Health Plan Premium Savings Have Their Trade Offs

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When anyone decides to do their own shopping for their health insurance coverage could be in some trouble and may not even know it. Insurance companies are smart enough to know people are emotionally driven on costs. Even a smart shopper will notice that there are two plans that are exactly the same, with some insurance companies, but one price could be several hundred dollars less per month. After scratching their head, they select the less expensive one and forget about it. Only to find out at claim time how their policy will actually function, depending on where they went for care.

Surprises are never good, especially when they are about to cost you more money. Financially devastating, in fact.

Many insurance companies have created what they call an Exclusive Provider Organization, or EPO, or have a 2-tier in-network type plan. Insurance companies do this to reduce their cost through a contacted reimbursement schedule with the providers. The providers may not have much of a say in the reimbursement schedule, so many will opt-out of that “Exclusive Network”. This is where the bad news comes in.

If you finally win the health lotto, big or small – it does not matter, you will need to use your health plan to help finance the claim. This is the whole reason we pick up the health insurance in the first place. Many are finding out that for the cost of saving of a couple hundred dollars a month on premiums, they cannot go to the local facility or the one they want. If they do go out-of-network, it’s worse now, post-ACA.

If you decide, or have no choice, to use the out-of-network provider, there comes some hidden costs. Most people today understand that if they are out-of-network, their out-of-pocket expenses nearly doubles. It’s been like that for years. This is separate from your in-network out-of-pocket expenses. Piece of cake to get the service you want, right? However, the ACA has put a twist to the out-of-network expenses.

The consumer protections did not make it for out-of-network costs. The insurance company is only responsible for reimbursing up to the medicare rate. Without the consumer protections for a maximum out-of-pocket for an out-of-network provider, the provider can balance bill you. This could mean that you are responsible for tens of thousands of dollars, above your typical out-of-network costs.

It gets even crazier than that… They can even send you to collections for not paying.

So I hope you have about $20,000 or $30,000 lying around so you can negotiate the difference if the balance is more than that. If not, it will drive you into the statistics for medical bankruptcy.

The whole point here is buyers need to watch out for what they are emotionally driven for. There are some that selected the smaller network and, by accident, their provider accepted that network. That is like winning $2 on a lotto scratch off card. Sometimes you win, but there is a high chance you may not.

Knowing what to look for when viewing the health plan quotes before selecting one is important. If you do not know, find out by seeking an expert in the industry. Do not assume. This assumption could cost you tens of thousands of dollars to save a measly couple hundred per month. Is it worth the tradeoff without knowing the risk? Buyer beware!