Copays vs. HSA's....LEt's Get it ON!!!!!!!!!

[bluemarlin08]

Some folks, especially self employed, aren't interested in the tax deduction but they like the high deductible and cost, we just fund a "savings account" that is not tax deductible, they aren't in a tax bracket that they need the deduction plus they might need to access the money in the account for non med reasons.

 

[BKrocko]

In Colorado, the problem with HSA's is that there is not a premium savings vs co pay PPO plans. In many cases, the HSA is more expensive and most carriers have gone to the 2 deductible/family framework. I think Humana and Assurant (not sure about GR) are the only ones left using 1 deductible. Once again, even those carriers are higher on premium vs co pay.

The problem with the co pays is that the co pay only covers "doctor consultation", the second that the doc pulls out any type of tool - the consultation is over and new billing/coding comes into play and your going to pay for it. That is the part most clients do not understand and it gets them pissed. It is also why Somarco is correct when he explains co pay vs non co pay plans.

The other PITA on co pay plans is the confusing difference between "preventive", "routine" and "diagnostic" visits - seems that the coding is the key but no one has control over how it is submitted.

Bottom line is that consumers do not understand anything outside co pay plans - and when you explain to them that it really does not cover anything outside of talking to the doc - you run into the old "then what the hell do I have insurance for" statement. The only true answer is "to cover yourself for unforeseen catastrophic events" and of course, in their minds, that only happens to the "other guy".

If HSA's were priced with a significant premium savings, it would make more sense to the consumer but that just is not the case out here. Also, most carriers in CO do not offer co pay vs non co pay - it is co pay, HSA or nothing. Assurant offers it but they are even higher on those plans vs the available co pays from other carriers.

 

[K-Dub]

Exactly! Try explaining this one to a prospective client:

Mrs. Client, you and your husband are both 39 years old and have two kids. I have two different plans you can go with. The first one offers you co-pays for doctors, lab and x-ray co-pays and a Rx drug co-pay, plus it will give you an annual physical every year free. It costs $255 a month!

The other option is a plan where you pay for everything, doctors visits, lab and x-ray coverage, all Rx drug costs and your annual physical. You will pay the first $5,600 each year in medical expenses. This plan costs $264 a month!

Which one do you think would fit you best?

 

[trvlnut]

Art Williams made a similar argument in his BTID manifesto.

Funny you brought him up. My ex step brother-in-law (got that?) was one of the first ones in on that deal. He made a killing until they went bankrupt. My Dad thinks he had all his $ in their stock. Did somebody say DIVERSIFY?

 

[newmindfashion]

BK, K-Dub,
Clearly a huge market differential from state to state. In the northeast, copay plans (the good kind with no lab fees and the lesser kind as BK described so well) are all much more than an HSA plan. In addition, in the states I work in, carriers have not gone to the multiple deductible approach within an HSA framework. To boot, some of the HSA plans in Connecticut and New Hampshire have upfront preventative care that is not subject to the deductible. Golden Rule has that in many states.

By the way, as long as we're on the topic of CO. Please tell me what carriers I need to have there. I'm licensed there but not marketing actively. I get referrals there now and then and would like to know who to be with. I'm with Golden Rule, Aetna, Humana and Assurant.

Anyone else I should make a priority to get appointed with?

 

[BKrocko]

NewMindFashion - You have a good start with those companies. You will want to add World Ins (talk w/K-Dub about this one), Anthem BCBS and in some southern areas (ex: Colorado Springs, Pueblo) = GTL.

Kaiser is also available but they are broker unfriendly = only 2 plans offer Rx coverage, paid only $13.50/member, no access to underwriting, minimum 50 clients after 2 years or they do not pay renewal commission - they also cherry pick - don't even bother submitting an app unless it is a young person with no neg health history., and they will not notify the agent/broker of a decline - the client has to call you back to inform you of the decision.

 

[newmindfashion]

BK and K-Dub,
Thanks for the market info. Never liked Kaiser.

Let me know if you ever need CT or NH info.

 

[4kitties]

Even though I am female the HSA plans really appeal to me.
But they sound "too good to be true" - For example a CA Blue Shield $4000 HSA covers 100% (including RX) after $4000 (and the deductible counts to the OOP Max). Seems like the insurance companies are taking a huge risk.

Is it that - as some of you said - 90% of people never reach the OOP max, so the insurance company thinks that 90% of the time they will never have to pay a penny - and thus on the other 10% where they have to start paying 100% at a much lower $, they will still come out ahead?

 

[Arabia]

I would be happy to explain. I use a ROI formula to show people the pros/cons of having a plan with/with out copays. The 120 doctor visit was part joke/part calculation. An illustration will help.

Family of 4 goes to the doctor a total of 8 times in both scenarios.

Current Plan:
$400 monthly premium + $35 co pay to see the doctor (annual premium = $4800)
$2000 deductible +$1250 coinsurance (2 deductible per family)= $6500 OOPM + copays .
8 visits to doctor = $280
Total Exposure = OOPM + Monthly Premiums + Copays = $11,580 for a bad year.

New Plan: $200 monthly premium, no copays, ( annual premium = $2400)
$5700 OOPM one deductible plan.
8 visits to doctor @ $60 (average repriced amount) = $480
Total Exposure = $8580


Savings w/ new plan = $800 in exposure on OOPM, $2400 in savings on annual premium.
Total Savings = $3000 + $800 = $3800
Doctor visits needed to break even with copay plan= 152 visits (total savings / $25 savings per visit).

Does the illustratoin make sense to you?

Some agents use monthly savings and calculate things in that way....or the difference of a copay versus none or the total exposure. In this case, the client is savings $25 per visit by having the copay plan, but is paying an additional $2400 a year for that privilege. You can just use that to show a return to equal 96 visits alone which gets the point across. I prefer to use every number at my disposal to proof my point and get the client thinking. I want them to think about their total exposure especially for accidents! How many times they go to to doctor, what they pay for health care costs, etc. because things boil down to economics and IMHO it is all about ROI and the risk associated with that.

Agent: "You're Son breaks his leg playing baseballl and goes to the emergency room. Would you rather pay $1500 or $100????"
Client:"Well, duh, I rather pay $100."
Agent: GREAT, you're going to love this then. Say that bill was $3250 and you had to pay that because surgery was needed on your sons leg, but you were smart enough to listen to me and had an accident policy in force. Now you only owe $100 on your plan vs. the full $3250 you would have had to pay for the plan you have now."
Client: "Where do I sign"
Agent:

Case closed, end of story. Once you put together a spreadsheet that you can quickly modify as needed. It is simply a matter of showing the client the numbers and let them speak for themselves. We, as agents, hope that logic will dictate the ultimate chioce, but we also know as sales professionals that emotions always lead first! The choice is always up to the client, but I feel it is ALWAYS important to look at every angle.


Hope this helps.....

-J.R.

What I am seeing now is that the premiums between the Co-pay plans and the HSA plans are essentially the same. How Has this changed the advice you're giving your clients?