The Ugly Duckling of Health Insurance Turns Into a Swan

If you want the highest quality for anything, you have to pay more right? Currently when you shop for individual, family, or self employed health insurance plans in Washington State that principle does not apply. Rarely does the combination of fantastic benefits and low rates coincide.

Let’s start by mentioning that I never thought the basic “Pay Less, Get MORE” principle would apply to this company. After all, the company I am referring to is usually thought of as an HMO, where you historically had to see their doctors at their facilities. Yuck. In many ways this resembles the ugly kid in class growing up to be a supermodel, it can happen, but it is rare. In fact, several years ago if you had told me that this company would have a huge network of providers and hospitals rivaling or exceeding Premera or Regence, I’d have thought you were kidding.

This company is Group Health. Remember when they were not so fondly referred to as “Group Death”? A lot has changed.

I was skeptical myself, and didn’t place a lot of clients with this new and improved version of Group Health until I saw that their new model was working. Well, it is working and is providing great health insurance benefits for very low rates. Even President Obama has recently lauded them as one of the best examples of care in the country.

They changed because they had to in order to survive. Their membership was stagnant, while Regence and Premera were growing. They were having a hard time attracting top talent, when Regence, Premera and others could afford the best management money could buy. So, Group Health rolled up their sleeves and changed. And, they didn’t receive any bailout money or tax assistance to do so.

The health insurance agent community is happy because now there are more competitive health insurance products that more people can afford. Health Insurance consumers ranging from individuals, families, self employed and small business are happy because the newly changed company fosters rate competition in Washington, a market historically dominated by Regence Blue Shield. Group Health is happy because their growth has increased revenues which allow them to attract better and more qualified employees than ever before.

So, the moral of the story is this. Anytime a health insurance company is allowed to offer more and expanded health insurance options at reasonable rates, we all benefit. Let’s just hope our elected leadership crafting new policy in Washington understands this basic economic principle.

Close to reaching your Health Insurance Deductible? Spend MORE soon!

If you or your family have had one or more health expenses this year, such as surgeries, hospitalizations, pregnancy, or anything that causes you to start paying towards your health insurance deductible, NOW may be the time to spend MORE, not less. While this sounds counter intuitive, spending MORE on needed health issues at the end of the year may actually save you money.

Most health insurance plans operate on a calendar year, from January 1st to December 31st. Your yearly deductible is usually also based on this time-frame. So, let’s say you have a $1,000 deductible plan with, 20/80 Coinsurance (This means after reaching your deductible you pay the remaining 20% and the insurance pays 80% of all bills until you reach a certain maximum, at which point you get covered at 100%.). Now assume that you have spent $800 of your deductible though October, and the doctor says you will need more medical treatment in the near future. In this case, if you wait to get your expected medical treatment until after January 1st, you may start paying towards your entire $1000 deductible again! However, if you complete the needed work or procedures BEFORE December 31st, you may only pay another $200 towards your deductible, and then just 20% of the remaining charges! You’ll “save” $800 of your own money from having to be used towards you deductible again.

Think of a deductible as “use it or lose it”. Once you start getting close to using your entire deductible for the year you might as well get as much other medical work done as you can, as it will cost you only incrementally more! People who get really burned by paying two deductibles in a close time period are those women who go into labor on December 31st, and end up having their baby on January 1! Having a baby is expensive and a pretty sure way to reach well beyond the yearly deductible. Thus, having the expensive childbirth cost split over two “years” requires one to potentially spend the entire deducible TWICE!

Now, it isn’t being advocated to have unnecessary medical procedures done just because you “can”, but if you know you must have more medical procedures done in the near future, getting as much done in one year as possible is a sure way to save money. Most though not all plans operate this way, so be sure to ask your broker if this situation applies to you.

My Health Insurance of Washington specializes in helping individuals, families, the self-employed, and small business find quality health insurance plans to meet their financial needs. Based in Washington State, their sole focus in on Washington State Health Insurance plans.

Confused about Health Care Reform? You're not alone.

I have received questions from many clients over the last several months asking about what health care reform means and what it will or will not do. Unfortunately, I myself have more questions than answers. Here are the questions I think we need to ask ourselves, and be able to answer, before deciding to either support, not support, or partially support “Reform”.

1. Which bill(s) are we referring to? There are over 6 bills circulating right now and the two front runners are likely to be merged soon.
2. What is the effect of the over 1,200 amendments to these bills? Will the amendments done at the request of the special interests neutralize any positive aspects intended? (Health Insurance Agents like myself just had a successful amendment added, can you guess what is was?)
3. What is the main problem we are trying to solve? Health Care spending or covering as many uninsured as possible? They are inversely related and none of the current bills adequately address both.
4. Do we want competition, regulation, de-regulation across state lines, etc.?
5. Will reform make us healthier, or just provide more customers to the health care and prescription drug industry?
6. Will the reform efforts help/make us change our lifestyles, the only way we will ever get healthier as a nation?
7. Should we bring back Richard Simmons and “Sweating to the Oldies”?
8. Would mandated insurance coverage for all be of enough benefit to outweigh the loss of personal choice?
9. ?

I appreciate hearing so much feedback from all of you, so let me know what questions you think we should be asking!

Use your health insurance to save money on taxes

Proper planning with respect to how you structure and use your health insurance can really pay off when the tax man comes. I’m not a registered tax planner, CPA, etc., but the next few items should be discussed with your tax preparer.

H.S.A Plans: A prior blog post from August 19^th described what they are and how they work. Amounts (up to certain limits) contributed to your H.S.A account can be deducted dollar for dollar from your top line income on form 1040. In 2008 it came out on the first page on line 25. That’s right, the money is yours to keep (it’s not use it or lose it) and spend on any qualifying health expenses you or your family incur now or in the future, and it is tax free. If you know you are going to have health expenses, you might as well pay for them with your tax free dollars. Keep in mind that you must contribute to your H.S.A account BEFORE you incur a qualifying health related expense however.

Self-employed deduction: This is a no brainer for self-employed people or people with a small business. Health insurance premiums for you and your family can be taken as a business expense. In 2008 on form 1040 it came out on line 29. In addition, if you have an H.S.A plan, not only can you take the top line deduction from your income for amounts contributed to your H.S.A account, but your monthly H.S.A health insurance premiums can also be taken as a business expense.

Health Expenses greater than 7.5% of your AGI: If your total health insurance expenses for you and your family are greater than 7.5% of your Adjusted Gross Income, amounts spent OVER that 7.5% can be taken as a deduction. What qualifies? Much more than you think! Please refer to the IRS site http://www.irs.gov/publications/p502/ar02.html for the full list. Many people just don’t keep receipts, and don’t know that money spent on a whole host of qualifying health expenses could have been taken as a legitimate deduction. If you had a major health event, had a new baby, or other combined health expenses which could put you over the 7.5% threshold, make sure you look into this.