Here is a familiar scene that plays out way too often. Before you have even seen the doctor or complete a scheduled procedure you’re presented with a lofty charge for services. You think, no problem, they must not know that I have insurance that will take care of it. Nope, they explain you have to pay the “insurance contracted rate” because you have not met your deductible for the year. You’ve probably heard that a time or two. Regardless, you need the procedure so you hand over your credit card and think, “Why do I pay for insurance anyway?!?!?”.
Well if there is an “insurance contracted rate” does that mean there is another rate? A cheaper rate? YES, the cash rate. And as the old adage goes, cash is king. This is where it gets perplexing...and maybe a bit infuriating. Why is the cash rate less than the insurance contracted rate? The answer is complicated, and I’ll handle that in another post, but let’s get back to the fact that there is a cheaper rate and you could be saving now. How do you get that rate and more importantly should you take it?
There are certain circumstances where you might be better off paying the cash rate rather than using your insurance and applying the cost to your deductible. Here are some of the most common examples:
Diagnostic Testing (MRI’s, CAT Scans, X-Rays) - I often get MRI’s because I had a tumor removed 15 years ago. I learned that it actually saves me money to ask the following questions before any procedure:
1. What is the insurance contracted rate? (the amount you will be responsible for paying)
2. What is the cash rate?
3. What are the CPT codes for the tests the doctor ordered?
4. Will you match other facilities' prices?
This past year I had 3 tests that would have totaled $1600 if I had used my insurance; which is well below my deductible. The cash rate at the same facility was $1200! I asked and found that they did match other facilities' prices. I asked for the CPT codes and then searched for “radiology near me” on my phone. I called 4 other places and asked them for the cash price and the name of the person I spoke to. I was able to find a location that charged $900!!! That is a savings of $700 compared to my deductible. Now I had a choice. If I pay cash, I need to pay in full at time of service. I also have to sign a waiver stating that I know insurance may deny a claim if they in fact find something in my scan. Because the odds of finding something are so rare, I decided to save $700 and paid the cash rate!
I have done this several times now and it has saved me thousands of dollars. I know I have my insurance to protect me in case my tumor does come back, but since the cost of the scans doesn’t come close to helping me meet my deductible and I don’t use my insurance very often, I’d rather save the money and pay CASH.
Prescription Medications – Prescriptions can be expensive as well, especially name brand drugs. Believe it or not, in many cases you can use a discount prescription program like GoodRX and save hundreds of dollars. Insurance companies may make arrangements with the pharmaceutical companies that actually don’t allow you to use your insurance towards a generic medication. In essence, to use your insurance and apply the cost to your deductible, you would have to buy the expensive name brand. When this has happened with my family, I asked the insurance company, “Are you telling me if I want to use my insurance, I must get the name brand which is 7 times more expensive?” The answer was yes. No coverage if I chose to get the generic brand which was significantly less. So, I decided to look up the medication on GoodRX and found it for $36 instead of $220+ a month! That is a savings of about $2,600 over the course of a year!
I also recommend asking for the CASH price. Even if you have a great insurance plan, your copay may be set at $25 for a Tier 1 medication. There are plenty of medications on the $4 cash list at several pharmacies. Why not save the $21 and just pay cash? Your copays don’t help you reach your deductible, so you might as well save money today!
Lab Work - Getting blood drawn can be expensive. Have you tried asking what the CASH rate is for the very same procedure? You may be surprised to find out that your blood panel is 1/3 the price if you pay cash.
The moral of the story, use some common sense and save. I have learned to always ask for the CASH price for everything medical related. I have a choice, do I want to use my insurance and have it go toward my deductible, or would I rather just pay cash and save now. Just to note, I am on a high deductible HSA plan (like most people these days), where you pay for everything at the contracted rate until you reach your annual deductible. Paying the cash rate is most advantageous for these types of common plans.
Some things to consider. If you or your dependents regularly meet your annual deductible, have chronic illnesses, visit the doctor often or have a large procedure or surgery scheduled, then this strategy may not be for you. When you meet your annual deductible, the cost for services will dramatically decrease or in many cases be nothing. But, if you have a pretty high deductible, like $3,000 or more and you’re generally healthy, it may be worth saving by paying the cash rate. If you normally don’t meet your deductible, then paying cash may be the way to go.
Unfortunately, with the soaring costs of healthcare and the way insurance plans are structured, the burden of cost is pushed to the patient. So consider your options, be smart and see if you can save a few dollars...or a few hundred dollars.
Occasionally office staff look at me strangely and wonder why I would not just pay the higher rate and put it toward my deductible, to which I respond, “There’s no prize for meeting my deductible.” I don’t ever really want to meet my deductible.
Although no industry seems to have been unscathed by Covid-19, it has been interesting to see how this pandemic has impacted each industry so differently. I talk to people from all walks of life and in the last several weeks, unfortunately, the hot topic has been how to handle health insurance while out of work, furloughed or simply because the pandemic has intensified the need for health coverage. Now more than ever people want and need to have some form of health insurance in place. You have several options to keep coverage for yourself and your dependents. This is how I’ve been consulting my clients and responding to inquiries:
1. Keep Your Current Employer Sponsored Benefits
In many cases your health benefits may continue through your current employer and they may even be willing to cover the cost of your premiums while you are out. This is your best option for good, continuing coverage and you should consult with your HR representative to understand how your company is handling the cost of your benefits.
2. COBRA Plans
If you had health insurance coverage through your employer, you will have access to COBRA, which is essentially the ability to maintain your current policy, however you will be responsible to pay for the full premiums which may have been subsidized or discounted by your employer. If you know you will be working again soon, although generally very expensive, this is a solid option to maintain coverage with your current plan. By law you can keep COBRA coverage for up to 18 months (in most cases) as long as you pay the premiums on time. If you are healthy, there are less expensive options that may save a significant amount and still give you the coverage you need.. If you are unsure, I recommend opting for the COBRA plan while looking for something more affordable - that way you maintain coverage for you and any dependents. You can always sign up for COBRA and cancel it at any time but you cannot sign up for COBRA once the enrollment deadline has passed.
3. ACA Plans
ACA plans (Affordable Care Act or Obamacare) are an option when you have a “qualifying event” like loss of employment. These major medical plans (traditional HMO high deductible plans) definitely have their place. The good, you can always get one of these plans no matter what pre-existing conditions you or a dependent may have. They do have limitations though. There really are not many insurance carriers available, as most insurance companies have pulled out of the ACA plans, and the available plans are both expensive and in many cases very difficult to utilize; the networks are small and not widely accepted. Some plans may only cover you in your county and none of them will go beyond state lines. Frankly, you need to do your homework to confirm you can find a doctor who accepts the plan you are looking at, and can give you the care you need. Many don’t realize all ACA plans are HMO plans.
4. Cost Share
You’ve probably heard the ads for Cost Share plans and may have thought they sound a little too good to be true. They are generally affordable, but keep in mind that they will have exclusions on pre-existing conditions. They are programs, not health insurance. If you are used to traditional health insurance and like having the stability and backing of a nationwide brand like United Health Care, Blue Cross, Humana, Aetna or the others, you may not like the “unknowns” that come with cost share programs. There are a variety of programs out there so do your research - I definitely have a preferred Cost Share plan. With some programs the members are cash paying patients and only get reimbursed if over a certain amount, while others function as a “traditional” plan where you are responsible for a small amount (like a copay).
5. Private Insurance
Believe it or not you can still get private insurance through traditional health insurance companies without going through the ACA. These plans feel familiar to most people who have had traditional plans with a major health insurance carrier. Although the plans are contingent on your health history, they come with many options. Many people like these plans because they provide a lot of flexibility when you consider your budget; you are able to customize the plan based on your needs while keeping monthly premiums manageable.
Create a Combo Deal. Just because you are one family, don’t think you have to all go on the same plan. I approach each situation with the goal of acquiring the best health coverage for my clients that meets current health needs and still fits the budget. With so many options available, I’ve been able to make health insurance affordable for people who thought it was impossible. That may mean you and your children are one one plan, with your spouse or significant other on another. Or you select your employer health benefits, (because your employer contributes to your costs) but the rest of the family is on a private plan. It really doesn’t matter as long as you’re all covered. What we’ve learned so far from this pandemic is that even though we never plan to get sick or injured, it’s really not in our control. So make sure you have a plan that not only protects you when you need it, but let’s you sleep well when you don’t.
Gone are the days when you’d hear people bragging about their amazing health benefits. It’s more likely that you hear people griping about it. But if you have a company sponsored group health plan, maybe you should be bragging. Those without that option certainly would be jealous.
Bottom line, health insurance is ridiculously expensive regardless of who you are and how you buy it! If you get your insurance through a company, you’re participating in a larger group policy which provides greater discounts. And usually the employer is paying for the employee’s monthly premiums or a majority percentage of it. So as the employee, if you have your spouse and/or children on your plan, the dollars deducted out of your paycheck are most likely going towards their premiums and the company is covering all or part of your premium. It truly is a company subsidized plan. It costs them a ton so employers have gotten smarter about displaying how much they contribute to your premiums on your paycheck to demonstrate just how valuable the perk is.
Here’s why a lot of employees don’t recognize just how valuable their company benefits are. Because premiums steadily increase each year, and have been for over a decade now, individuals with a company or group sponsored health plan pay more each year for their benefits. In many cases it is significantly more. And because we all look at our “take home” pay as what we earn, it looks like you’re earning less each time you go through open enrollment. It’s frustrating and can start feeling like your salary is getting a demotion. The reality is that your company is probably paying more than they were just a few years ago, as they too feel the pinch of escalating health insurance costs. Not to mention, most companies have had to move to high deductible plans which means even if you can handle your monthly premiums, you’re most likely paying “out of pocket” for your medical expenses. Remember going to the doctor and paying a small copay like $15 each time? Well, hold on to that fond memory because you’ll probably never experience that again. And by the way when you do say that out loud, you start sounding like your grandfather, “back in my day a movie was just fifty cents”.
When you start to feel angry or frustrated about how “bad” your company health benefits are, I know just the thing to make you feel better and it may even make you like your employer more. Try going out to HealthCare.Gov (ObamaCare) and experimenting with the alternative. This is where the rest of America goes to get health insurance. And by “the rest of America” I don’t mean the poor; it’s for working professionals, those that are self-employed or who work for a small company – plumbers, dentists, CPA’s, attorneys, mortgage brokers, realtors, hair stylists, electricians, writers, entrepreneurs, advertisers and anyone who may work for them.
Just recently I went through the arduous process to determine the cost of ObamaCare for my family. Ready for the numbers? I promise it will make you feel better about whatever your company offers!
Crazy, right? But this is the reality for millions of working professionals and small business owners. And it’s worth mentioning that you only have one choice – a plan you’ve never heard of and no, you don’t get to keep your doctor, and in fact, you’ll have a hard time finding a doctor who will accept it. This is the mess that’s been created. If you have a company or group sponsored plan, next time you think about complaining to your friends, you just might want to keep it to yourself and remember how much others are paying. Take a closer look at what your company is offering you and you’ll discover that although it’s not what it used to be, it definitely has real value.
And if you’re lucky enough to be self-employed or your small company does not offer health insurance, just know that there are options to help make insurance more affordable.
Health Plan Source: (healthcare.gov – Maricopa County, Arizona – 2 adults + children, 8/2017)
Shauna Brown - Independent Licensed Agent