Horizon Blue Cross Blue Shield: How to read your health insurance claims EOB.

August 15, 2011 By Mike Sheeran

As I mentioned in a previous post about health insurance claims, one of the first steps is to review the EOB. Horizon Blue Cross Blue Shield has put together a nice one page sheet to help members understand how their claims were processed.

EOB and Insurance Claims Notes From Horizon Blue Cross Blue Shield

Part of making the most of your health care coverage is understanding how your plan pays your claims and what your role is in that process. Horizon Blue Cross Blue Shield of New Jersey provides you with an important resource called an Explanation of Benefits (EOB) to do this.

The EOB is a document you will receive after you see a physician or other health care professional, at the time your claim is processed. On the EOB you will find claims and patient payment information for you and your covered family members on a single statement. The sample EOB below provides an overview of the information and what it means to you.

Horizon Blue Cross Blue Shield – How to Read EOB – PDF

If you are current client and need assistance, contact Mike Sheeran or your dedicated account consultant at Glenn Insurance. You may also contact Horizon Blue Cross Blue Shield directly below.

Contact Horizon Blue Cross Blue Shield

If you have questions about
how to read your EOB, call
Member Services at
1-800-355-BLUE (2583).

Disadvantages of Having A High Deductible Health Plan

August 12, 2011 By Mike Sheeran

In my opinion, high deductible health plans are one of the best options available to small businesses and individuals looking to save some premium dollars. They certainly aren’t perfect though so I will give you a an idea of what to expect before you take the plunge.

I have personally been covered by a high deductible health plan for the past three years. I have probably saved over $10,000 in premiums over those three years compared to having a premium plan option. Of the $10,000 I’ve saved, I have had about $6,000 in claims so I am still way ahead of the game. Knock on wood!

First off, what is a high deductible health plan?

For the purposes of this post, we are assuming it is a HSA qualified plan, so it will have a minimum single deductible of $1,200 and a minimum family deductible of $2,400.

These plans also have no first dollar coverage so you pay for all services, except for preventive care until you meet your deductible. After the deductible is met, you then pay according to the plan. It may be a fixed copayment for services, a cost sharing or a combination of the two.

On With The Disadvantages

Premium Savings – Before you go all in with an HSA/high deductible plan, you need to evaluate how much you are saving in premium for how much you are going to risk. If your particular plan has a $2,500 deductible and it is only $500 cheaper than a much better plan, it may not be a good buy. Your broker should be able to help with this analysis.
Upfront claims exposure – you do your homework and the HSA is the way to go with savings of $200 per month and a $2500 deductible. Sounds great right? Maybe not. If you have a large claim in the first month, you will have to pay for that service right away before you have had a chance to save the money. You may be able to get a payment plan from the hospital or provider, but it does provide another potential issue.
Claims Paperwork – you will be self administering a lot of your claims, so you must do your due diligence to make sure all claims are paid correctly and on time. With an HSA, your provider will bill the insurance carrier and then you pay based on the approved amounts.
Receipts – the IRS requires that you save all receipts in case you ever need to substantiate a purchase. Good bookkeeping is a must!
Short plan years – this goes along with the upfront claims exposure. Most health insurance plans have a calendar year deductible, so the first year can be tricky. If your plan has a $2500 deductible and starts in November, you could potentially pay out $2500 in December and then another $2500 in January.

Those are the main disadvantages that I have come across personally since I have had my HSA. As long as the premium savings are there, most of the issues aren’t that big of an issue and you just have be able to do proper bookkeeping. Once you get the hang of it, these plans are no more work than anything else.

If you can think of anything I may have missed, or that you have personally run into, please send me a note so I can update the list.

HRA Case Study: How you can save 30% on your small business health insurance.

August 11, 2011 By Mike Sheeran

I talk about health reimbursement arrangements all the time so people have started to ask, “are they worth the extra work in getting them set up?”

Absolutely! Let’s take a look at case study of a group we just worked on.

HRA/Health Reimbursement Arrangement Case Study

This is a recent case we worked on where the business found tremendous savings using an HRA. This group had another large increase with their health insurance carrier and they were ready to try something different. Two of the employees rarely use the plan, so they thought they may be wasting money on high premiums. The solution to this was the HRA.

With the HRA, they opted for a high deductible health plan and are going to reimburse employees for their claims as they are incurred. The best part is, it will work great whether the employees have zero claims or extremely high claims. With the change to a high deductible plan, the premiums were cut in half!

HRA Plan Setup

Premium Savings: $33,176 with new high deductible plan.

2 Single employees and 2 families

HRA Fund : $2500 per single and $5,000 per family.

HRA Fund: September through December 31 = $15,000

HRA Fund: Jan 1 through December 31, 2012, $15,000

Total HRA Fund: $30,000

The worst case scenario for this group is that every employee spends through their HRA allowance and it costs the company $30,000. They are guaranteed to save $3,000 but will likely save much more depending on actual claims usage.

Do you think this will work for your company? It works in most cases and can be a better setup for employees too. Just because you are saving thousands, doesn’t mean employees get a bad deal. Call me today and I will share more information on this setup can benefit everyone.

Contact

Quote

Should You Buy Your Life Insurance Online?

August 10, 2011 By Mike Sheeran

Like many people, the first place I turn for information is usually the web. Nowadays, we can purchase nearly any type of insurance online with just a few clicks of the mouse. This can be both good and bad, and I think online purchases may have some disadvantages, especially when it comes to life insurance.

I will walk through the process of purchasing a term life insurance policy on the web versus dealing with an independent insurance agent.

I’m an agent, so of course I think agents do a better job then our online counterparts, but please read below and decide for yourself.

Pre-Sales Information Gathering and Advice

When you first decide to purchase life insurance, you will have to do some initial research to help pick the right policy.

A few considerations:

What type of policy? Term, whole life, universal life?
How much insurance do you need?
How long do you need the insurance?
What is your monthly budget? How much can you purchase based on that budget?
What company to choose?

There are more to add to the list, but your initial research will either have to be done solely on the web, or you can speak to your agent for advice. Looking for good advice online can be very time consuming and some things may be overlooked. If you decide to work with an agent, they will help you with all of the questions above and will probably bring up some addtional concerns that you may not have thought of.

Getting Quotes

You’ve done your research and you are now ready to get some quotes. Some think that they will get lower rates by purchasing online because they can cut out the middle man(agent). This is simply not true. Just to be sure, I quoted myself at a major online site and compared it to my own quotes. Same price!

Another way to look at it is this. If your premium for a ten year term is $500 per year, the agent might get 50% commission. So if you average out $250 commission over ten years, that is about $2.08 in commission per month. So even if you could cut the commission, you are saving a whole $2 monthly.

Moving on…

A quote is just a quote so regardless of what the website or your agent says, the actual rate will be determined by the underwriter when they issue the policy. If you are making comparisons, make sure everyone is using the same rate class to be fair.

Online

Online quoting is very easy. You can probably get quotes from 30 carriers in a matter of minutes.

Agent

Some agents will also quote 30 carriers, or they will select a few that they think will work best for you. They probably know of some carriers that are more lenient with underwriting, or some that may consider cigar smoking as non-tobacco or other details that may benefit you.

At Glenn Insurance, we carefully selected a few different carriers that underwrite fairly, and they will almost always be in the top five for lowest price. Typically the top few carriers will only vary by a few dollars per month in the quotes.

Advantage

I think the advantage will be with the agent, because they will know some of your medical conditions ahead of time and can quote appropriately. As long as they use the top companies, this will be your cheapest route.

Underwriting

Insurance carriers have teams of underwriters that will use your personal and medical information to decide how “risky” you are, and assign you to a rate class. The rate classes are usually some variation of this:

Super Preferred – least expensive
Preferred
Select
Standard
Substandard – Rated Policy – most expensive

The underwriters use criteria set by the insurance carrier to place you in one of those categories. Some of these rules are strict, but others may be up to the underwriters discretion. If you are on the border, the underwriter gets to choose based on their professional opinion.

Since underwriters don’t have the chance to meet you in person, they have to rely on the information in your application to base their decision. If you purchase online, they may not be as agressive with thier underwriting decision especially if you are in between classes. This is where the value of an agent can come in. A good agent can write a letter to the underwriter or speak to them directly to help you get a better rate. Sometimes they can get you from Standard to Preferred, which will save you a lot of money in the long run.

Service Issues and Questions

Life insurance does not require much service once the policy is delivered, but things do come up at times. Things like beneficiary changes, billing issues, address changes, etc… If you do not have an agent, you will be calling the 800 number and will be responsible for all follow up. If you do have an agent, you can make one quick call, tell them what you want to do, and they will take care of the rest.

Claims

No one wants to even think about this, but remember why you bought the policy. Should anything ever happen to you, you want your loved ones paid quickly and correctly so they can get their financial situation in order.

If you purchase online, your beneficiaries will be responsible for contacting the insurance company and getting the proper forms in order. If there is any holdup with payment, they will be responsible for all followup.

If you are working with an agent, this is something they can be a huge help with. With someone passing, the last thing a claimant wants to do is to fill out forms and deal with the insurance company. Your agent will walk everyone through the process and make sure everything is done timely and correctly.

Summary

I tried my best to be fair to both sides and let you decide if purchasing online is right for you. I encourage a litte shopping online but in the end, I think your best bet is to find an agent you trust. Having someone help out when needed is worth a lot more than the perceived convenience of online shopping. Life insurance claims are filed at the worst possible moment for your family. Should something happen, do you want your loved ones dealing with an 800 number or a trusted advisor?

7 Disadvantages of Using a Health Reimbursement Account – HRA

August 7, 2011 By Mike Sheeran

I often talk about the many advantages of using a HRA for your business because of the potential savings and flexibility. Today, I want to mention a few potential disadvantages of using health reimbursement accounts. I still have no reservations in recommending these setups, but to be fair, I will go over some things that can come up with these types of plans.

As a reminder, a HRA is a strategy that employers can use to reimburse employees, tax free, for chosen medical services. The usual setup is to purchase a high deductible health plan and then reimburse employees for their services. The funding levels are very flexible and you can design the reimbursement levels almost any way you wish. Potential savings can be up to 30%.

Potential Disadvantages to Using Health Reimbursement Account

1)HRA Plan Setup

The first potential issue is actually setting up the HRA plan properly. I don’t recommend any small company doing this on their own so you must seek out a third party administrator to handle claims and handle the plan document setup. The typical charge for these services may be around $1,000 – $2,000 per year for a small business. That being said, if you only have 2-3 employees, the extra cost may wash away any potential savings. (I will be doing a future post on why you should not self administer)

The administrator will handle plan documents, non-discrimination testing and all other services to make sure your plan is set up properly according to the IRS.

2)Substantiation Requirements

The IRS has strict rules regarding anything that has potential tax savings, so you must substantiate every claim that gets reimbursed. That means you must have a receipt and/or EOB for every claim to prove it was a qualified medical expense. If you cannot provide proof, you are setting yourself up for a lot of problems should you ever be audited.

3)Additional paperwork and ID Cards

This goes along with number 2 and adds a little. Since this is essentially another health plan, we have extra enrollment forms and possibly debit cards that can be used to pay for services(TPA’s will often issue debit cards that employees can use to pay for their medical services). More forms and cards mean a little more work for everyone, but nothing to be too concerned about.

4)First year claims exposure

HRA plans run calendar year regardless of what your underlying health insurance is.

-Health Plan renews every July 1 for your company – you also decide to start the HRA July 1 this year

-HRA year 1, will run July 1 to Dec 31 .

-HRA year 2, will run Jan 1 to Jan 31.

Why this matters is this. You pledge that you will pay the full deductible for all of your employees. This first year you could potentially pay the deductible for everyone between July and December and then be on the hook again to pay it again next year from Jan 1 to Dec 31.

***HRA Plans can be discontinued under a worst case scenario

For the possible first year claims issue, you have be careful how much you pledge, especially if your plan renews late in the year. Also, depending on your initial premium savings, this may or may not be an issue. It may end up meaning you don’t save quite as much as initially planned. (If you save $60,000 and you pledge up to $30,000, then the worst case scenario is you save $0)

5) Cash Flow Issues

If you have decided to fund an employee’s full deductible or pay the first $1,000 or whatever the amount is, you have to make sure the money will be available when needed. If you start the plan on July 1, there is always the chance that three of your employees are going to need the money right away. If you have more employees or want to fund a larger amount, the amount needed can grow pretty quickly.

***Once you get through the first few months, you will have a good buffer from your premium savings to pay for claims.

6)Employee Complaints

Using an HRA will be a different experience for everyone so you are bound to get some complaints. This is normal for almost all plans, but anytime you ask an employee to do more paperwork, there is always the potential for some pushback. The HRA is usually a much better setup for the employees any way though, so once they get over the reimbursement process, they will love the plan.

7)Eligible Employees

Unfortunately, self employed business owners, partners in partnerships, members of LLC’s and 2% shareholders of S-Corporations may not participate in the HRA. ****At least on a tax free basis – speak to your accountant for specific rules.

So there you have it. Those are the six “big” issues in setting up and maintaining a HRA for your business. It may be a little extra work for everyone, but if you can save 30% on your premiums I think it is well worth it.

We have seen companies save nearly $30,000 with only 10 employees enrolled in the health plan. If you are an insurance/tax/legal professional and can add anything to the list, I welcome any information and will gladly update the post.