knowledge about your health plan before you need it. So if an emergency does come up, you’ll know what to do:

Decide if you really need the emergency room.

Up to 25% of visits made to the ER are not actually emergencies—they are cases of allergies, coughs, or sprains and strains, which could have been treated in the doctor’s office. Yet when treated in the emergency department, the same care can cost three to four times more. There is also no guarantee you’ll get faster or better service in the ER. Depending on how busy they are, and how urgent your condition is, the average ER wait time can be up to four hours.

Call your plan’s nurse advice line.

Most plans offer this service for free, 24 hours a day. Not sure or want a second opinion? Call back. The benefit is yours, and you’ve paid for it.

Try an urgent care clinic.

 If your condition is not life threatening but also can’t wait for your regular doctor, this might be a good option. While most clinics are not open 24 hours, the costs will be a fourth or a fifth of what an ER would charge. Also be aware that health plans have varying rules on how they cover urgent care visits, so find out before you go.

 

If you do need to go to the emergency room:

Avoid the ambulance.

Unless the situation is life-threatening, or a person has a neck or spine injury, you may get care just as quickly in your own car. Ambulance fees can be high, and some plans will not cover them if the situation was not actually an emergency. What defines as an emergency can be tricky. According to federal regulations, an emergency is what a “prudent layperson” would determine to be a situation requiring emergency attention. But insurance companies don’t always have the same opinion as Joe on the street, and may refuse to pay a claim. This kind of denial can be appealed, but can be difficult to win. So if the urgency of the situation is unclear, but driving on your own is definitely safe, avoid the ambulance altogether.

Learn your authorization rules.

Some plans require you to notify them before you go to the ER. Others may require that you obtain authorization from your primary care provider first. Under the health reform bill, newer plans can no longer require prior authorization, but plans that were created before the bill was passed in March 2012 (grandfathered plans) are exempt from this rule.

Question your bill.

Start by asking the hospital for an itemized bill. Go over each of the expenses to see if they look right—for example multiple charges for the same thing, services that never happened, or incorrect diagnoses. Since ERs can be chaotic places, with multiple physicians handling one patient, it is not uncommon for a diagnosis to be changed or recorded incorrectly, or for a test to be ordered but never completed. Be aggressive in asking the hospital about charges that don’t make sense or appealing to the health plan if they refuse to cover certain services.

Beware of balance billing.

Most plans are now required by the health reform bill to cover emergency care at the same cost shares for you, whether the hospital was in-network or out-of-network (grandfathered plans are exempt). But in situations where a plan does not have a contract with individual physicians staffing the ER, the plan might reimburse physicians at lower rates than the doctors normally charge. So the physicians then turn around and bill their patients the difference—a practice known as balance billing. Each state has different laws around balance billing when it comes to in-network versus out-of-network providers and HMOs versus PPOs. Find out what the laws are in your state to make sure you are not being improperly billed.

Remember, Simplee does not give medical advice – only financial. If you are unsure about the urgency of your medical situation, always be sure to seek the care you need.

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Making Sense of Drug Formularies

Every year, prescription drug plans seem to become more and more complicated. The question is no longer “Is my drug covered?” but how and when it’s covered. Going generic is not the only strategy to lowering your drug costs. Understanding your formulary will also help you budget, make smarter decisions, and save money.

A formulary is the list of drugs your health plan covers and the level of coverage for each. It should be sent to you with your plan documents or available online.  So what’s in a formulary? You’ll probably find some of these features:

Drug Tiers

Formularies divide the drugs that are covered into tiered categories. The higher the tier, the more expensive the drug. Tier 1 usually includes generic and low cost drugs; Tier 2 can include some more expensive generics and preferred brand name drugs (those where the insurer has been able to negotiate a discount with the drug supplier). Tier 3 includes non-preferred brand name drugs, and Tier 4 has the most expensive, specialty drugs.

It’s common for equivalent or similar drugs to appear in different tiers, so if your doctor prescribes a medication on Tier 2 or 3, ask if there is a Tier 1 version of it. Formularies are not the same across health plans—every insurer has a different list. So if you are shopping for new plans, be sure to check formulary coverage for each.

Prior Authorization

Some plans require authorization from your doctor before they cover a drug. This means your doctor will need to call, fax, or complete an online request before you fill the prescription. Sometime your doctor will also need to provide evidence that lower cost versions of the drug will not work for you given your health condition, or that you have tried other versions and had adverse effects. It can take one to three days for an authorization to be approved.

Step Therapy

Step Therapy is a process where you are required to try a lower cost version of a drug first, before the plan will pay for a more expensive version. The insurer will only cover the drug that is subject to Step Therapy if you find you do not react well to the low cost version.

Quantity Limits

Just like the name suggests, this rule means the plan will only cover a certain number of refills or a certain dosage of a particular drug over a period of time. A common quantity limit rule is only allowing refills every 30 days. If the quantity limit is a problem for you, your doctor can ask the insurer for an exception.

Finally, if you’re having issues with the cost of a medication because of one the plan features above, talk to your doctor about different drugs to try. Remember, doctors don’t usually know what’s on your formulary or what your plan covers. If a drug is too expensive, or your plan changes the cost for it, don’t assume your doctor knows or that you are stuck paying for it.

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Last Minute Tax Tips

It’s almost April 17th. Yes, the IRS gave us all an extra two days for the 2012 tax filing deadline. Don’t forget that Simplee’s here to help you with your taxes!

If you still haven’t filed, and need some help figuring out your medical deductions, Simplee has you covered. Here’s what you can do in:

Less than 30 seconds – Log in to your Simplee account for a quick look at your medical expenses for 2011. The dashboard makes it easy to bring up claims only for the last year.  If you have dependents, you can also add in their medical expenses. Keep this figure on hand—you’ll need it soon.

Less than 1 minute – Pull out your 1099-SA. If you have an HSA, this will have been mailed to you by the HSA administrator. Use it to complete Form 8889.

Less than 2 minutes – Once you have your Adjusted Gross Income figured out, take 7.5% of it and compare this to the medical expenses from your Simplee account. If your expenses exceed 7.5% of your income, congrats! You can itemize your expenses for a bigger deduction. If not, you’re done—there’s nothing more you need to do with your medical expenditures for this tax year.

If the numbers are close, keep reading—you still might qualify for a deduction:

Less than 10 minutes (if you’re organized) – Gather up any other Qualified Medical Expenses which might not be in your Simplee account. This could include anything from premiums to travel expenses for medical appointments, or from acupuncture to improvements to your home for medical reasons. The IRS has a complete list. Make sure you have receipts or some other kind of record for each.

??? minutes – File those taxes! If you are itemizing, you need to use Form 1040 (not 1040A or 1040EZ).  If your expenses are not high enough to itemize, then the form doesn’t matter, unless of course, you’re itemizing for other reasons. You can deduct the amount of medical expenses that exceeds 7.5% of your Adjusted Gross Income. For example, if your income was $60,000, then 7.5% is $4,500. If you spent $5,000 on medical expenses, you can only deduct $500, the amount that exceeds $4,500.

For more details, see Taxes & Medical Expenses: What You Need to Know Before You Begin.

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