Decoding US Health Insurance
Several times in this book, we have suggested that priority should be given to overcoming challenges that effect your, Health, Liberty and Finances. This chapter addresses the first: Health Insurance.
Whether you are accessing Health Insurance through your employer, or through your State’s Health Care Exchange (Obamacare), understanding which plan is right for your needs is dependent on your understanding a very different Health Care system.
To enlighten the reader, and demystify some of the nomenclature, the following are important terms and concepts that will make navigating the US healthcare system less complicated.
Click here to access the New York State of Health website where you can see if you qualify for Government sponsored Health Insurance.
If you are working, then your employer will offer you health Insurance. Depending on the size of your company, your choices in health coverage may be limited. You may also have to wait up to 90 days before you are eligible to access your company’s plan.
Whether you are under your employer’s plan or through a State’s Health Exchange, you will have decisions to make. Firstly, if you are single of married, you will need to choose between an individual or family plan. Then you will need to consider the coverage you are offered, for the amount of money you can afford to pay.
This is where most confusion arises so we will take you through some of the terminology and considerations in the decision process.
NOTE: This article cannot cover every Health Insurance term or situation, nor every State or City’s Hospital system. Given New York is the #1 destination for E-3 workers and Green Card holder, we have used NYC to highlight certain Health Insurance concepts. We recommend that you speak with your HR Department or Insurance specialist if you have any specific questions or concerns about your State’s Health Insurance System.
Generally speaking, once you enroll in a plan, you are locked into that plan up until what is known as Open Enrollment. This is a limited period of time, usually at the end of the year, when you can change to another plan or increase your coverage.
As this is only offered once a year, you must be very careful in what you select. If there are changes in your life circumstances such as marriage or the birth of a child, you can make changes to your health plan before Open Enrollment for the following year.
This is a relatively straightforward concept: You pay an agreed amount of money each month, for an agreed level of health coverage.
This is the amount you are billed each time you visit a Doctor, Specialist, Emergency Room visit or Hospital stay. A Co-Pay can range from $15 to $35 for a Doctor visit, or $100 to visit the ER. Some plans have a zero Co-Pay, but generally the Premiums are higher for these plans.
You may have seen storefront Urgent Care clinics, and they may charge as much as $50 for a visit, even if your Insurance does not charge a Co-Pay.
This is a new concept to many Aussies. In Australia, you go to the Doctor, pay a small fee (Co-Pay here in the US) and that is that. If you have bloodwork done, that is generally free as well. However, when choosing a US policy, you need to understand that a Deductible is an additional amount on top of your monthly premiums that you need to pay, up to a certain amount. Once you have paid that amount it is called meeting your Deductible.
As an example, a Family plan under Obamacare can cost upwards of $1,500 per month, and an annual Deductible of $4,000. Therefore on top of the $1,500 x 12 months ($18,000) there will be another $4,000 that will need to be paid over the course of the year.
The Deductible is generally not charged all at once. If you visit the Doctor and you have bloodwork, you may receive a bill for a percentage of the total charge from the Doctor that goes to your annual Deductible. Co-Pays can also go toward your annual Deductible. Each time you visit the Doctor, you receive a bill up to when your Deductible is met.
There are exceptions where you may receive a bill for thousands of dollars at once. If for example, someone had a baby, or had an operation, which could cost tens of thousands of dollars in Hospital and Doctors fees, the Insurance company could send you a bill for the full amount of the annual Deductible.
The Deductible often comes as an unexpected surprise to many Australians. However, the insured would only be responsible for Premiums for the remainder of the year once a Deductible is met.
Many Aussie tourists who visit the United States, take out some form of travel insurance. These are relatively inexpensive and cover the policy holder for unforeseen health emergencies. As with any insurance policy, you need to understand the health emergencies these policies cover – or not.
What is unequivocal with these policies, is that they are not a substitute for Health Insurance, and may in fact be void if deemed that the policy holder is resident in a foreign country.
Percentage of Coverage:
Some plans have a zero or low annual Deductible, but only pay a percentage of your health costs. Commonly these policies cover up to 80% of your medical expenses. The Premiums for this type of health coverage is generally more affordable, and for someone who rarely visits the Doctor, and has a low risk lifestyle, this can be an alternative form of Insurance.
However, in a country where a trip to the Emergency Room can cost $50,000 to $100,000+, receiving a bill for 20% of your Hospital expenses may not seem such a good deal.
In Network vs Out of Network
When evaluating a Plan, you need to understand which Hospitals and Providers (Doctors) are covered. For example, a Doctor to whom you have been referred by a friend, may not be In Plan and therefore you will receive a bill for the full amount of the consultation, or reimbursed only a percentage of his or her fees by your Insurance (company). Plans will tell you how much you will have to pay if you visit a Doctor or Hospital that is Out of Network.
The same applies to Hospitals. You may want to rub shoulders with players from the Yankees or the Giants at physical therapy for that torn ACL at Hospital for Special Surgery, but if HSS is not in your Plan, you will be up for a hefty medical bill.
Where it gets complicated (if not already), is your Provider may be In Plan, but the hospital that he or she operates at is not!
In the previous example, if you have the guru of knee surgeons in your plan, but she only operates at Hospital for Special Surgery – and HSS is not in your plan – then you are in a situation where you have to find another Doctor who operates at a Hospital in your plan – or be prepared to pay tens of thousands of dollars in Hospital bills.
Primary Care Physician (PCP)
Your Insurance may ask you to nominate your Primary Care Physician after you enroll. Your choices of PCP will be limited by a list of Doctors who are In Network, and of those Doctors, who are accepting new patients.
Once you nominate a Doctor, this is the provider to whom you will first go for check ups, or if you have a medical issue. If you want to change your PCP, you first have to contact your Insurance and nominate your new PCP, otherwise your coverage may be effected.
Some plans do not require you to nominate a PCP.
If there is a medical need to visit a specialist, say a Dermatologist for your six monthly skin cancer screening, your plan may require a referral from your PCP. This may mean another Co-Pay for the visit and the referral to a Specialist who is In Plan.
Again, some the more expensive plans do not require a referral, and you can simply call the Specialist and make an appointment without visiting a PCP first.
The Decision Process
As a best practice you need to assess your medical needs for the next twelve months and choose a plan that best suits your foreseeable medical needs. A good example would be a couple having a baby, and the mother-to-be is in a high-risk category. Choosing a Hospital that provides the best High-Risk care is going to be a priority.
The Doctor will be less of a priority, but given the standards of the Hospital clinics, you are more than likely to find a good Provider inside the Hospital who is more than qualified and experienced to meet your medical needs.
Hospitals in NYC, tend to be known for specialties. For example, Hospital for Special Surgery and Lennox Hill are renown for their Orthopedic specialty, but Lennox Hill also has an ER and performs General Surgery. Memorial Sloan Kettering Cancer Center is the #1 ranked Cancer Center in the Northeast, but Columbia Presbyterian and NYU still have highly regarded Oncology Units.
For high-risk pregnancies, Columbia Presbyterian is ranked up there, but not all of their Hospitals have a high risk delivery ward. As a best practice, do your research on which Hospitals in your plan are best suited to your health needs, and then find a Provider who either works at the Hospital’s clinic, or a surgeon who operates at that Hospital who is In Network.
Different Levels of Coverage on the Exchange
If someone is accessing Health Insurance through your State’s Exchange (Obamacare), you will be offered Silver, Gold and Platinum levels. With each level there is a different price point and level of care. Where it gets confusing is where there are multiple Health Insurance Companies offering three levels of health coverage!
The best way to begin is to estimate your monthly premiums, co-pays and the cost of the annual deductible and divide that by 12 to estimate your monthly Health Insurance expense. It is best to go with the highest level of care that you can afford. A major consideration will be any upcoming medical issues or if you are having a baby, as you will be hit for the full amount of your Deductible immediately after your hospital stay. You are going to have to keep aside a few thousand dollars in savings to pay the Deductible when it comes to you in a lump sum – which could be as much as $8,000 for a Family Plan!
Affordable Health Care is somewhat of an oxymoron for Aussies given $1,500 a month in Premiums and a $8,000 Deductible is far from affordable by Australia’s standards. Nonetheless, once you have established a budget, you can begin to narrow down your selection of Insurance.
Choosing a Plan:
In the selection of a plan, a good place to start is to look at which Hospitals are In Network. You may find that some plans offer only a few of the major Hospitals in their network, and others offer more. As a general rule, go with a plan with the most Hospitals who are renown for a specialty that you may require to meet your health needs – that torn ACL or an upcoming addition to your family, or go with a plan that has Hospitals that offer the widest range of services.
In New York, Columbia Presbyterian, NYU Langone and Lennox Hill are among the major Hospitals. Columbia Presbyterian also has Hospitals in multiple locations around the City. Specialist Hospitals such a MSKCC treat cancer only, and the Hospital for Special Surgery primarily focus on Orthopedic surgery and sports injuries rehabilitation.
Once you have selected a plan, that is affordable, and covers Hospitals that can meet your expected (and unexpected) health needs, you can then select a PCP that either works inside the Hospital’s clinic, or select a physician that has surgical privileges at your Hospital.
The advantages of seeing Doctors who work at a Hospital’s outpatient clinic as your PCP, is that if you are referred to a Specialist, all of your medical records are in the Hospital’s computer system and you do not need to track down paperwork and bring it to a consultation.
An additional layer of Complexity (that could save money)
Health Savings Accounts (HSA):
A Health Savings Account (HSA) is a tax-advantaged medical savings account available to taxpayers in the US who are enrolled in a high-deductible health plan. The funds contributed to this account are not subject to federal income tax at the time of deposit.
Essentially the tax payer can contribute to a dedicated savings account up to the annual limit set by the IRS for Individuals and Families, and use that account to pay for medical expenses up to when their Deductible is met.
The funds must be used exclusively for medical expenses otherwise if withdrawn or used for non-medical expenses, the amount is taxed and a 20% penalty added.
Flexible Spending Account:
Some employers offer their workers the option of a FSA with their health plans. The employee nominates an amount they contribute from their salary, and the employee receives that amount tax-free. The money is used for Co-Pays, Deductibles, Dental, medication and health products. A disadvantage of a FSA is that if by December 31 you will loose any amount above $500 in the account as that is the maximum amount you can roll over to the next year.
Tax-free spending accounts can be quite complex, so read all of the materials offered by your employer, speak with co-workers who use a FSA, speak with your Accountant, or you can search the web for articles to get a better understanding.
Here is a links to a Wiki on Flexible Spending Accounts: https://en.wikipedia.org/wiki/Flexible_spending_account
Here is a link to a Wiki on Health Savings Accounts: https://en.wikipedia.org/wiki/Health_savings_account
Traps for Young Players
You may decide to do your own research and search for a Doctor who is located close to your office or home. The first step is to log into your Insurance website and use the Find a Doctor search feature.
You can enter a specialty or location and you will be presented with a list of health care providers. Do not assume that just because they are listed on the website, the Provider is covered by your insurance! Some Doctors will leave a plan and it may take some time to update the website.
Always ask before making an appointment if the Doctor takes your insurance. Further, check again with the receptionist that your insurance will cover the appointment when you arrive. It is not uncommon for a receptionist to make mistakes and tell you on the phone that you are covered, when you are not.
You will be required to fill out forms on your first visit. Included, there will be a from that states YOU are responsible for all amounts not covered by Insurance – so buyer beware!
Laboratory services can also catch you out in unexpected costs. For example, if your Doctor is In Plan, but he or she orders bloodwork from a testing lab that is Out of Network – you could end up owing hundreds of dollars in lab expenses. Always check that any lab work that is ordered by your Provider is covered by your insurance.
You may even have to spend time on hold with your Insurance company to double check, but that is often time well spent.
Benefits and the Job Seeker
You may have watched some program on American TV where an employee asks about “Medical Benefits” during the interview process. To most Australians this seems to be a minor consideration given the assumption that all companies offer similar health insurance plans: But they don’t!
If you are interviewing with two companies offering similar salaries, the benefits they offer can mean a difference in thousands of dollars towards you annual compensation.
Consider a Health Plan offered by Company A that gave you access to all of the top Hospitals in your area, Dental, Physio and covers all of your prescription costs. The Deductible is only $4,000 for a family.
Compare that to Company B whose health plan only covers you for 80% of medical expenses or has a Deductible of $8,000 for a family.
Depending on the needs of the employee, Company A may be offering $5,000 a year less than Company B, but you medical expenses under Company B’s plan could end up costing significantly more than the difference in salary.
There are also other considerations when it comes to benefits such as Paternity and Maternity leave, length of annual leave, sick days etc., but your medical expenses are going to impact you the most, especially if you have children or are about to start a family.
In a country where a simple Appendectomy can cost up to $30,000, you are going to need to ensure you get the best possible health care, and not be blindsided by unexpected medical expenses.
On a final note, do your homework! If your HR department cannot assist, ask your coworkers for advice and chose the plan that meets your expected (and unexpected) health needs.
Selecting the right Health Insurance Plan is one of the most impactful decisions you can make, get it wrong and you could be out of pocket tens of thousands of dollars.
Click here to read Chapter 6: Local Language 101