Health Care on Less Than You Think

By Fred Brock
Published by Times Books October 2006; $15.00US/$20.00CAN; 0-8050-7980-7

From bestselling author Fred Brock, the first ever hands-on guide to managing your family's health-care costs -- and maximizing your coverage

With Retire on Less Than You Think and Live Well on Less Than You Think, Fred Brock inspired families to focus on increasing wealth by decreasing expenses -- rather than chasing investment fads -- and by following his distinctively achievable, pragmatic strategies. He now tackles the most alarming financial issue facing Americans today: the health-care crisis that is stifling job changes, bankrupting families, and unsettling retirement plans.

Brock investigates the best insurance options available, offering a one-stop guide to maximizing your coverage while minimizing your costs -- with potential savings of thousands of dollars each year. Drawing on the experiences of regular Americans and his practical, dollars-driven analysis, he shows how to

• choose among the health plans and minimize costs based on location

• shop for coverage when your job does not provide insurance

• assess whether health savings accounts help your budget

• track down the biggest savings on prescription drug costs

• master your insurer's fine print and win battles over payments

• manage Medicare and long-term-care insurance to protect your retirement savings

Worksheets and a handy resource list give you the tools to manage your health and your budget.

Once again, Fred Brock provides unrivaled, objective, and essential financial reporting and advice to safeguard the wallets of American families.

Excerpt
The following is an excerpt from the book Health Care on Less Than You Think

Know What Your Insurance Protects

Before selecting a policy from an employer menu (or shopping for an individual policy), you should be certain you understand the terms used by the health insurance industry. The meanings can vary slightly among insurers, so if a number or explanation doesn't match up with the following definitions, press the insurance provider for more details; there may be costs or exceptions hidden in the differences in jargon.

Coinsurance is the amount you must pay after your health plan's deductible has been met. It's usually expressed as a percentage. For instance, you might have to pay 20 percent of every bill until the total of your own payments hits your out-of-pocket maximum.

Copayment is a flat fee you pay for health-care services, regardless of how much the doctor or hospital receives from your insurance provider. Some plans, especially HMOs and some PPOs, require a copayment, usually $10 to $30 for each office visit to a doctor and often higher copayments for emergency care.

Credit for prior coverage may be something you need to prove -- normally with a letter from your former insurer -- if you are switching employers or insurance plans and need preexisting conditions to be covered right away. This is especially important if you are buying an individual policy, which can have a waiting period for preexisting conditions.

A deductible is the amount you must pay for your medical bills before your insurance kicks in. Usually the higher the deductible runs, the less expensive the policy is.

EOB (explanation of benefits) is a statement from your insurance company showing what it has paid and not paid for a claim. Some companies resist supplying duplicate EOBs, so maintaining an organized file of your EOBs is important if you need to challenge a bill.

An EPO (exclusive provider organization) plan allows you to use any doctor or hospital within the insurance provider's current network, without a referral. You have no coverage, however, outside the current network even if your doctor used to be included in the plan. There can be copayments similar to those for HMO and PPO plans.

A fee-for-service (indemnity) plan is the traditional kind of healthcare policy that allows you to go to any doctor or hospital you choose. Deductibles can range from several hundred to several thousand dollars. After you have paid bills totaling your deductible, the plan usually pays 80 percent of all bills; you pay the other 20 percent up to an out-of-pocket maximum that generally runs between $1,500 and $3,000. After you have reached the out-of-pocket maximum, the policy pays 100 percent of your medical expenses. In most states, fee-for-service is the most expensive health insurance you can buy.

An HMO (health maintenance organization) is essentially a prepaid health plan. For a monthly premium, the HMO provides comprehensive care. You likely pay a copayment for office visits, but most HMO plans have no deductibles. (The exception to the no-deductible rule is an HMO that is eligible for a health savings account.) There are usually no forms to fill out or bills to keep track of. You are, however, quite limited in your choice of doctors, hospitals, and other health-care providers. You commonly must get a referral from your primary-care physician to see a specialist; if you don't, your treatment with the specialist is not covered. Though HMOs were designed to control costs, they have been the source of many consumer complaints. These complaints were often because of coverage limitations or the fact that some doctors were compensated for denying treatment or referrals to patients or punished for providing what was considered by the HMO to be excessive treatment, although both problems have lessened in recent years. Because of their comprehensive, deductible-free coverage, HMOs often compete with the most affordable health insurance options.

An HSA (health savings account) is a less expensive, high-deductible policy linked to a tax-free savings account that can be used to pay medical bills before the policy's deducible is met.

Lifetime maximum is the maximum amount of covered expenses your insurance company will pay in your lifetime. Look for a policy with a lifetime maximum of at least $3 million.

Out-of-pocket maximum is the amount of coinsurance you must pay yourself before an insurance policy will pay 100 percent of your bills. It may or may not include the deductible. The term stop-loss is sometimes used to refer to the point at which you have met your deductible and paid your out-of-pocket maximum.

A POS (point-of-service) plan is like a PPO except that you need a referral from your primary-care physician to see an out-of-network doctor, for which you may have to pay extra. Without the referral, you will likely have to pay the entire bill for the out-of-network physician.

A PPO (preferred provider organization) plan is a cross between a fee-for-service plan and an HMO. You can see any doctor you choose without a referral, although if the physician is outside the insurance plan's network you will probably be reimbursed at a lower rate. For network doctors, you usually have only a copayment for office visits. There can be varying copayments -- as well as deductibles, coinsurance, and out-of-pocket maximums -- depending on the policy. Most plans that are eligible for use with a health savings account are PPOs with a high deductible tacked on.

These terms, of course, aren't exclusive to individual policies. Many employers offer a menu of plans for you to select from that usually includes HMOs, PPOs, and traditional indemnity plans. Increasingly, companies are offering HSAs and dropping indemnity plans because they are so expensive.

Copyright © 2006 Fred Brock

Author:
Fred Brock, a former business editor of and a current contributor to The New York Times, is the author of the bestselling Retire on Less Than You Think and Live Well on Less Than You Think. He has previously been an editor and reporter covering politics, business, and finance for The Wall Street Journal, the Houston Chronicle, and the Louisville Courier-Journal. Now the R. M. Seaton Professor of Professional Journalism at Kansas State University, he lives in Manhattan, Kansas.

By Buzzle Staff and Agencies
Published: 10/19/2006