Advertiser Disclosure

Health

How to Use Your Health Savings Account (HSA) as a Retirement Tool

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Advertiser Disclosure

Medical expenses are no joke, and that is especially true for consumers saddled with high-deductible health plans (HDHPs). Since 2011, the rate of workers enrolled in HDHPs jumped from 11% to 29%, according to the Kaiser Family Foundation.

For people enrolled in one of these HDHPs, chances are they’re familiar with the HSA, which stands for health savings account. HSAs are useful, tax-advantaged savings vehicles that allow consumers to contribute pre-tax dollars to a fund they can use for out-of-pocket medical expenses.

What HSA users may not realize, however, is that they can also hack their HSA and transform it into a tool for future retirement savings.

Before we explain further, you need to understand how HSAs normally work and who can take advantage of them. From there, you can use a strategy that allows you to use your health savings account as a powerful retirement tool that will help you manage your biggest expense once you retire.

How to Invest Through a Health Savings Account (HSA)

Health savings accounts allow you to contribute a set amount each year. As an individual, you can contribute up to $3,400 for 2017. Families can contribute up to $6,750, and the catch-up contribution for those over 50 allows you to put in an additional $1,000.

The money you contribute is tax free, meaning it reduces your taxable income in the current year. Once your money is in an HSA, you can hold it in cash or invest your savings to increase its earning potential. If you choose to invest, you can explore a variety of options.

But before you get too excited about the possibilities here, remember: not everyone gets access to HSAs. As we noted before, you need to have a high-deductible health plan before you qualify to open one of these accounts, which may or may not make sense for your financial situation.

You don’t have to use the HSA provider associated with your employer’s health insurance company, says Mark Struthers, a Certified Financial Planner and certified public accountant with Sona Financial.

“HSAs are individual accounts that don’t have to go through your employer. You can shop around for the lowest fees and best investment options,” Struthers says. And unlike their close cousin the Flexible Savings Account, HSAs are portable, meaning you can take your HSA with you if you leave the employer you opened it with.

Within the HSA itself, explains Struthers, you also get to choose many types of investments. “In addition to low-risk, savings-type accounts, you can invest in the same type of fixed income and equity mutual funds that may be in your 401(k) or IRA,” he says.

Just like all other investments, protecting against the risk of losing your hard-earned money is an essential step to take. Tony Madsen, Certified Financial Planner and president of New Leaf Financial Guidance recommends taking a hybrid approach.

“I typically advise my clients to leave two years’ worth of the maximum out-of-pocket expenses in cash in their HSAs,” Madsen explains. “Then, we include the rest in investments that are in line with the client’s overall retirement allocation.”

When you’re ready to withdraw your HSA contributions or your earnings, you can do so without penalty — and again without paying tax — anytime, so long as you spend the money on qualified health care expenses.

Examples of qualified expenses include doctor’s fees and dental treatments, vision care, ambulance services, nursing home costs, and even services like acupuncture or treatment for weight loss. It also includes things like crutches, wheelchairs, and prescription drugs (but does not include over-the-counter medications).

Why HSAs Are Great for Retirement Savings

Here’s what makes your HSA such an attractive vehicle for retirement savings:

If you can contribute to your HSA, invest it wisely, and leave the money in the account just like you would leave the money in your 401(k) or IRA until retirement, you can build a sizable nest egg to use specifically on health care costs after you retire.

Not only will you have a fund for medical expenses, but it’s also money you can use tax free!

That’s a big deal, because health care will likely be your largest expense in retirement. Fidelity estimates couples retiring in 2016 can expect to pay up to $390,000 for medical expenses and long-term care during their golden years.

Health savings accounts are designed to help you pay for medical expenses, tax free. No other account offers so many tax advantages for savers.

You can contribute money to the account tax free. Then you can invest that money, and the earnings are also tax free. If you withdraw the money and use it on qualified health expenses, that money is free from tax too.

In addition to the tax advantages, the funds you contribute to an HSA roll over from year to year. That means you don’t have to spend what you saved until you choose to do so.

(This is different from a Flexible Spending Account, where funds are subjected to a use-it-or-lose-it policy. If you don’t spend the money you put into the account by the end of the year, you don’t get it back.)

And health savings accounts aren’t just liquid savings vehicles. You can invest money within them, often within the same kind of mutual or index funds that you might invest in within a Roth IRA or brokerage account.

When It Doesn’t Make Sense to Use an HSA for Retirement Savings

While HSAs can provide a great, tax-free way to save and pay for qualified medical expenses, your priority should be on selecting the best health care plan for your needs first and foremost. If an HDHP makes sense for you, then you can look at using a health savings account.

If you have an HSA already or currently qualify for one, the next step is to consider hacking it to make it work even harder for you. You can transform your account from a good way to manage medical costs into a tool that makes it easier to bear the brunt of your projected retirement expenses.

This strategy may not work if you currently feel overwhelmed with the cost of your health care and need to take advantage of the tax-free savings and spending power today, instead of waiting for retirement.

Because you’re already in a high-deductible health plan if you have an HSA, that also means you are liable for greater out-of-pocket expenses if you seek treatment.

At a minimum, HDHP deductibles start at $1,300 for an individual or $2,600 for a family. Many HDHPs come with deductibles that range upward of $4,000.

Unless you already have an emergency fund with at least enough money to cover the cost of your deductible should you need to pay it, taking on an HDHP can leave you in a bad financial situation if a serious medical concern arises.

Here’s what you need to think about and ask before you switch to an HDHP:

  • Do you expect to spend a lot of money on health care expenses in the next 5 to 10 years? If you’re young and have no health concerns, your expenses will likely be low and manageable.
  • Do you currently have room in your monthly cash flow for occasional unexpected or increased expenses? If your budget can handle a few doctor’s bills here and there, you may be able to handle health care costs with regular income while you’re young.
  • Do you have an emergency fund, and if so, is it fully funded? Would paying your full deductible wipe out that savings? If so, you may want to create a bigger rainy day fund before you take on an HDHP.
  • Will you save on premiums if you switch to an HDHP? Often the higher deductible can provide you with a lower monthly premium, which can help free up more money in your monthly cash flow to pay for health needs as they arise — but that’s not always the case, so compare plans before making decisions.
  • Can you contribute a significant amount to your HSA? Switching to an HDHP just to get an HSA doesn’t make sense if you’re not close to making the maximum contribution to the account each year.

You can also use a tool created by Hui-chin Chen, Certified Financial Planner with Pavlov Financial Planning. She designed a decision matrix where you can input your own financial information and numbers, and see if an HSA makes sense for you based on that information.

If you’re already on an HDHP and like your plan or if you decide you want to switch to one, open an HSA and start saving. At the very least, you can save money tax free, invest it tax free, and use it tax free on qualified medical expenses.

And that’s a great situation, even if you can’t contribute money and leave it in the account all the way until retirement. If you’re able to contribute and let your savings compound until you retire, great! Use your HSA as a retirement tool to help you cover your biggest expected expense in life after work.

“A ‘good’ HSA decision is to have one and use the funds you saved as you need them,” explains Brian Hanks, Certified Financial Planner. “‘Better’ is maximizing your family contribution each year and using the funds as needed. A ‘best’ situation is to maximize your family contribution, not use the HSA account for medical expenses, and treat it as a second 401(k) or retirement account instead.”

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Kali Hawlk
Kali Hawlk |

Kali Hawlk is a writer at MagnifyMoney. You can email Kali at Kali@magnifymoney.com

TAGS:

Advertiser Disclosure

Featured, Health, News

Trump’s Congressional Speech Debrief: 5 Changes He Has in Store for Obamacare

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Advertiser Disclosure

Trump’s Congressional Speech Debrief: 5 Changes He Has in Store for Obamacare

In his first speech to Congress Tuesday night, President Donald Trump outlined the overhaul he and his administration plan to make to the Affordable Care Act, known as Obamacare.

The proposed new health care plan now heads to the Congressional Budget Office and could face more changes as Democrats and Republicans battle over it in the House and Senate.

Trump urged Congress “to save Americans from this imploding Obamacare disaster.”

The president promised to repeal and replace Obamacare. Here are five key ways he plans to dismantle the current health care system.

You could be in a high-risk pool if you have a pre-existing condition

“First, we should ensure that Americans with pre-existing conditions have access to coverage, and that we have a stable transition for Americans currently enrolled in the health care exchanges,” Trump said in his speech Tuesday night.

A draft of revisions to the Affordable Care Act leaked to Politico on Feb. 24 references high-risk pools, although Trump did not discuss them in his speech.

States would have the ability to create high-risk pools for people with pre-existing conditions who are searching for health care. According to the draft, states would receive $100 billion over nine years in “innovation grants” that would be used to fund high-risk participants, news outlets such as CNN reported.

“High-risk pools would need a lot of taxpayer funding to work properly, experts say,” the Commonwealth Fund, a private nonpartisan foundation that supports independent research on health and social issues, tweeted after Trump’s speech.

You could receive a tax credit — even if you don’t deserve one

Tax credits and expanded health savings accounts could help Americans purchase their own coverage. It should be “the plan they want, not the plan forced on them by our government,” Trump told Congress.

Tax credits based on age, with the elderly receiving higher tax credits, would take the place of Obamacare’s income-based subsidies.

“For a person under age 30, the credit would be $2,000. That amount would double for beneficiaries over the age of 60, according to the proposal,” reported Politico prior to the speech.

The credits were also heavily criticized by some GOP members.

“So the headline is that the GOP is reducing subsidies to needy individuals when in fact, the growth of the taxpayer-subsidized reimbursements will actually increase,” Rep. Mark Meadows (R-N.C.) told CNN. “The total dollars that we spend on subsidies will be far greater. So you can be a millionaire and not have employer-based health care and you’re going to get a check from the federal government — I’ve got a problem with that.”

“What are tax credits & savings accounts going to do for those who don’t have money to spend on healthcare in the first place?” tweeted Advancement Project, a national civil rights organization.

Chris Rylands, a partner in the Atlanta office of Bryan Cave LLP, says many people are worried that the tax credits will make it difficult for low-income participants to afford coverage.

Under the current system, many individuals eligible for a subsidy are immune to price hikes in insurance because the government picks up such a large portion of the cost. The proposed Republican system might make them better consumers, says Rylands, whose practice focuses on employee benefits.

“However, given the complexity of health insurance plans and the opacity of the pricing of health care services, it’s not clear whether individuals can really become well-informed consumers,” Rylands says.

You could lose Medicaid

Trump said his changes would give governors the resources and flexibility they need with Medicaid “to make sure no one is left out.”

Under the Trump administration’s revisions, Medicaid would be phased out within the next few years. Instead, states would receive a specific dollar amount per citizen covered by the program. States would also receive the ability to choose whether or not to cover mental health and substance abuse treatment.

“Medicaid is the nation’s largest health insurer, providing coverage to nearly 73 million Americans,” tweeted the Commonwealth Fund after Trump’s speech. In a follow-up tweet, it said capping spending for Medicaid will reduce coverage rates and increase consumer costs and the federal deficit.

However, the Center for Health and Economy, a nonpartisan research organization, reported in 2016 that block-granting Medicaid in the states will lead to additional savings. H&E projects that the decrease in the use of Medicaid funds, by block-granting Medicaid in the states and the repeal of the Medicaid expansion, would be an estimated $488 billion from 2017 to 2026.

Rylands points out that this will not be a popular provision in Congress.

“What I heard here — although [Trump] didn’t say so in so many words — is that they want to try to turn Medicaid into a block grant program, similar to what was done with welfare reform in the 90s,” Rylands says. “However, I suspect many governors from both parties will not like this because it could mean states will pick up more of the tab for Medicaid.”

You could pay less for drugs

Trump proposes legal reforms to protect patients and doctors from unnecessary costs that make insurance more expensive and bring down the “artificially high price of drugs.”

Alongside medical device manufacturers and insurers, the pharmaceutical manufacturing industry is obligated by the Affordable Care Act to pay a yearly fee. It was determined the industry would pay $4 billion in 2017, $4.1 billion in 2018, and $2.8 billion each year after. However, proposed revisions to the Affordable Care Act include repealing the tax.

Some consumer advocacy groups are hopeful that repealing the taxes will reduce drug prices.

“From life-saving cancer drugs to EpiPens, high Rx prices push critical care out of reach for those who need it,” tweeted AARP Advocates, a nonprofit advocacy group for senior citizens.

You could purchase cheaper health insurance across state lines

“Finally, the time has come to give Americans the freedom to purchase health insurance across state lines — creating a truly competitive national marketplace that will bring costs way down and provide far better care,” Trump told Congress.

Under the current law, many states have the choice whether or not to allow insurers to sells plans between states. However, even when allowed, there isn’t much incentive for health care providers to do so.

Difficulty building a network and attracting enough customers to create a large enough risk pool makes this option unappealing to insurers, the Center for Health and Economy reported.

Whether this proposed change will result in a healthy competition in the industry or in a race to the cheapest offer remains to be seen, says Rylands.

“This has the potential to undermine traditional state regulation of insurance … since it would allow insurance companies to sell into a state without having to comply with that state’s particular insurance laws,” Rylands says.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Katie Tiller
Katie Tiller |

Katie Tiller is a writer at MagnifyMoney. You can email Katie here

TAGS: ,

Advertiser Disclosure

Featured, Health, News

Facing a Medical Debt Lawsuit? Take These 10 Steps First

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Advertiser Disclosure

Facing a Medical Debt Lawsuit? Take These 10 Steps First

If you’ve ever been sued by a debt collector or service provider over medical debt, you know how stressful it can be. If you couldn’t afford to pay the original debt, you likely still can’t afford it. And if you want to defend yourself, you’ll have to face the additional time and cost of going to court, too.

You should know that you’re not alone. According to staff attorney Chi Chi Wu of the National Consumer Law Center, when you look at debt collection items on credit reports in America, “half of those items are from medical debt. Not credit cards. Not auto loans. Medical debt.”

You may be tempted to ignore the suit since you know you can’t pay, but Wu advises against inaction.

“Always show up,” she says. “Never ignore a lawsuit. If you ignore it, the debt collector or service provider on the other side automatically wins by default.”

What happens when you show up, though? Here are four steps to take if you’re facing a medical debt lawsuit.

1. Find Out Where the Debt Comes From

You cannot properly address your lawsuit if you don’t understand where the debt comes from. If you look back at your past bills, you should be able to find a date of service and itemized list of services rendered with associated costs.

You may be in debt because you’re uninsured, but even insured patients end up in this boat thanks in part to a rise in high-deductible health plans. Mistakes can happen as well. If a patient visits an in-network hospital, but is unknowingly seen by an out-of-network doctor, they can be charged out-of-network fees. Doctors are independent contractors, so while the hospital may be affiliated with your insurance company, that doesn’t mean your service provider is inherently in-network.

2. Don’t ignore the lawsuit

In most consumer debt cases, consumers don’t have an attorney at all. But hiring an attorney to advise you can be a wise move. It doesn’t have to cost a fortune either, Wu says.

Most lawyers will provide a free consult before taking you on as a client. In this consult, they may be able to help you find your bearings so you can represent yourself.

Wu recommends seeking help from the Legal Services Corporation, a government-supervised nonprofit that provides legal representation at a low cost to low-income households. You can also seek help from nonprofit legal assistance firms in your area.

If you’re uninsured, one way to keep the case from going to court is to contact the doctor or debt collector immediately to negotiate your bill down to Medicaid/Medicare prices — which are often 2-3 times less than that of the gross price you were billed. When a provider refuses to negotiate down to these lower rates, it is called “discriminatory pricing,” and your legal counsel may recommend using it as a defense in court.

3. Prepare for Court

The first thing you must do is prepare an answer to the lawsuit, including any defenses or countersuits that you want to raise. This will involve filing paperwork at the court, mailing paperwork, and showing up on your initial court date. Again, it’s advisable to get a lawyer to help you through this, or at least get a consult. The National Association of Consumer Advocates has a helpful video explainer on preparing to defend a medical debt lawsuit.

It’s important to make this initial court date. It is very unlikely the judge will grant you a continuance that would move the court date further out.

There are some exceptions to this. If you are being sued in a state in which you no longer reside, it’s easier to mount a defense if you can’t appear in court. In fact, appearing in court could work against you, demonstrating to the court that you have no problem traveling to and from court out of state.

If you’ve been served in a state outside of your own, it is very important to get legal representation.

This is because you must answer the suit, but you must also do so in a way that does not imply that you are submitting to that court’s jurisdiction over you. The process is one that is best handled by someone trained in law.

After you answer the suit, the court will set a date for the discovery part of the trial. You will have to file more paperwork with the court before this date so that you are able to present evidence that you are not liable for the debt.

4. Understand Wage Garnishment

If you are found liable for the debt, or you fail to answer the lawsuit and the judge rules against you, the court may issue an order giving the lender or collection agency the ability to garnish your wages. By federal law, they cannot leave you with less than 75% of your income or $217.50 per week — whichever is greater. State law may protect you even further.

Medical debt collectors are able to garnish your wages, but they cannot garnish Social Security benefits, disability insurance payments, unemployment insurance payments, VA benefits, pension distributions, child support payments, or public assistance benefits. If you have any of these forms of income, it’s wise to set up a different bank account where those funds are deposited and keep all garnishable wages in another separate account.

You should do this because a court order can go after your bank account balances, too. While that doesn’t make it legal to take money that came from any of these protected sources, separate bank accounts will make the incidence of errors smaller — saving you headaches and potential victimization.

5. Know Your Rights

When it comes to medical billing and debts, you do have rights as a patient. Make sure you understand them so you can lower or eliminate your bill before or after you’ve been sued.

Were You Served Properly?

Sometimes wages are garnished before the plaintiff is even aware that there’s a lawsuit against them. This happens most commonly when you’re improperly served. Examples of using “improperly served” as a legal defense include papers being only mailed to you and not delivered in person, papers being left at an incorrect residence, or papers being mailed to an old address. Being “improperly served” does not mean that the papers were left with a family member or friend at your residence and they forgot to tell you about it. If that happened, you’re still on the hook.

If you have been improperly served, or if you find out that the court mistakenly started garnishing wages because you have the same name as an actual plaintiff, you should contact a lawyer immediately to figure out what possible recourses there may be for your specific situation.

6. Get Low-Cost or Free Help from Financial Assistance Programs

In 2016, about 58% of community hospitals in the U.S. were not-for-profit, according to the American Hospital Association. This gives them tax-exempt status, but also obligates them to give back to their communities. Under the Affordable Care Act, these hospitals must provide some type of financial assistance program to low-income patients. Even if you aren’t from a low-income household, you should apply, as some hospitals extend their programs far beyond the poverty line. Many hospitals also extend this program to insured patients.

These hospitals have an obligation to let you know about their financial assistance programs within four months of when your bill has been issued.

You have until eight months after the initial bill was issued to apply for financial assistance. You have the right to do this even if the debt has been sold to a third-party collector, and even if that collector is the one suing you in court.

7. Be Aware of Discriminatory Pricing

We’ve already touched on the fact that you can try to negotiate your medical bills down to Medicaid/Medicare prices. If you are being sued in court and are uninsured, discriminatory pricing can serve as a defense. If you qualify for the hospital’s financial assistance program, they legally must reduce your bill to the amount generally billed to insured patients.

8. Look Out for Balance Billing

Balance billing happens when your hospital or medical provider bills you instead of or in addition to Medicaid or Medicare. It’s a forbidden practice, and you are not responsible for any amounts due when this happens.

You may be able to identity balance billing if you receive an “Explanation of Benefits” from your insurer that states the amount they covered and the amount you still owe. If this does not match the bill your medical provider sent you, there is a cause for concern. Additionally, if the bill you receive does not show any payment from your insurance when you are, in fact, on Medicaid or Medicare, it may be a sign that you are a victim of balance billing.

9. Stop Lawsuits Before They Begin

If something about your bill doesn’t look quite right, there are ways to reduce it to its fair amount.

First of all, make sure the hospital didn’t make an error that resulted in a larger bill. One way this could happen is if something they did caused you to have to stay in the hospital an extra night, inflating your costs beyond what they should have been originally.

Another good avenue to pursue is to have your bill examined by a medical bill advocate. They’re familiar with coding and laws that you’re not, making them the perfect people to review your charges. You may find one in your community by asking around, or you can start your search with the National Association of Healthcare Advocacy Consultants.

Debt collectors, hospitals, and other medical providers don’t want to take you to court. It costs them money, and the odds of them actually getting a full payment at that point are very low. They are almost always willing to work with you before issuing a lawsuit. Negotiate. Apply for financial assistance. Set up zero-interest payment plans directly with your health care provider.

Keep the lines of communication open so that no one ends up with the additional costs of litigation.

10. Weigh Bankruptcy

At any point in this process, you can choose to file for bankruptcy. Filing for bankruptcy may alleviate the medical debt. Just be cautious. Bankruptcy is not a decision that should be made lightly, as it will remain on your credit report for up to 10 years and make it difficult to qualify for new credit.

There are two types of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 requires you to sell off all of your assets to settle what you can of your debt obligations. If you don’t have any or many assets, that aspect of it doesn’t matter much. What will matter is that the debt will essentially disappear after you file.

If you file for Chapter 13, you do not have to sell off any assets, but the debt won’t disappear either. Instead, you’ll be put on a 3-5 year payment plan in order to settle.

This may make sense if the court has already issued an order against your wages, but at any other point in your case, it would make more sense to try to set up a payment plan with the medical service provider or debt collection agency directly. Their last resort is wage garnishment. Don’t let it get that far. Know your rights so you can negotiate with them effectively rather than damaging your credit report through Chapter 13 bankruptcy.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Brynne Conroy
Brynne Conroy |

Brynne Conroy is a writer at MagnifyMoney. You can email Brynne at brynne@magnifymoney.com

TAGS: , ,

Advertiser Disclosure

Featured, Health

3 Ways to Keep Medical Debt from Ruining Your Credit

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Advertiser Disclosure

3 Ways to Keep Medical Debt from Ruining Your Credit

Turns out, your physical well-being isn’t the only thing at stake when you go to the hospital. So too is your financial well-being. That’s because no debt is more common than medical debt.

The numbers are staggering in their scope. According to the Consumer Financial Protection Bureau, more than half of all collection notices on consumer credit reports stem from outstanding medical debt, and roughly 43 million consumers – nearly 20% of all those in the nationwide credit reporting system – have at least one medical collection on their credit report.

Now, you might be inclined to think that because you’re young or have both a job and health insurance, medical debt poses you no risk. Think again. According to a recent report from the Kaiser Family Foundation, roughly one-third of non-elderly adults report difficulty paying medical bills. Moreover, roughly 70% of people with medical debt are insured, mostly through employer-sponsored plans.

Not concerned yet? Consider that a medical collection notice on your credit report, even for a small bill, can lower your credit score 100 points or more. You can’t pay your way out of the mess after the fact, either. Medical debt notifications stay on your credit report for seven years after you’ve paid off the bill.

The good news (yes, there is good news here) is you can often prevent medical debt from ruining your credit simply by being attentive and proactive.

Pay close attention to your bills

Certainly, a considerable portion of unpaid medical debt exists on account of bills so large and overwhelming that patients don’t have the financial wherewithal to cover them. But many unpaid medical debts catch patients completely by surprise, according to Deanna Hathaway, a consumer and small business bankruptcy lawyer in Richmond, Va.

“In my experience, it’s often a surprise to people,” says Hathaway. “Most people don’t routinely check their credit reports, assume everything is fine, and then a mark on their credit shows up when they go to buy a car or home.”

The confusion often traces back to one of two common occurrences, according to Ron Sykstus, a consumer bankruptcy attorney in Birmingham, Ala.

“People usually get caught off guard either because they thought their insurance was supposed to pick something up and it didn’t, or because they paid the bill, but it got miscoded and applied to the wrong account,” says Sykstus. “It’s a hassle, but track your payments and make sure they get where they are supposed to get. I can’t stress that enough.”

Stay in your network

One of the major ways insured patients wind up with unmanageable medical bills is through services rendered – often unbeknown to the patient – by out-of-network providers, according to Kevin Haney, president of A.S.K. Benefit Solutions.

“You check into an in-network hospital and think you’re covered, but while you’re there, you’re treated by an out-of-network specialist such as an anesthesiologist, and then your coverage isn’t nearly as good,” Haney says. “The medical industry does a poor job of explaining this, and it’s where many people get hurt.”

According to Haney, if you were unknowingly treated by an out-of-network provider, it’s not unreasonable to contact the provider and ask them to bill you at their in-network rate.

“You can push back on lack of disclosure and negotiate,” Haney says. “They’re accepting much lower amounts for the same service with their in-network patients. They may do the same for you.”

Work it out with your provider BEFORE your bills are sent to collections

Even if you’re insured and are diligent about staying in-network, medical bills can still become untenable. Whether on account of a high deductible or an even higher out-of-pocket maximum, patients both insured and uninsured encounter medical bills they simply can’t afford to pay.

If you find yourself in this situation, it’s critical to understand that health care providers themselves usually do not report unpaid bills to the credit bureaus – collection agencies do. After a certain period of time, most health care providers turn unpaid debt over to a collection agency, and it’s the agency that in turn reports the debt to the credit bureaus should it remain unpaid.

“If you can keep it out of the hands of the collectors, you can usually keep it off your credit report,” says Hathaway.

The key then is to be proactive about working out an arrangement with your health care provider before the debt is ever sent to a collection agency. And make no mistake – most providers are more than happy to work with you, according to Howard Dvorkin, CPA and chairman of Debt.com.

“Trust me, no one involved with medical debt wants it to go nuclear,” says Dvorkin. “The health care providers you owe know very well how crushing medical debt is. They want to work with you, but they also need to get paid.”

If you receive a bill you can’t afford to pay in its entirety, you should immediately call your provider and negotiate, says Haney.

“Most providers, if the bill is large, will recognize there’s a good chance you don’t have the money to pay it off all at once, and most of the time, they’ll work with you,” he says. “But you have to be proactive about it. Don’t just hope it will go away. Call them immediately, explain your situation, and ask for a payment plan.”

If the bill you’re struggling with is from a hospital, you may also have the option to apply for financial aid, according to Thomas Nitzsche, a financial educator with Clearpoint Credit Counseling Solutions, a personal finance counseling firm.

“Most hospitals are required to offer financial aid,” says Nitzsche. “They’ll look at your financials to determine your need, and even if you’re denied, just the act of applying usually extends the window within which you have to pay that bill.”

If all else fails, negotiate with the collection agency

In the event that your debt is passed along to a collection agency, all is not immediately lost, says Sykstus.

“You can usually negotiate with the collection agency the same as you would with the provider,” he says. “Tell them you’ll work out a payment plan and that in return you’re asking them to not report it.”

Most collection agencies, according to Haney, actually have little interest in reporting debt to the credit bureaus.

“Think about it,” Haney says. “The best leverage they have to get you to pay is to threaten to report the bill to the credit agencies. That means as soon as they report it, they’ve lost their leverage. So, they’re going to want to talk to you long before they ever report it to the bureau. Don’t duck their calls. Talk to them and offer to work something out. They’ll usually take what they can get.”

At the end of the day, according to Haney, most people can keep medical debt from ruining their credit by following one simple rule.

“Just be proactive,” he says.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

MagnifyMoney
MagnifyMoney |

Have a question to ask or a story to share? Contact the MagnifyMoney team at info@magnifymoney.com

TAGS:

Advertiser Disclosure

Health, How to Complain, Life Events

Here’s Everything You Should Know About Term Life Insurance

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Advertiser Disclosure

Shot of a group of people warming up outdoors

The majority of healthy Americans can use term life insurance policies to get sufficient coverage in place for anywhere from $15 to $100 a month. Most (85%) American consumers believe that most people need life insurance, but just over 60% carry a policy. Even among those who carry a life insurance policy, the amount covered is frequently not enough.

Term life insurance is a low-cost way for individuals with financial dependents to meet those people’s needs even after death. But it can be confusing to understand what it is and what it covers.

When to Consider Life Insurance

Anyone who has a financial dependent should consider buying life insurance if they don’t have the assets available to cover their dependent’s financial needs in the event of their death.

There are five major events that create financial dependence and may justify the purchase of life insurance. These events include:

  1. Taking on unsecured debt with a co-signer
  2. Taking on secured debt with a co-signer
  3. Marriage
  4. Having a child
  5. Moving to a single income

How Much Life Insurance Do I Need?

Term life insurance is the cheapest form of life insurance, but carrying too much life insurance is a waste of money. The exact amount you decide to carry will depend on your risk tolerance and the size of your financial obligations. In this article we offer rules of thumb that can help you calculate the financial loss associated with your death.

Most life insurance companies and brokers also offer life insurance calculators, but these calculators rely on averages. Since each person’s situation is different, it can be valuable to create an estimate on your own.

Unsecured debt with a co-signer

If you’ve taken on unsecured debt (like student loans) with a co-signer and you don’t have sufficient cash or investments to cover the debt, then consider purchasing life insurance in the amount that is co-signed. The beneficiary of this policy should be the person who co-signed the loan with you.

For example, if your parents have taken out $50,000 in loans via a Parent PLUS Loan or private loans, then you should take out a $50,000 policy with your parents as the beneficiaries. In most cases involving unsecured debt with a co-signer, a short term (such as 10-15 years) will be the most cost-effective option for covering this debt.

Secured debt with a co-signer

Secured debts (like a mortgage or a car loan) have some form of capital that could be sold to pay off most or all of the loans, but you still might want to consider taking out life insurance for these types of debts.

While your co-signer can sell the asset, pay off the debt, and become financially whole, that may not be the right choice for your situation (especially if the co-signer is your spouse).

For example, a couple that takes out $200,000 for a 30-year mortgage may decide to each take out a $200,000, 30-year term life insurance policy. This policy will allow either spouse to continue to live in the house in the event of the other’s death.

Marriage

Marriage isn’t a financial transaction, but it brings about financial interdependence. In the event of your death, the last thing you want your spouse to be concerned about is their finances.

Couples without children who both work aren’t financially dependent on each other, but many people would still like to provide their spouse 1-3 years’ worth of income in life insurance to cover time off from work, final expenses, and expenses associated with transitioning houses or apartments.

A couple who each earn $40,000 per year, and who have $20,000 outside of their retirement accounts, can consider purchasing life insurance policies between $20,000-$100,000 in life insurance to provide for the other’s financial needs in the event of their death.

Having a child

Because children are financially dependent on their parents, parents should carry life insurance to cover the costs of raising their children in the event of a parent’s death.

The estimated cost of raising a child from birth to 18 is $245,000, so it is reasonable for each parent to carry a policy of $100,000-$250,000 per child. It is especially important to note that stay-at-home parents should not neglect life insurance since their death may represent a big financial loss to their family (manifested in increased child care costs).

The beneficiary of this life insurance policy should be the person who would care for your child in the event of your death. Sometimes this will be your spouse, but sometimes it will be your child’s other parent, or a trust set up in your child’s name.

If a couple has two children under age 5, and $50,000 in accounts outside of retirement, then each parent should have between $150,000 and $450,000 in life insurance. Parents of older children may choose to take out smaller policies or forego the policy altogether.

Income dependence

If your spouse is dependent upon your income to meet their financial needs, then it is important to purchase enough life insurance to care for their immediate and ongoing financial needs in the event of your death. If you are the exclusive income earner in your house or if you co-own a business with your spouse that requires each of you to play a role that the other cannot play, then your death would yield a tremendous financial loss for several years or more.

In order to estimate the size of policy needed in this situation, there are a few guidelines to consider. According to the well-respected Trinity Study, if you invest 25 times your family’s annual expenditures in a well-diversified portfolio, then your portfolio has a high likelihood of providing for their needs (accounting for inflation) for at least 30 years. A policy worth 25 times your annual income, less the assets you have invested outside of retirement accounts, is the maximum policy size you should consider.

Many people choose to take out even less than this because their spouse will eventually choose to return to work. A second rule of thumb is that the total amount of life insurance for which your spouse is the beneficiary should be worth 10-12 times your annual income. A policy of this size would reasonably provide money to pay for living and education expenses (if your spouse needs to re-train to enter the workforce) for many years without damaging your spouse’s prospects of retirement.

Based on these rules of thumb, if you earn $100,000 and your family’s expenses are $70,000 per year, and your spouse is a stay-at-home parent, then you should have enough life insurance to pay out between $1 million and $1.75 million (remember to subtract the values of any other policies or non-retirement assets above when calculating this amount).

How to Shop for Life Insurance

After deciding on the amount of insurance you need, and the terms you need, you can start shopping for the best policy for you. Although it’s possible to shop around for the best insurance, MagnifyMoney recommends that most people connect with a life insurance broker. For this report, every quote received from a broker was within a few cents of the quote received directly from the insurance company.

If you tell a broker exactly what you want, they can pull up quotes from a dozen or more reputable companies to get you the most cost-effective insurance given your health history. This is especially important if you have some health restrictions.

People with standard health (usually driven by high blood pressure or obesity, or many family health problems) may find some difficulty finding low rates, but brokers can help connect them with the right companies.

People with “substandard health” because of obesity, high blood pressure, or elevated cholesterol, those suffering from current health issues, or people recently in remission from major illnesses will not qualify for term life insurance.

Top Three Life Insurance Brokers

  1. PolicyGenius – PolicyGenius is an online-only broker with an easy-to-use process and helpful policy information. Users give no contact information until they are ready to purchase a policy. PolicyGenius’s system saves data, so users don’t have to re-enter time and again. It is very easy to compare prices and policies before applying.
  2. Quotacy – Quotacy is an online-only life insurance broker with connections to more term life insurance companies than most other life insurance companies. Quotacy offers quick and easy forms to fill out, and they do not require that you give contact information until you are ready to purchase a policy. Unfortunately, they do not fully vet out the policies, so you may need to ask an agent questions before completing a purchase.
  3. AccuQuote – AccuQuote is an online-based brokerage company that specializes in life insurance products. Unlike the online-only brokerage systems, their quotes are completed through a brokerage agent via a phone call. People who prefer some human interaction will find that AccuQuote emphasizes customer service and offers the same price points as online-only competitors.

Top Life Insurance Companies

For those who prefer to shop for life insurance without the aid of a broker, these are the top five companies to consider before purchasing a policy. Each of these companies allow you to begin an application online though you may need to connect with an agent for more details (including a rate quote).

To be a top life insurance issuer, companies had to offer the lowest rates on 30-year term insurance for preferred plus or preferred health levels, and be A+ rated through the Better Business Bureau.

  1. Allianz – Allianz offers the lowest rates for both Preferred and Preferred Plus customers, but they do require you to contact an agent or a broker for a quote.
  2. Thrivent Financial – Thrivent Financial offers the lowest rates for Preferred Plus customers, but they require you to contact an agent before they will confirm your rate.
  3. American National – American National offers among the lowest rates with Preferred and Preferred Plus customers, and they work closely with all major online brokers. You must contact an agent to get a quote directly from them.
  4. Banner Life Insurance (a subsidiary of Legal & General America) – Banner Life Insurance offers an online quote portal and very low rates for Preferred Plus customers. They also seem to be a bit more lenient on the line than other customers for considering Preferred Plus (not considering family history).
  5. Prudential – Prudential offers an online quote portal and the lowest rates for Preferred customers.

What to Expect Next

After you’ve decided to purchase an insurance policy, the policy will need to undergo an underwriting process. This will include a quick medical examination (height, weight, blood pressure, urine sample, and drawing blood) that usually takes place in your home. After that, the insurance companies will need to collect and review your medical records before issuing a policy for you.

Underwriting typically takes 3-8 weeks depending on how complete your medical records are. The company will then issue you a policy, and as long as you continue to pay, your policy will remain in effect (until the expiration of the term). Once your policy is in effect, you can rest easy knowing that your financial dependents will be taken care of in the event of your death.

 

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Hannah Rounds
Hannah Rounds |

Hannah Rounds is a writer at MagnifyMoney. You can email Hannah at hannah@magnifymoney.com

TAGS:

Advertiser Disclosure

Health

Health Care Sharing Ministries Surge in Popularity, MagnifyMoney Analysis Shows

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Advertiser Disclosure

 

melanie
Melanie and Matthew Moore of Wake Forest, N.C., turned to Samaritan Ministries, one of the largest health care sharing ministries in the U.S. when they needed health coverage.

In 2013, Melanie and Matthew Moore were facing a bit of a health care cost crisis. After the birth of their first child, the Wake Forest, N.C., couple decided that it made sense for Melanie, 33, to leave her job and become the primary caregiver at home. Not only did that mean losing an additional income source, but it also meant giving up the family’s affordable health benefits.

The monthly premium for a family plan through Matthew’s employer far exceeded the reach of their newly reduced budget. Melanie began researching health insurance options online, and eventually landed on the home page for Samaritan Ministries. East-Peoria, Ill.-based Samaritan is one of the six major faith-based health care sharing ministries in the U.S.. Members of these ministries pay monthly contributions to a pool of funding that is dispersed among members as they show need.

Samaritan’s plan for Melanie and her son cost just $300 per month — less than half what they would have paid for a family health plan through Matthew’s job. Melanie quickly signed them up. To keep costs as low as possible, they decided Matthew, 31, would continue to receive individual coverage through his employer, which was free.

Even more than the price tag, Melanie says she appreciated the ministry’s faith-based approach to health care. “Health sharing promotes the Biblical ideals of sharing,” she told MagnifyMoney. “It takes a whole different mindset than insurance.”

As health care expenses have ballooned over the last decade, health care sharing ministries have gained in popularity as a lower cost alternative to traditional insurance. Their numbers still pale in comparison to people who receive insurance through employers or the federal marketplace. But health care sharing ministries have experienced an explosion in interest in recent years.

Membership among the top four health care sharing ministries nearly tripled in just the last two years — from a reported 274,000 members in 2014 to more than 803,000 Americans in 2016, according to a MagnifyMoney analysis of membership rates at the top six ministries.

Even the smallest ministry in the bunch, Altrua, saw an eight-fold surge in membership in the last year alone — from 1,000 in early 2016 to 8,000 as of November 2016.

But what exactly are health care sharing ministries, and can they really replace primary health insurance?

At a glance, health care sharing seems like a perfect solution to families facing rising premium costs. However, a deeper look shows that participants take a leap of faith when they eschew traditional insurance protections in favor of health care sharing ministries. MagnifyMoney took a deeper look at how they work.

How Health Care Sharing Ministries Work

Ministry members pay a monthly share to the health care sharing ministry. Monthly share costs can be as low as $21 for an individual, but they can be as much as $780 per month for a family. Share costs vary from ministry to ministry and can also change unexpectedly, much like traditional insurance premiums.

In terms of actual functions, most health care sharing ministries collect monthly shares online, and they disburse funds electronically or through checks. Not all the share money goes directly to helping people in need. Some of the money goes to cover administrative costs, and some money may go into an escrow account. The escrow accounts allow ministry participants to share costs even during periods of high expenses.

Submitting claims

When members incur medical expenses, they submit their bills to the ministry for approval. Approvals are based on the ministry’s published guidelines. Some health care sharing ministries allow medical providers to send bills directly to the ministry. The board then approves or denies sharing. When cost sharing is approved, the member is paid in one of two primary ways: Either the ministry disburses funds to those in need directly, or the ministry directs other members to send their monthly premium payments to the member in need instead.

Health care sharing ministries encourage members to pray for sick members and to send encouraging letters or emails to those in need. Health care sharing ministries specifically publish medical needs to members of the community for the purpose of prayer and encouragement.

“You almost can’t compare sharing to health insurance,” says Dale Bellis, executive director of Liberty HealthShare. “Sharing is about giving not receiving. Your goal is to be available for others in need. Participating is motivated by faith in God and faith in one another.”

The “individual responsibility”

Before sharing a cost, some health care sharing ministries require that members meet an “individual responsibility requirement.” Basically, this is their form of a deductible. The individual responsibility can cost from $35 per incident all the way to $5,000 per incident. For example, Samaritan Ministries requires members to share up to $300 per incident. Medi-Share requires members to pay a non-reimbursable fee of $35 per medical visit or $135 for an emergency room visit (much like a co-pay).

Negotiating bills

One of the benefits of participating in a health care sharing ministry is that many ministries emphasize the importance of negotiating medical expenses. It’s in the ministry’s interest to encourage members to negotiate fees, which leaves all the more money in the pool for everyone else. Some ministries hire third-party firms to negotiate bills, but it’s up to members to take advantage of those services.

Altrua Healthshare directly negotiates on behalf of its members, according toRon Bruno, VP of Business Development.

To incentivize members to negotiate their bills, some ministries offer to waive the member’s individual responsibility portion.

For example, Melanie negotiated a discount at the birth center when she had her second child in 2016. The discount she received more than covered her individual sharing responsibility of $300. That meant 100% of her expenses were shared by Samaritan members.

Finding a doctor

For the most part, ministry members are free to choose primary care doctors of their choice. This is because health care sharing ministries don’t usually share the cost of preventive care. The exception, Altrua HealthShare, has a network of affiliate providers including primary care physicians.

The trouble with choosing “any” doctor is finding a primary care physician who will accept patients who pay in cash. Samaritan Ministries directs their members to use a “cash and direct pay” resource from the Association of American Physicians and Surgeons.

Outside of primary care physicians, each health care sharing ministry allows members to request sharing pre-approval for planned surgeries and other expensive procedures. Most ministries have established processes or arrangements that help their members find the most cost-effective surgeons and specialists in their area.

For example, Liberty HealthShare maintains a list of providers who negotiated bills and accepted payments from Liberty in the recent past. Medi-Share has members search databases for preferred medical providers.

Even with these resources, members are free to find their own doctors, and they will still be eligible for sharing (as long as they follow the standard procedures set forth by the ministry).

When it comes to emergency care, ministry members use the best available option and submit their bills for sharing afterward. The health care sharing ministries will seek to honor requests to share even expensive emergency care (provided the emergency care meets their standards).

Health Care Sharing Ministries vs. Insurance Companies

It’s crucial to understand that health care sharing ministries are not insurance companies. They operate more like nonprofit organizations. And because they are not technically insurance companies, they have no contractual obligation to share certain medical expenses. That means they can mostly write their own rulebook for what they expenses will share and what they won’t.

Each health care sharing ministry has full discretion over which treatments it will share, and ministries will not share expensese for many treatments or conditions that do not align with their religious ideals. For example, many ministries won’t cover treatment for drug or alcohol addictions. Medi-Share, for example, will typically not share expenses for prenatal care for an unmarried woman or health care for children born to unwed mothers. These are costs that traditional insurers would cover without hesitation.

There are also limits to how much health care sharing ministries are willing to share. The majority of ministries have a maximum sharing amount of $125,000-$1 million per incident. In contrast, government-approved health insurance plans do not have annual or lifetime maximums for insurance coverage. That’s not to say that these ministries can’t absorb large costs. Samaritan Ministries participants share $18 million per month in medical costs. Currently, Liberty HealthShare has a sharing capacity of $6 million per month among 30,000 households. Medi-Share and Christian Healthcare Ministries have shared more than $1 billion each.

Who can benefit the most from health care sharing ministries

At their heart, health care sharing ministries are meant to help members who are facing unusually high or unexpected health care costs. To that end, most ministries do not share the kinds of routine preventative care — like annual physicals and immunizations — that private insurers are required to cover. Commonly “shared” expenses among ministry members are things like sudden illness or surgeries, says Michael Gardner, a spokesperson for Medi-Share.

In a way, health care sharing ministries have replaced catastrophic health plans that were phased out under the Affordable Care Act. People who may not require regular doctor’s visits but who want a health plan for emergency health care needs might benefit from a health care sharing ministry.

melanie
Melanie Moore, 33, decided to remove her infant daughter from her Samaritan health care ministry plan because the plan did not share her newborn well visit expenses. She continues to use the ministry for her own health benefits.

Because these ministries don’t share expenses for routine health costs, health care sharing ministries make sense for people with low routine health care costs. In general, this includes many healthy people who don’t struggle with chronic conditions.

One surprising group that needs to look out for high routine costs are new parents.

In early 2016, Matthew and Melanie Moore gave birth to their second child. After the birth, the Moores chose to enroll the children on Matthew’s insurance plan instead of keeping them on the Samaritan plan, which wouldn’t share any of their newborn well visit expenses.

Infants visit the doctor 9-10 times in their first 18 months, and they receive dozens of immunizations during that time. For the Moores, the out-of-pocket costs for preventive care would have overwhelmed their budget again.

Health Care Sharing Ministries in the Obamacare Era

Under the guidelines of the Affordable Care Act, health care sharing ministries would never pass muster. But five of the six large health care sharing ministries were granted exemptions under the ACA — meaning their members will not have to pay tax penalties for not having qualified health coverage.

Please note: Members of Medical Cost Sharing (MCS), another ministry, will not receive qualified exemptions from Affordable Care Act penalties. Their website uses language that may lead you to believe otherwise.

Faith (Almost Always) Required

Health care sharing ministries have been around since the 1980s, led by Christian Healthcare Ministries. Like Melanie and her family, most health care sharing ministry participants are drawn to the organizations’ emphasis on faith.

The organizations model their sharing plan after resource sharing ideals practiced by the early Christian church nearly 2,000 years ago.

All the health care sharing ministries require that their members affirm some set of beliefs. Most specifically, they require participants to adhere to the Christian faith. Liberty HealthShare is an exception, according to Bellis. “We are unabashedly a Christian organization, but we don’t intrude on the faith choices of participants,” he says.

Bruno, of Altrua Healthshare, explained that members of Altrua adhere to a statement of standards instead of a statement of beliefs. The standards are based on the Bible, but the ministry is non-denominational.

One reason Melanie Moore loves health care sharing ministries is the sense of community and encouragement she receives from other members. She received notes of congratulations and prayers for recovery when she received checks to pay for her child’s delivery. Likewise, she sends notes of encouragement along with her monthly share check.

All the health care sharing ministries encourage participants to pray and give words of encouragement to sick participants. The ministries exist to foster community and to promote sharing. Anyone looking for an impersonal experience will need to look elsewhere.

Each of the ministries is faithful to its heritage. These ministries are faith-centered, and they want to promote religious faith among their members. It is clear that these ministries want members to share more than medical bills. They want to promote a community of care among their members.

The Bottom Line

Walking the line between faith and finances hasn’t been easy for the Moore family. Melanie is still a member of Samaritan, but the rest of the family is on Matthew’s traditional insurance plan.

Like the Moores, anyone considering a health care sharing ministry should think about their mindset, their faith, and their finances. Don’t join a ministry because of the low monthly costs; the organizations want members who live out the belief statements. Be sure that the rewards of joining a ministry (both financial and otherwise) outweigh the associated risks.

*This post has been updated to reflect the following correction: Due to a reporting error, the name of the ministry used by the Moore family was incorrectly noted. It is Samaritan Ministries, not Medi-Share.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Hannah Rounds
Hannah Rounds |

Hannah Rounds is a writer at MagnifyMoney. You can email Hannah at hannah@magnifymoney.com

TAGS: , ,

Advertiser Disclosure

Featured, Health

6 Health Benefits You Should Never Have to Pay For

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Advertiser Disclosure

child and doctor talking in clinic

Since the passage of the Affordable Care Act, most insurers must now provide preventive benefits without any form of cost sharing. And yet, millions of Americans are still missing out on free (and potentially life-saving) preventative health care services, like flu shots and cancer screenings.

If pocketbook concerns are keeping you from taking care of your health, take a second look. You may find that the preventive services you want are covered without cost to you.

Free benefits — Really?

Of course, it’s misleading to call preventive benefits completely free. You pay for them in the cost of your health insurance premiums. But you may as well use these benefits because, after all, you’re already paying for them. Recent studies show that preventive benefits may save 2 million lives and $4 billion dollars annually.

Furthermore, the ACA doesn’t guarantee free preventative treatments for 100% of insured people. Some insurance plans were given a pass on providing preventative services if they were implemented before March 2010. In 2016, 23% of workers who receive benefits through their employer are enrolled in a grandfathered plan and may not receive full free preventive benefits.

There is also the risk that medical providers may bill patients for services that should be free. Those types of errors are caused when medical billing offices unwittingly bundle covered and uncovered services, when your bill contains an error, or when your insurer errantly denies a claim.

Office visits and preventive services are often billed separately. This means you may receive a legitimate bill even when you thought you were going to receive free care. The only way to avoid this conundrum is to ask for costs in advance. You may also be billed if you use an out-of-network provider.

Below, we cover the preventive benefits you can expect to receive for free, and the times that they may lead to unexpected medical bills.

Benefits for adults

Preventive benefits for all adults fall into six categories. Some benefits are limited to at-risk groups or women only. Before you use a preventive benefit, ask your doctor if you qualify for free screenings. If you don’t, you will have to pay a bill.

Some preventive services will be built into an annual physical, but you can request the services as you need them.

Remember, the preventive service is free, but you may need to pay for ongoing treatment if you uncover a health problem.

Cancer Screenings:

  • Breast cancer screening (mammogram)
  • Cervical cancer screening (pap smear)
  • HPV screening (pap smear)
  • Skin cancer counseling
  • Colorectal screenings (fecal occult blood testing, flexible sigmoidoscopy, colonoscopy)
  • Lung cancer screening (tomography)

Insurers (except grandfathered insurers) cannot impose an extra charge for polyps removed during a colonoscopy. They also cannot charge for medically necessary anesthesia.

Treatment for Chronic Conditions:

  • Screening for the following diseases: abdominal aortic aneurysm, diabetes (blood glucose), hypertension (blood pressure), hepatitis B, hepatitis C, latent TB infection, liquid disorders, osteoporosis
  • Depression screening
  • Low-dose aspirin (adults with cardiovascular or colorectal disease risk factors)

Except obesity management and prescribed aspirin, you must pay for chronic condition treatments through your insurer. This means treating chronic conditions will include cost sharing.

Many chronic condition tests require a blood or urine sample. If your doctor is worried about your health, they may test for multiple uncovered diseases. In that case, you can expect to pay a fee for lab work.

You may also see a charge if a medical biller uses the wrong medical billing codes. If you end up with an unexpected bill, request an itemized bill and an explanation of benefits. You will see on the bill if any you have fees associated with the covered screening. When you see fees for covered screenings, call your doctor to have them adjust the bill. You can also ask your insurer to adjust the claim for you.

Free Health Promotion Treatment

  • Alcohol misuse
  • Obesity screening and management
  • Diet and activity counseling for cardiovascular disease prevention
  • Falls prevention (adults 65+)
  • Tobacco cessation
  • Well-woman visits
  • Intimate partner violence screening and counseling

Initial counseling and tobacco cessation pharmaceuticals are covered at 100%, but your doctor may recommend therapies and counseling not covered by insurance. Be sure to ask if counseling will be billed as a preventive benefit.

Free Immunizations

All immunizations recommend by the Advisory Committee for Immunization Practices (ACIP) must be covered as preventative benefits. This includes over 20 types of immunizations including the annual flu shot.

If you aren’t sure whether an immunization will be covered by your insurance, ask your doctor before you agree to the immunization.

Sexual Health Treatment

  • Screening tests for chlamydia, gonorrhea, syphilis, HIV infection
  • STI counseling
  • HIV counseling
  • Contraceptive services

Insurers must cover the lowest cost version of 18 unique forms of birth control. Treatment for sexually transmitted diseases or infections is not covered as a preventive benefit.

Lab work for sexually transmitted diseases that are not listed will cost extra. Request cost estimates for all tests and screenings even if they are part of your standard wellness visit.

Pregnancy Treatments

  • Anemia, bacteriuria, gestational diabetes, HIV, hepatitis B, syphilis screening
  • Depression screening
  • Folic acid supplements
  • Preeclampsia preventive medicine
  • Tobacco cessation behavioral cessation support
  • Breastfeeding counseling, supplies, and support

Obstetricians commonly ask for tests outside of those listed above. You should expect to pay lab fees for those tests. Most obstetricians can provide clients with a list of routine pregnancy tests and associated costs. In addition to lab fees, you should expect to pay for ultrasounds, labor and delivery fees, and facility fees during your pregnancy and birth experience.

Benefits for Children

Preventive benefits for children are more robust than preventive services for adults. Nearly all procedures provided during scheduled well-child visits will be covered as preventive services. This includes regular checkups, screenings for childhood diseases and disorders, and immunizations.

If your child provides a blood or urine sample you may want to ask about lab fees, but all other services will be free.

Children at risk and sexually active adolescents can receive all the preventive benefits that adults receive in addition to those specific to children.

Regular well-child visits will make it easy for you and your child to take advantage of any preventive benefits available to you.

Final word: Don’t neglect preventive benefits

Preventive coverage can help you catch and cure otherwise deadly diseases. Curing early-stage diseases often costs less than later-stage treatments, and early treatments may save your life. Recent studies show that preventive benefits may save 2 million lives and $4 billion dollars annually.

These services come with no additional cost sharing to you. Take advantage of preventive coverage; you can’t afford to neglect your health.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Hannah Rounds
Hannah Rounds |

Hannah Rounds is a writer at MagnifyMoney. You can email Hannah at hannah@magnifymoney.com

TAGS:

Advertiser Disclosure

Featured, Health

Here’s How Much More Your Obamacare Plan Will Cost in 2017

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Advertiser Disclosure

obamacare Affordable Care Act paper family

As widely expected, millions of Americans who rely on Obamacare for health insurance will face higher premium costs going into 2017. Premiums will rise 25% on average, according to a new report released by the U.S. Dept. of Health and Human Services (HHS). That’s one of the largest year over year spikes premiums have seen since the marketplace opened in 2013.

A 27-year-old woman who paid $242 for a benchmark silver plan in 2016 will now face a premium of $302 before tax credits. The silver lining here is those three words: before tax credits. Roughly 85% of Obamacare customers currently qualify for tax credits that can offset the cost of their premiums. The average subsidy in 2016 was $290/month. Tax credits can help offset rising premium costs, but they depend largely on household size and income. Beginning in November, consumers can calculate their tax credit for 2017 here.

How much premiums will rise depends largely on the state where consumers are shopping. In states where major insurers have exited the federal marketplace, premiums will see much higher gains. Further contributing to rising premiums, insurers are now raising prices in order to recoup losses they’ve incurred since entering the Marketplace in 2013. For example, BlueCross BlueShield reversed its decision to exit the marketplace in parts of Arizona in September. But as a condition of its decision to stay in the marketplace, the company said it would raise premiums by more than 50%. The company will have very little competition this year. Arizona lost a total of six major insurers this year, bringing the total number of insurers offering plans on the marketplace from eight to only two.

Arizona customers will feel those price hikes now. A 27-year-old in Arizona will pay a whopping 116% more for a benchmark silver plan in 2017, according to HHS.

Minnesota consumers relying on Blue Cross Blue Shield for coverage were also unlucky this year. Citing losses of $500 million over its three year run on the state’s exchange, BCBS decided in June to pull all but one plan from Minnesota’s state-run healthcare marketplace, leaving more than 100,000 Minnesotans without plans. The benchmark silver plan will rise an average of 59% for a 27-year-old in Minnesota going into 2017.

The silver lining

The government report focused largely on positive news for Obamacare consumers going into 2017.

Three-quarters of Marketplace customers in states using the federal health care exchange (Healthcare.gov) will be able to find plans with a monthly premium under $100 after factoring in tax credits. On average, these consumers will have 30 different insurance plans to choose from.

But the number of individual insurers offering plans in states has decreased in many states. Pennsylvania and Ohio each lost five insurers. Arizona lost six, the largest loss of any state. In several states, including Alaska, Arkansas, Wyoming, and South Carolina, only one major insurer offers plans on the marketplace. When there are fewer insurers operating in a given state, there is less competition and, as a result, potentially higher rates for consumers.

The Bottom Line:

This all means one thing for Obamacare consumers facing open enrollment Nov. 1: It is more important than ever to shop around and compare plans. If customers don’t shop around, they will simply be re-enrolled in their 2016 coverage. And if their 2016 plan is no longer available, the marketplace will stick them in a similar plan that could cost much more.

“In 2017, more than 7 in 10 (76 percent) current Marketplace enrollees can find a lower premium plan in the same level by returning to the Marketplace to shop for coverage rather than re-enrolling in their current plan,” according to the report.

MagnifyMoney has several tips for people who found out that their Obamacare plan has been dropped.

The open enrollment period of marketplace health plans is a crucial time to save and select the right coverage for your family’s needs. Open enrollment for Obamacare consumers begins November 1 and ends January 31. You can shop for plans in advance right now by visiting Healthcare.gov or your state insurance marketplace.

Source: HHS
Source: HHS

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Mandi Woodruff
Mandi Woodruff |

Mandi Woodruff is a writer at MagnifyMoney. You can email Mandi at mandi@magnifymoney.com

TAGS:

Advertiser Disclosure

Featured, Health

Open Enrollment Season: How to Choose the Right Health Plan

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Advertiser Disclosure

 

Smiling senior man having measured blood pressure

It’s that time of the year again — health care open enrollment. Open enrollment season is the time of the year when you enroll, re-enroll, or change your 2017 health insurance plan. These fall months are pretty crucial. Unless you have a qualifying life event (getting married, starting a new job, etc.), you won’t get another chance to change your benefits for another year.

Most Americans get their health care through three main options — Medicare, their employer, or the federal health care exchange.

  1. Medicare

Open enrollment for Medicare is between Oct. 15 and Dec. 7 each year. You can get a jump start on the enrollment period by reading up on the plans and options ahead of time in Medicare & You, which is updated each year.

  1. Your job

Enrollment for employer-provided health care plans varies since these plans are set by the employer. Enrollment is typically in the fall, and any changes will go into effect on Jan. 1 of the following year. Ask your employer’s human resources department when your deadline is to enroll.

  1. Obamacare

Open enrollment through the state and federal Health Insurance Marketplace begins Nov. 1, and closes Jan. 31. Keep up on important deadlines here. If you need help signing up on the exchange, seek advice from a designated health care navigator.

Here are some tips to keep in mind as you review your health coverage this year:

Don’t get complacent

You might love the benefits you have at the moment, but that doesn’t mean you should blindly sign up for the same plan next year. Insurers are constantly tweaking existing coverage areas and creating new plans. Check to see if your existing plan has changed and see if there are new plans. With the rapid increase in pharmaceutical and health care prices, it’s important to look beyond the premium alone. Lower-cost plans may have higher out-of-pocket costs like deductibles, co-pays, and co-insurance. Certain covered drugs and treatments or the qualifying doctors or hospitals in your network could have changed as well.

Lower your out-of-pocket expenses with a Flexible Spending Account

Americans are paying the highest out-of-pocket health care expenses in history, due to a shift toward high-deductible plans. You can lower your out-of-pocket expenses by setting aside pretax dollars in a Flexible Spending Account. FSAs are only available to workers whose employer provides them.

FSAs can be used only for certain medical expenses, such as co-pays, prescriptions, and some over-the-counter medications. The maximum contribution is $2,550 for 2016. You can only sign up for one during the open enrollment period. When you do, you’ll decide how much of your pretax salary you want to contribute to cover qualified health care expenses throughout the year. Be careful not to contribute too much, however. The downside of an FSA is that you have to use the money in the account by December 31, or it is returned to your employer. However, some employers offer grace periods.

Take advantage of a Health Savings Account if you have a high-deductible health plan

Health Savings Accounts (HSAs) go with high-deductible plans like salmon and white wine. Like an FSA, you contribute pretax dollars to an HSA to cover your medical expenses. However, since HSAs are not tied to any one employer, they are portable. Your money will come with you from one job to the next, and you won’t be limited on where you can use it. You also don’t have a certain time period to make or change your contribution amount, so you can make changes anytime throughout the year. In order to qualify for an HSA in 2017, your health plan deductible must be higher than $1,300 for an individual and $2,600 for a family.

Learn from last year’s mistakes

This is your chance to find a plan that fits your budget and your needs. Insurance companies change coverage rates and options frequently, so take the opportunity to do your research and flesh out all of your options this enrollment season. If you went for a low-premium, high-deductible plan this year, you might have realized you don’t really like paying higher out-of-pocket expenses all that much. Similarly, if you’ve paid for a high-premium, low-deductible plan but don’t use your health insurance that much, you may join the ranks of the growing number of Americans who have switched over to high-deductible health care plans over the past few years.

Check to see if you qualify for a tax credit

Like 80% of Obamacare applicants, you might be eligible for a tax credit that would lower your monthly premium. The average subsidy granted in 2016 was $3480 ($290/month), according to the U.S. Department of Health and Human Services. If your estimated household income is up to four times the federal poverty level, then you’d qualify for the credit. You can check here to see if you qualify for a subsidy.

If you decide to forego insurance, know what to expect

Under the Affordable Care Act, every American has to have qualifying health insurance coverage, or pay a tax penalty. For 2016, the penalty is $695 for each uninsured adult in the household. However, there are a few exceptions. You might qualify for an exemption from the penalties under certain circumstances. For example, you won’t face a penalty if you suddenly lose a job or you are in between jobs for 1 or 2 months and have a gap in coverage. You should check to see if any exemptions apply to you before skipping out on signing up this enrollment season.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

TAGS: , ,

Advertiser Disclosure

Featured, Health

U.S. Travelers Struggle to Find Health Care Options on the Road

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Advertiser Disclosure

U.S. Travelers Struggle to Find Health Care Options on the Road
Livingston, Tex., couple Kate Gilbert, 47, and her husband, Lain, 51, travel in their Airstream travel trailer across the U.S. Finding a health care policy that will cover them has been a challenge.

In 2015, 27-year-old blogger Michelle Schroeder-Gardner and her husband, Wesley, sold their Kansas City, Mo., home and packed what they could fit into an RV. For the next few years, the couple plans on traveling across the U.S. while Michelle runs her business, the personal finance blog Making Sense of Cents, from the road.

“We love traveling,” Michelle says. “I couldn’t imagine living in a ‘normal’ home again.”

Some aspects of transitioning to a mobile lifestyle have been easier to adjust to than others. When it came time to figure out how they would take care of their health on the road, the couple began researching statewide insurance plans. They soon realized finding a plan that would cover them in any state at any time was easier said than done. Without a permanent address, they were denied again and again.

“We came across many problems and even used an RV health insurance broker,” Michelle says. “There was not a single health insurance plan that we qualified for.”

If you’re planning on spending extensive time on the road, either within the U.S. or overseas, managing health care can be a tricky — and oftentimes frustrating — undertaking. As it stands, just 36 states offer multistate health plans (although that will change in 2017, when all 50 states will be required to offer at least two multistate plans).

Finding plans that cover travelers across the nation, no matter where they are traveling, is an even tougher task. While some multistate plans include nationwide coverage, many only offer coverage in a handful of states. If you are traveling outside the bounds of your health plan’s coverage, there’s a good chance that you’ll need to look at other options.

To help you navigate your health care options while traveling in the U.S. or abroad, we’ve come up with a few tips:

Take a good look at your existing coverage.

If you already have a health care plan, look closely to see what is covered. Many major insurance plans offer regional coverage, which means you could be covered in a handful of states. If your current plan does not offer out-of-state coverage, you run the risk of having to pay for medical bills completely out of pocket, except in an emergency. In fact, in 2016 45% of silver-level PPO plans that were new to the health marketplace had no cap on out-of-network costs.

Research multistate plans.

As we mentioned, many multistate plans don’t offer nationwide coverage. The costs, limitations, and options may vary, so be sure to review the details of a plan carefully. Most important, read plan benefits closely to find out which providers are considered in-network versus out-of-network. Other out-of-pocket expenses like deductibles, co-pays, and the cost of services such as lab work and prescriptions can vary by state as well.

Consider traveler’s insurance.

If you’re traveling abroad, one thing you can consider is traveler’s insurance. Traveler’s insurance can cover trips to a clinic or hospital in the case of an illness or injury, plus trips to the emergency room. If your travels take you outside of the U.S., many U.S-based health plans won’t cover the cost of sending you back to the States in the case of a medical emergency.

Depending on your location and mode of transport, medical evacuations can start at $25,000 and exceed $250,000.

An added perk is that most traveler’s insurance will cover theft or accidental loss of your belongings, whether that be your luggage, computer, or other valuable personal belongings. A few companies that offer traveler’s insurance include World Nomads and Travel Guard. Some credit cards even come with travel insurance benefits, so you can look into coverage your credit cards may offer. The cost of a policy depends on where you’re traveling to, the duration of the trip, and how many people will be covered, but typically starts at around $100 per month for international travel.

Think outside the box.

Because they were denied health insurance through traditional health care providers, Michelle and her husband decided to go an unconventional route: they signed up for a health plan through a health sharing ministry. Health sharing ministries are faith-based health organizations that offer health coverage. Members contribute a monthly share and agree to help others in the pool with their medical expenses. Health sharing ministries such as Liberty HealthShare and Samaritan Ministries offer different programs with varying levels of coverage, and the cost is based on your household size. Michelle and her husband pay $449 per month for their plan.

Only a handful of health care sharing ministries are exempt from rules under the Affordable Care Act. Without that exemption, people who rely on these organizations for health care will face a tax penalty.

kategilbert1_healthcareroad

Go for a hybrid approach.

If you plan to spend time traveling within the U.S. and overseas, you may have to piecemeal together some options. Livingston, Tex., couple Kate Gilbert, 47, and her husband, Iain, 51, travel in their Airstream travel trailer across the U.S. and take trips abroad for several months at a time.

“Our main issue when choosing a plan is the out-of-network costs we might be exposed to,” says Kate. “The risk of running up a large bill in an emergency is scary with the lack of nationwide plans.”

In 2015, Iain, who is retired, and Kate, who works part-time as a self-employed consultant, purchased a PPO through Blue Cross Blue Shield that cost $662.55 per month and offered sufficient out-of-state coverage.

However, in 2016 that plan no longer became available. As a result, the couple purchases short-term care insurance when they’re in the U.S., and traveler’s insurance when they’re traveling internationally. Short-term care is an option that can provide coverage up to one year. It usually comes with lower premiums and less strict requirements for eligibility. The downside is that it provides less comprehensive coverage.

But short-term insurance plans do not meet the minimum requirements under the Affordable Care Act, meaning they can’t be used as primary insurance. The Gilberts will be required to pay an Obamacare tax penalty when tax season rolls around. In 2016, the penalty is $695 per adult per household.

Refill prescriptions well ahead of time.

Having your prescriptions refilled in advance is a smart way to avoid headaches on the road. If you’ll be staying in another state for a set amount of time, transfer your prescriptions to a local pharmacy. Let your doctor know you’ll be traveling, and keep his or her number on speed dial. In case you run into any trouble, your doctor may be able to offer advice on the go.

If you have an HMO, you are most likely more limited as to where you can have your prescriptions refilled. On the other hand, a PPO will offer you more choices. You can use your insurance carrier’s pharmacy locator to map out where you can refill your prescriptions.

Have a game plan for dealing with medical emergencies.

Check where the in-network urgent care and ER centers are where you’ll be traveling. If you’re traveling overseas, find out what the 911 equivalent is for emergency phone numbers. You’ll also want to make sure you read up on the health care system of the places you’ll be visiting and the potential costs involved.  Great Britain may have free health care for UK residents and some visa holders, but international travelers will have to pay 150% of whatever their treatment costs abroad. Ouch.

Prep beforehand.

For smooth sailing before you hit the road, make sure your records are up to date and have been transferred to a new primary care physician. Make sure you have any documents you’ll need during your travels, and create copies as backup.

Save extra for unexpected costs.

As it goes for traveling in general, make sure you have a buffer fund in case an illness or injury happens.

If you have a Health Savings Account (HSA), see what the limitations and rules are with your account. Across the board, the maximum amount you can contribute annually for 2016 is $3,350 for individuals, and $6,750 for families. To open an account, you need to have a high-deductible health plan, with a deductible of at least $1,300 for self-coverage, and $2,600 for families. If you pay for a medical expense that isn’t qualified under your account, you’ll have to pay a 20% tax penalty.

While handling health care on the road is a challenging endeavor, don’t despair. Doing your homework ahead of time will ensure you have sufficient coverage that works with your needs and budget.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Jackie Lam
Jackie Lam |

Jackie Lam is a writer at MagnifyMoney. You can email Jackie here

TAGS: ,