Changes to Insurance Plans Are Coming

Insurance can be one of the most expensive and scary things we spend our money on. Keeping up with the rules of the game is important. In this article, I share some information with you on what is changing for me, so you know about potential trends AND have some advance notice in case it starts happening to you.

Recently, the Human Resource Department at my company let us know that there was going to be a change to one of our key employee benefits: health insurance. The existing plans allow employees to choose between a PPO and an HMO plan. The PPO plan provides the option to be able to go to any doctor that an employee wants, whereas the HMO plan requires that the employee get a referral from their Primary Care Physician in order to get special services from another provider. None of this type of process is changing at all; the change is coming on the tail-end of the process.

The Reimbursement Run-Around

After hearing more about it and finally going to the doctor for my first service after the change, I realized how the process would work and initially I was displeased. Here was what happened: I went to the doctor as normal and paid my copay. However, after the services were rendered, I received an Explanation of Benefit from the insurance company and a bill from the doctor for a much larger amount. This amount was in fact coming from the amount that was normally paid by the insurance. Now, instead of that amount being paid directly, it was being reimbursed via a separate process whereby I needed to submit a claim to Wells-Fargo for reimbursement.

The doctors, of course, now need to wait longer for payment. They provide the service, then they submit the bill to the insurance company, and then they submit the amount to patient once they get notification from the insurance company that the patient has a balance due. Once I receive this bill, instead of paying it directly, I submit it as a claim to Wells Fargo immediately. Upon processing, I get the money back in the form of a check that I deposit in my account. Once the check clears, I write a check to the doctor for the balance. This process, according to the insurance company, costs less than the old process. They charge my company less for it. So, clearly that is a better option.

The Numbers Don’t Add Up

In the end, I am not really paying any more than I used to, and although the claims process is a little tedious, I really don’t mind it that much. Rather, what I resent is the outright misrepresentation. There is no possible way that adding more people and more steps to a process makes it more efficient unless the additional steps significantly reduce error. I don’t think that the reimbursement process from insurance companies was broken at all. So, I must conclude that there was an advantage to changing the process this way. Here’s what I think it is: the tax-deduction. By setting up this reimbursement process, the insurance companies are effectively getting a tax deduction for the insurance costs. This effectively reduces the overall profit or taxable earnings for the company overall and this is where the money is made.

Someone is Still Paying For It

Anyone with a calculator can figure out that taxes are easily one of the biggest chunks of money that is taken from us every day. And for businesses, it is no different. So it does in fact make sense that the companies are trying to leverage this fact and this vehicle for tax savings to their advantage. However, what must be acknowledged is the fact that this reduced tax revenue will be felt elsewhere in a social program. And the result will either be less social benefit program in order to create a fiscal balance or an increase in some other tax revenue to offset the deficit.

Health Insurance is Crucial - Coming Changes May Help You

Many sole-proprietors and small business owners struggle to insure their employees, even as more and more people in the United States live day to day without health insurance. The trend among insurance companies is reductions in coverage, higher premiums, and increased deductibles. This means that if you haven’t started considering your insurance situation, you should start soon.

Despite all of these changes, many people still don’t know how the process works and how it has changed over the past 40 years. Not long ago, the process was entirely driven on paper without personal computers. In this age of paper, it was not uncommon for patients to have to pay for their health care costs up front and out of their own pocket. This payment was made and then, if applicable, the patient would apply for a reimbursement to the insurance company by sending in a claim form. This process was arduous and painful, especially as patients got older and older and less able to maintain complex paperwork schemes.

Fast Forward

Now, it is a much simpler process. The average healthcare provider has a software package that has an easy means to enter information about services provided to patients. These services are separated by date and patient and called claims. These electronic claims are then sent via modem or internet to a clearinghouse that checks and formats the claims and forwards them on to major insurance companies.

Insurance Saves Money

Even in the case of a very cheap policy, the benefits can be amazing in the case of a catastrophe where a surgery of some kind is needed. This type of process can in fact mean that the patient will still pay a large portion of the bill in the form of a deductible or coinsurance, but will save a significant sum over someone paying for it out of pocket with no insurance discount.

How? By Allowing For Reductions

Most insurance companies need to negotiate and set a fee-reimbursement schedule with doctors. In this case, the doctor agrees to the fee schedule (which is typically less than what the doctor charges) and then that lower amount set by the insurance company is the maximum amount that can be charged to an insured patient. This means, that patients with insurance usually save money “off the top” regardless of whether or not their insurance pays any of the cost for them or not.

Even Uninsured May Get Help by using the Free-Market System

With a new order just signed on August 22, 2006, the president has enacted new rules to potentially Help Increase The Transparency Of America’s Health Care System, it is quite possible that doctors might be required to provide more public information about procedures, including cost. This might provide more of a “free-market” system whereby a patient who is covering the entire amount as an out-of-pocket expense could decide where to go by using cost as a factor.