June 22, 2007 by bob.

Q. I currently have a plan with an Rx copay. For quite some time I have taken (name withheld) medication and paid my $40 copay. The last time I used my card the pharmacist told me I had to pay over $80 for my medication. My plan has not changed. Why is this pharmacist over-charging me?

A. You are not being over-charged by your pharmacist. Rather, your plan is doing exactly what it should.

If you read your policy (something everyone should do at least once) you will see a 3 tier copay plan. Tier 1 is for generics (and usually the generic copay is much higher than you would actually pay for the med without your card). Tier 2 is for older, more established brand name drugs. Tier 3 has the highest copay and is used for the newer drugs that are regularly advertised in print and on TV.

Your plan Rx manager has noticed that you are taking a tier 3 med that has a lower priced, tier 2 equivalent. The allowance for meds reverts to a lower tier when an equivalent med becomes available.

The same would happen if there were a generic equivalent to a tier 2 or tier 3 med.

You would then be allowed the copay on the lesser priced med and you pay the difference.

If you were to change to a plan without copays you would most likely realize a significant total savings in premium + out of pocket.

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May 6, 2007 by bob.

Q. My son is graduating from college and I need a plan to bridge him over to an employer group plan. Where can I find a site (or sites) that compare plans, provide financial ratings and an independent analysis of plans available.

A. An STM may be the best thing or the worst possible choice. More on that later.

As for websites, there really are none that provide the kind of information you mention. Most of STM plans are the same and prices are similar. One plan that has proved competitive is administered by HPA, a large administrator out of Florida. The STM plans have simplified underwriting (usually 5 health questions or less) and can be approved in minutes for coverage to begin the next day.

STM plans also have limitations such as a 5 year look back on pre-ex conditions. Also, the plans are not renewable. Once benefits expire, even if you are in claim, you cannot renew.

STM plans do serve a purpose, but what happens if your son is injured or becomes ill and is unable to begin his job as planned? Will he go on the payroll and benefits or not? Chances are, the employer will be willing to hold his position for a short while but salary and benefits do not begin until he actually reports to work. For about the same price as the STM your son can have a more comprehensive plan such as Tonik without the worry of pre-ex conditions or expiry of coverage while he is in claim.

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January 19, 2007 by bob.

Q. I am a well educated, intelligent individual who is perfectly capable of finding the health insurance plan I want without agent involvement. Why should I pay extra to have an agent tell me which plan to buy?

A. I can appreciate the fact that you seem to be intelligent and well educated.

Someone once said, we are all ignorant, just in different areas.

While you may be quite informed in many areas, it is highly unlikely you have absolute, or even adequate knowledge in others. You may know how to drive a car, but that does not mean you know how to design & build a car.

Health insurance is a highly specialized area that balances the dynamics of risk management with price competitiveness. Any agent can offer quotes on multiple plans but few can effectively balance underwriting savvy and the ability to anticipate final offers from carriers with plan design and price point.

I have been involved in the health insurance industry for more than 30 years on a daily basis, and I still learn things that surprise me. What is available today may not be next month. I can’t imagine how difficult it is for those who only occasionally have to look for insurance.

As for agent compensation, it should be comforting for you to know you are not paying any more to use the services of an agent. The premiums charged by the carrier are exactly the same regardless of whether you go direct to the carrier, buy through an online “direct seller”, buy through a third party endorser or buy through an agent.

Given this scenario, would you rather deal direct with a carrier that can only tell you what they have to offer and cannot, or will not, tell you what their competitors offer?

Or would you like to go through an online direct seller that can only show you 15 - 20% of the plans available?

Possibly you would prefer to buy from a warehouse club or social organization that has been paid to promote a handful of products from a single carrier.

You can also deal with a knowledgeable agent who represents multiple carriers and can take the time to explain the differences in one plan over the other.

Your choice.

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January 18, 2007 by bob.

Q. I am trying to decide between policies with 2 different carriers. The plans are identical, but one will cover my medicine the other will not. Which one should I choose?

A. Sometimes self insuring makes sense. Sometimes it does not.

In your case you are currently taking 2 brand name meds that cost (retail) $160 per month. The premium difference in the two plans is $192 so you will save $32 per month by opting for the plan that does not cover your meds.

That is the easy part.

You may be able to save even more by asking your doc to consider lower priced meds, including generics.

Saving money is not the only consideration. You also need to weigh the consequences of the exclusionary rider should you have an illness that is related to your pre-ex conditions. Some riders are very limited and do not factor in collateral issues. Others are quite broad and should never be considered.

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January 17, 2007 by bob.

Q. I have applied for coverage for my wife & myself with several different companies. It takes over a month for the companies to respond and they keep losing the files that are sent from my doctor. In addition, my wife has a minor medical problem that is causing her to be rejected. Why can’t I find coverage for her?

A. There are several issues here that are creating your problems. The primary cause of the rejection is over medication. More on that later.

While you have used the services of an agent, in fact, more than one agent, your attempt to control the process is compounding the problems.

When you submit multiple applications simultaneously, as you did with 2 different agents, you have needlessly created a backlog. When carriers see a condition that warrants additional information they make a request from the attending physician for more details. In this case, it was the MVP (mitral valve prolapse) that is present in your wife.

Carriers do not solicit the APS (attending physicians statement) direct, but rather will go through a third party. In your case, the request was made through EMSI by two different carriers approximately 2 weeks apart. Your wife’s doctor responded to the initial request from EMSI for carrier #1. A few weeks later when carrier #2 made a similar request, also through EMSI, your doctor did not honor the request since they thought it was a duplicate from the same carrier.

This further delayed the process by almost 3 weeks.

The first carrier declined your wife for coverage, as did carrier #2.

MVP is a benign condition in most people that does not require medication. In your case, after reviewing your medical history as well as that of your wife, it would appear you have a doctor who is more than willing to provide a medication even when it is unnecessary. I am not a doctor, and am making assumptions based on a review of your records and conversation with you & your wife. You have had a very generous (albeit expensive) plan with low copays. As such, you have used the plan to the point of making your situation unacceptable to a carrier.

My guess is, if you were to ask your doctor(s) if some of the meds could be discontinued they would agree. Once you have been off meds (without ill effects) for at least 12 months you might find a carrier who will accept you.

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January 10, 2007 by bob.

Q. You quoted me a rate that was quite attractive based on the plan I selected. Now that I am submitting an application you are quoting a higher rate. What gives?

A. The initial rate was my best estimate based on data you provided in response to my questions. Once you filled in the application & faxed it to me, your spouse’s weight changed to a higher figure. That kicked her out of preferred rate bands into a standard rate band which is about 10% higher.

You asked how much she needed to weigh to qualify for preferred rates & I provided the range. You then asked if I can change the weight on the application before submitting to the carrier.

I cannot, nor will I do so.

A falsified application gets’ all of us in trouble. Eventually the carrier will find out the weight was misstated and back bill you for the premium difference.

Preferred rates are for preferred risks. I don’t make the rules, I just help to enforce them.

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January 7, 2007 by bob.

Q. I have a plan for my family with a major carrier and my rates have almost doubled in the last 30 months. I tried to get an HSA but was rejected. Why are my rates going up so much? What can I do about getting an HSA?

A. There are many reasons why your rates could double in that period of time but first you need to know that doubling in less than 3 years is not the norm.

The plan you have is old and most likely that block is deteriorating for the carrier. To compensate they raise rates dramatically in hopes of moving folks off that plan an on to something else. During the last 3 years you, and then your wife, moved into higher age brackets triggering another rate increase. Your children also aged beyond 18 triggering another jump.

All these things combined make the rate increases more dramatic than they would have been under normal circumstances.

As for the HSA rejection, you were turned down by a carrier for health insurance, not by a bank for the HSA. For reasons you have not yet shared, your health is creating an obstacle in moving to a different plan with the same or different carrier. Just because you have health issues does not mean the rest of your family cannot move on to another plan.

Your attempts to handle matters by yourself have resulted in frustration and rejection. What you really need is the counsel of an agent who understands the market and can point you in the right direction. Before you do any of that, you need to provide more details about any health issues that may or may not continue to be a stumbling block

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December 13, 2006 by bob.

Q. I have a pre-existing condition that insurance companies are not willing to include in their coverage. Why should I have insurance if the policy does not cover what I need it for?

A. Let me ask you this. If you had an accident last month and applied for health insurance coverage today, would you expect the policy to cover last months injury?

Of course not.

Why is it any different for an illness?

Some pre-ex conditions can and will be covered by insurance. The only time a carrier will rider or exclude coverage is for ongoing or anticipated future treatment that is considered to be more costly than policy pricing can allow.

As to your closing question (why have insurance?) the answer should be obvious. One purchases insurance in advance of the need to protect one’s assets against seizure or depletion in the event of a catastrophic event. If the event is such that you can cover the cost from your cash reserves, then there is no need for insurance. But if the event is significant enough to cause a major financial setback, then you have reason to purchase insurance.

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December 12, 2006 by bob.

I devote a lot of time to freely answering questions in public forums, both live and on the web. One thing that always baffles me is the number of folks who want answers from people who lack experience & training in specialized fields. Recently I ran across the following question on a site for programmers.

Q. I’m a self-employed programmer who is about to become a father. Previously, my family’s insurance has come through my wife’s employer, but she is eagerly looking forward to being a stay-at-home mom. We must look for that elusive low-cost insurance in order to enable her to do this. Losing her insurance is not a huge loss as, due to failed negotiations, the hospital in our city (3rd largest city in the state), along with most of the doctors that refer to it, is dumping the network (largest in the state) that our insurance uses. On the individual coverage plan front, my research shows story after story of deception, fraud, and general run-around or obfuscation by most of the major players and nearly all the minors. With all of the bad experiences out there, I’ve yet to see a good review of an insurance company. What does the Slashdot crowd use and recommend? Company and plan-type? PPO? HMO? HDHP + HSA (High Deductible Health Plan + Health Savings Account)?”

A. These are certainly fair questions, but unfortunately they are posed to the wrong people.

The individuals who frequent this site are computer programmers, not health insurance experts. Further, health insurance is state, and even region specific. The loss of the PPO network providers is specific to his state and city. Insureds in other states, or even other areas of the state will be immune to his particular problem.

The comment “I have yet to see a good review of an insurance company” is biased. Most who comment on carriers do so in public forums and only use the forum to vent their frustrations. Most of the time the complaint is generated by a lack of understanding of the way insurance, or their particular policy, works.

Most of the “fraud & deception” can be attributed to uneducated marketers of health care products who are selling to an uneducated consumer. Consumers are easy targets who are constantly looking for the “best deal” and unfortunately, that is where they are subject to being defrauded.

And, most of the complaints revolve around either of two issues. My premiums are too high, or, they did not pay my claim.

In most (but not all) cases the premiums are too high because the individual bought the wrong kind of plan. The spread between what people want their plan to do, and what they can afford, is often canyon sized. This is because they fail to understand why they need health insurance. It is to pay those claims that are financially impossible to cover out of income & reserves. Nothing more, nothing less.

As for claim denial, this too is a lack of understanding of what they bought. Most individual plans will not pay for treatment of a pre-existing (or related) condition. There are also restrictions on coverage when you go out of network, or have procedures done that are extra contractual.

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December 4, 2006 by bob.

Q. I am looking for health insurance and want to keep my costs down. One of my options is a “saver” plan with a premium that is 20% less than the regular coverage. I am also looking at a hospital only plan which is even less. My agent is advising against the plans. I think it is just because he wants me to pay a higher premium so he can earn a bigger commission.

A. Your agent is looking out for you, in spite of your beliefs.

The Saver plan you refer to does not cover doctor visits, does not cover X-ray & lab unless performed within 14 days of discharge from the hospital or following surgery, and does not cover brand name drugs. The only outpatient coverage you have for major items is chemo & radiation therapy, which is more than most plans like this cover.

You should know that some meds (for which there are no generic equivalents) run several thousand dollars per month. A popular drug for treating colon cancer runs $9,000 per month and drugs for other forms of cancer routinely run $3000 - $4000 per month.

How will you pay for meds that cost more than a monthly mortgage payment if you go ahead and buy a plan like this just to save $100 per month in premiums? Would you buy an auto policy that is only good from midnight to 6 AM? Would you buy a life insurance policy that only pays if you are killed in a hold up?

Why would you want a plan that only gives half coverage?

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