Health Insurance Bonus: Insurance language red flags

Recently, we talked a bit about ways to get decent health insurance.

And then today, I come across a very pertinent post on the Consumer Reports Health Blog: "Seven Signs a health plan might be junk."

The title says it all, doesn't it? Here are the major categories, but I suggest you go to the blog and read the story (and the soon-to-be-released investigative report) at the site:

Limited benefits
This is a big one since, CR reports, "In most states those phrases might be your only clue to an inadequate policy."

Low overall coverage limits
Have a coverage limit of $25,000 or even $100,000? You're setting yourself up for bankruptcy if you have a heart attack or even if you develop diabetes.

“Affordable” premiums
"There’s no free lunch when it comes to insurance," states CR. "[I]f your insurance was a bargain, chances are good it doesn’t cover very much." Their answer is similar to Randy's: Look into a comprehensive plan.

No coverage for important things
Some policies don't cover prescription drugs or outpatient chemo, CR reports. But most won't tell you. Uh oh.

Ceilings on categories of care
"A $900-a-day maximum benefit for hospital expenses will hardly make a dent in a $45,000 bill for heart bypass surgery," says CR. "Limits on mental-health costs, rehabilitation, and durable medical equipment should be the most generous you can afford."

Limitless out-of-pocket costs
Get specifics from your plan before you sign on to find out if they have a cap on how much you can pay. "Some policies, for instance, don’t count co-payments for doctor visits or prescription drugs toward the maximum," they say. That was my experience with my high-deductible plan. A nightmare.

Random gotchas
"An AARP policy we looked at began covering hospital care on the second day," CR says. "That seems benign enough, except that the first day is almost always the most expensive, because it usually includes charges for surgery and emergency room diagnostic tests and treatments." Ouch.

Head's up fellow freelancers!

30-Day Economic Stability Challenge: More health group love

Yesterday's post on health insurance for the creative freelancer left me a little deflated. There might be one group there that might offer me better health insurance, but most of them were for New York City freelancers and therefore no use for me.

So what do you do if you don't live in New York and still want the warm embrace of group health insurance? Consider these options:

Your local Chamber of Commerce
I know most creative professionals think of chambers of commerce as a place for local restaurant owners, accountants and the owner of the biggest bowling alley in town--in other words, not our crowd.

But some chambers of commerce offer health coverage for sole proprietors and small businesses. All groups have dues, some of which are deductible, but you get the bonus of networking with professionals who could use a good writer or editor. Doesn't seem like a bad deal.

National Association of the Self-Employed (NASE)
Hundreds of thousands of entrepreneurs belong to this group, which offers discounts on everything from roadside assistance costs to term life insurance. It offers health insurance through the MEGA Life and Health Insurance Company. But beware: There are red flags on this company at sites such as The Ripoff Report and Attorney Pages. I haven't been able to find any reports on this from legitimate news sources, and would love to hear if you have experience with this company denying claims in bad faith. If that's the case, I don't see the difference between having health insurance through them and the individual market.

I also received a call from a group called One Person Group, which offers group health coverage to self-employed and sole-proprietor professionals. It claims to be the first of its kind, and I'd love to hear if there are freelance writers who use it and how they like it.

Know of others? Leave them in the comments so other freelancers can benefit from your knowledge.

Photo by woodleywonderworks.

30-Day Economic Stability Challenge: Group healthcare love for the freelancer

As Randy mentioned in yesterday's post, a great way to get good coverage and avoid the perils of the individual market is to get insurance through professional organizations. I looked into this when I was searching for better insurance than the HSA and HDHP I had. Here's what I found.

The following writer's groups offer health insurance to members:

MediaBistro
For $55 a year, you can join AvantGuild, their membership arm that gives you access to articles, market guides and, oh yeah, health insurance. Rates are separated into In New York City and Outside New York City.

The good news: If you're in New York City, you get healthcare through Oxford Health Plans, IRBA plans Atlantic, HIP and GHI.

The bad news: Outside New York, you only have an option of--surprise--an HSA or a PPO Copay plan. And that insurance has a $25 million cap, which seems like a lot until you develop a costly illness such as multiple sclerosis or parkinsons disease.

ASJA (American Society of Journalists and Authors)
The yearly membership fees of this huge freelance writers' group are similarly large: $195 a year plus a $50 nonrefundable application fee and a one-time $75 initiation fee upon joining. But once you're in, you'll get discounted rates at their popular annual conference in New York, access to inside information about markets and pay rates, and other benefits. You'll also have the option of joining their health insurance pool.

The bad news: They only offer insurance in 30 states and companies still do underwriting, meaning they can charge you more if you have chronic medical conditions. Sometimes this makes the insurance so expensive, it's unaffordable.

The Author's Guild
For $90 a year, you get access to all kinds of benefits, including copyright and contract help. And if you live in New York City or Massachussets, you'll have access to health insurance starting at $334 a month.

The bad news: As the site says, "Although we offer plans for California, Connecticut, Florida, New Jersey and metropolitan Chicago, rate increases have rendered those plans unaffordable to most members. Understanding the importance of these benefits, our staff is continuously working to provide affordable group health plans for our members."

The National Writer's Union
This honest-to-god union for writers charges hefty membership fees based on income (up to $340 a year for people earning more than $45,000 annually) but it also fights for journalists' rights, offers contract assistance, negotiation assistance and other benefits. It's health benefits are specific by region (they have a California plan, and other regional plans) but it's impossible to tell from the Web site how much they cost).

Editorial Freelancers Association
For $125 for those in New York City and $105 elsewhere (and a $35 processing fee), you can join this group, which is aimed primarily at editors and copywriters. You'll get access to it's online membership directory, job list, email discussion list, and local events, as well as health insurance. They offer a variety of health plans, including the Health Insurance Plan of Greater New York (HIP, which Randy referred to yesterday), The Entertainment Industry Group Insurance Trust (TEGIT), and the discount (NOT health insurance) firm Careington International. It's unclear which areas are covered outside New York City, but it looks like some plans may cover Chicago, Connecticut, California, Florida, Texas, Arizona and Virginia. Some rates are available, in the $400 range for individuals and the $1,200-$1,400 range for families--but those rates for are New Yorkers.

The Writer's Guild of America
This group, which seems to be for television, movie and TV writers, offers members a credit union, health insurance and a pension plan (becoming a TV writer has never seemed more appealing). If you can afford the $2,700 initiation fee for a full-time member, you'll have access to all of this, but there's no detail on the Web site about how much their health plans costs, and they aren't relevant to most journalists anyway, it seems. (Randy, correct me if I'm wrong.)

The National Writer's Association
This group, which seems to be aimed at fiction writers, offers health insurance through Med Choice One, a company that seems to be a group of insurance consultants who help people find decent health insurance through the National Association of Independent Business. No information is available on their site about how much they charge or where their insurance is available.

Have you noticed a theme here? If you live outside New York City, you'll be hard pressed to find decent health insurance through any of these groups, it seems--though if you think you might qualify and want to join, do more research.

Tomorrow, I'll add a few more places to look for group health insurance, closer to home.

Photo by CarbonNYC.

30-Day Economic Stability Challenge: The case against high-deductible plans

Recently, I asked insurance broker C. Steven Tucker who should avoid health savings accounts and associated high-deductible plans. His answer?

It is my informed opinion that no one should avoid an HSA-qualified high-deductible health plan (HDHP). The longer you own one the more lucrative having one becomes. However, it should be noted that prior to age 30 the premium difference between an HSA-qualified HDHP and a more traditional health insurance plan (with all the "first dollar" bells and whistles) is almost non existent. This being the case, younger families can enjoy a more traditional health insurance plan with "first dollar" coverage for about the same premium. However, they will not have the unique tax advantages allotted to those who own an HSA qualified HDHP.

I'm going to take the contrary view on this, not only as someone who started her freelance career with an HSA and as someone who's written about them. Your mileage may certainly vary, but when I was looking at them, I had a hard time finding any critical information on them. In an effort to provide you with more information, I've compiled the following.

About HSAs and HDHPs

Here's the deal with HDHPs and HSAs: HSAs are the Individual Retirement Account of the health insurance world. They're essentially a tax-protected savings account rom which you can draw funds to cover approved health expenses. These are pretty generous: They cover everything from chiropractic to emergency room visits. However, in order to use one, you must have a corresponding HDHP. Deductibles range from $1,000 to $4,000 and premiums can be anywhere from $150 to much much more. The idea is, the money you save will be invested in the stock market according to your wishes and, when you have money left over at retirement you can use it for anything you want, not just health costs.

Sounds like a good deal, right? But let's look at the potential problems:

Not enough money

The attraction of high-deductible plans is that they are inexpensive, catastrophic coverage that can at least get you in the door of a doctors' office or emergency room. But they aren't so cheap when you really look at them:

• The saving problem: In an ideal world, you'd take the difference between what you'd pay for a full-coverage plan (in some cases, up to $1,000 a month) and what you'd pay for a HDHP ($200 or so a month) and put it in the HSA. That way, when you need healthcare, you can draw down the account without having to pay a lot if you're relatively healthy. But as I've written elsewhere, most Americans are abyssmal at saving. Unless you can save the equivalent of your annual out-of-pocket expenses (in some cases $10,000), you may go into more debt with an HSA and HDHP than without it.
• The coverage problem: The reason you could incur serious debt is because you must pay out-of-pocket for all your health expenses until you hit your deductible. The plan I got had a $4,000 deductible. I didn't have $4,000, let alone the money to meet the deductible. What's more, my particular HSA and HDHP didn't cover prescriptions. So I ended up paying $150 for a bottle of allergy spray. No kidding.
• The fee problem: Tucker says the longer you own one, the more lucrative it becomes, but that wasn't my experience. I wasn't a good money manager--I'll be the first to admit it. What I didn't count on what that most HSAs charge you fees. When I finally closed the account because I signed on to a big HMO, I expected to get $20 back. I got $0.11. The bank took the rest in fees.

The reason so many people choose HSAs and HDHPs is because they don't have $1,000 or even $400 to spend on health insurance a month. And with budgets strapped, it can seem easy to slide off on saving money in your HSA. As writer Beth Goethe shared when I asked about health insurance on LinkedIn:

It tickles me that we talk about a health care crisis in this country. The health care is not the crisis. It's a health care INSURANCE crisis. There is plenty of care, but no way to pay for the insurance. Sorry to disappoint, but medical savings accounts are not as impressive as they sound.

Tax time

Tucker says HSAs and HDHPs offer "unique tax advantages." That they do, if you have cash you want to protect from the IRS. But as a self-employed person, you might get just as much of a tax savings, or even more, from getting a high-premium, full-coverage plan if you can afford one.

That's what freelance business writer Randy Hecht argues:

Interestingly, Heather, I've learned to take the opposite approach presented by the first two posters [who advocate HDHPs], something I was taught by Bob McGarvey. I buy relatively high-end health insurance with a low deductible because it's far more advantageous come tax time. Premiums are guaranteed to be expenses you can deduct off your 1040. But high insurance deductibles/co-pays may not be. Too many freelancers treat insurance as something less than a necessity when they ought to give it the same regard and priority they give to housing, utility and food expenses. It's a necessity, and my suggestion to anyone considering a switch to self-employment would be not to do it until they were confident of making enough money to pay for decent coverage.

I've been on a HIP plan for 7 years or so by way of Media Bistro, which itself actually piggybacks on the IRBA health plan. I'm probably going to make the switch to an Oxford plan offered through the Authors Guild, but not for reasons of economizing--simply because a doctor I like no longer takes HIP but does take Oxford. In either case, my monthly insurance expense is slightly higher than a third of my monthly housing expense (though I should qualify that by saying my monthly housing expense is low by NYC standards because I bought my apartment 20 years ago). My suggestion to anyone who's shopping for health insurance is to compare the plans available from any professional associations they're qualified to join--and to get quality rather than bargain-basement coverage, both for peace of mind and for the tax deduction.

Bottom line: The fact is that the U.S. Government Accountability Office found that the average income of someone with an HSA was $139,000 and that 41 percent of people with an HSA didn't draw money from it for health costs. It was a tax shelter. If you actually plan to use it, HSAs won't be the great investment you hope it will be.

Photo by K e v i n.

30-Day Economic Stability Challenge: The great health insurance debate

I watched Sicko the other weekend. Well, I watched part of it. Okay, 15 minutes. Then I had to turn it off.

Anxiety rose up in me because I knew what the people Michael Moore interviewed experienced could easily happen to me. I'm self-employed. I'm on individual health insurance. And I discovered by reading the fine print of my renewal notice at the end of last year two things:

My insurer will increase my premium twice this year.
Once for the annual increase and again when I turn 35 and jump to the next age bracket. I'm anxiously waiting for that letter informing me of how much I'll be paying.

My insurer will review my "membership" in their health plan monthly this year, instead of annually.
Meaning? I assume it means if I get some dread disease in June, I'll be out of health insurance in July. I'm grateful I'm healthy, but I shouldn't have to be lucky. I should have some kind of decent health insurance that does what it promises it will do--cover me for any expenses that develop from a new health condition. I don't trust them. Nor should I.

Still, I know I am lucky to have health insurance, which has covered my allergy spray and treated me for an abscess on my back last year that just finished healing. If I didn't have that, I don't know what shape I'd be in now, financially or physically.

Since this blog is about serenity, I will not subject you to the blood-pressure-raising statistics about healthcare and bankruptcy. But I will say that this is such a major component of economic stability in this country that it's getting a full week of posts on the subject.

I'll cover the options available and whether you should consider them, with the help of some experts.

But today, I want to ask you two things:

How does having health insurance contribute to your self-employed serenity, however you define that?

Where do you get your insurance and do you recommend it to others?

If I get some good tips, I'll incorporate them into future posts.

Photo by allaboutgeorge.