As premiums continue to increase and plan designs are tweaked to keep costs under control, today’s health insurance policies are quickly turning into catastrophic coverage. They’re great if you have a big, unexpected medical expense but aren’t all that useful for some of the day-to-day needs like doctor visits and prescription drugs. Sure, members do get the benefit of the carrier’s negotiated rate if they stay within the insurance company’s shrinking provider network, but consumers are beginning to realize that there are other options outside the health plan that might help them save money while receiving better care. And as health insurance plans cover less and less, we’ll see more and more of these non-insurance solutions.
One solution that’s growing in popularity is direct practice medical care, sometimes called “concierge medicine.” Without the predictable office visit copayments that consumers have relied on for years, many people have started paying a monthly fee for unlimited access to their family physician.
The Internal Revenue Service has announced the 2018 deductible, out-of-pocket, and contribution limits for Health Savings Accounts. Compared with 2017, the minimum deductible will increase by $50 for people with single coverage and $100 for those with family coverage; the maximum out-of-pocket will increase by $100 for people with self-only coverage and $200 for those with family coverage; and the contribution limit will increase by $50 for self-only plans and $150 for family plans.
There are a lot of really good reasons to purchase health insurance:
As lawmakers on both sides of the aisle debate the merits of the American Health Care Act and its possible effect on the poor, the sick, and the elderly, we thought we’d look at the proposed law from a different perspective: from the viewpoint of health insurance agents.
To answer this question, we must first look at the impact on your clients. Based on an analysis by the Congressional Budget Office, 23 million more people would be uninsured in the next 10 years if the AHCA becomes law, with 14 million people losing their coverage as early as 2018. Second, states that apply for waivers will see significant premium variations between healthy and sick people since carriers will be able to rate based on pre-existing conditions. And finally, older people nationwide will pay more as a result of expanded age rating.
As you know, there are a number of steps involved in running an agency and selling an insurance policy. Some of those steps, like answering incoming calls, explaining claims procedures when interpretation is not required, and tending to administrative matters can be handled effectively and legally by unlicensed personnel. Other tasks, though, require that an agent be properly licensed. Examples include providing insurance quotes, accepting an application, and receiving premium payments. The distinction is pretty clear, and most agents are careful about the duties they ask their unlicensed office staff to perform. There are some pretty stiff penalties for selling insurance without a license.
It shouldn’t be hard to understand, therefore, that the legal profession has similar rules about what duties must be performed by a licensed attorney and what information can be shared by people without a license – people like insurance advisors, for example.
What does this mean for agents?
On May 4, the U.S. House of Representatives passed the American Health Care Act (AHCA), its version of the Obamacare “Repeal and Replace” legislation. The bill would, among other things, end the individual and employer mandate penalties, change the way premium tax credits are calculated, eliminate the cost sharing subsidies, roll back expanded Medicaid, kill most ACA taxes, and give states the option to charge more for pre-existing conditions while eliminating some of the essential benefits.
The House bill was wildly unpopular and, according to the Congressional Budget Office, would increase the number of uninsured by 23 million people. Several GOP senators said the bill would be dead on arrival in the Senate and that they would need to start over from scratch when creating their version of a health care reconciliation bill. Even President Trump weighed in, calling the House bill “mean” and saying he hopes the Senate version is more generous.
As deductibles and out-of-pocket limits continue to rise, and more and more plans drop the up-front copayments our clients have grown to love, we’re once again hearing the word “consumerism” as a possible answer to America’s health care crisis. The idea behind consumerism is that people purchase health insurance for the big, unexpected medical expenses that may arise and budget for everything else. When people spend their own money, they make different and better decisions than when they’re spending the insurance company’s money. Since they’re not shielded from the cost of health care services, they make buying decisions based on cost and quality—the same way they do in other areas of the economy.
Whether people are ready to embrace consumerism or not, they’re sort of being pushed into it. These days, most of our clients have a “consumer-driven” plan design, even though they may not realize it.
It’s well-known and generally accepted that the non-partisan Congressional Budget Office is, in fact, non-partisan. The CBO, as you probably know, is the government agency charged with “scoring” proposed legislation to determine its intended and unintended impact. But just because people on both sides of the aisle agree that the CBO’s analyses aren’t politically motivated doesn’t mean that they necessarily agree with their findings.
Take the American Health Care Act, which was passed by the Republican-led House of Representatives on May 4, 2017, without an up-to-date CBO score. The Congressional Budget Office had reviewed a previous version of the bill but had not yet issued its findings about the revised version before the vote, causing opponents to point out that Republicans had passed the bill without even knowing how much it will cost or how many people will lose insurance as a result.
In part 1 of this series, the author explained how some fortunate timing helped his uncle fight cancer without high premiums or big out of pocket expenses. In part 2 of the story, he explained how a cancer policy helped his uncle replace his lost income while he was out of work. In part 3, he discusses his uncle’s latest ordeal and explains why people should purchase insurance before they have a need.
I started this story by talking about how my uncle got health insurance. Though he had some pre-existing conditions and neglected medical issues, my uncle was able to take advantage of the health law’s guaranteed issue provision and open enrollment period and sign up for coverage just in the nick of time, right before being diagnosed with cancer.
As we all know, though, that’s not the way other types of insurance work. Most lines of coverage are not guaranteed issue and don’t have an annual enrollment period; instead, people must have the foresight to purchase them ahead of time, before they have a claim to file. That’s exactly what my uncle did when he purchased the cancer policy back in 1996, and it saved him nearly 20 years later. He also purchased an accident plan that he’s never had to use, but that’s a good thing: we purchase insurance not because we have an immediate need but rather because we don’t know whether we’ll need it or not; our hope is that we won’t.
In part 1 of this series, the author explained how some fortunate timing helped his uncle fight cancer without high premiums or big out of pocket expenses. In part 2 of the story, he explains how his uncle dealt with the time off of work.
For years, my uncle had bad knees and always knew that he should have surgery, but he never did because, even if he had had health insurance, which he didn’t, he couldn’t afford to miss work. His social security payments, which began when he was 62, weren’t enough to pay his mortgage, much less the rest of his monthly bills. He didn’t have a huge nest egg and relied on his self-employment income to get by.