So you need medical insurance, and you aren’t one of the lucky ones who has another job or a spouse who can cover you. I can sympathize; I’m going through the same search myself, and I thought it would be a good time to share some of my research with others going through the same thing.
Medical insurance is a growing issue for everyone. As media companies consolidate and create more correspondent and 32-hour staff positions, medical insurance is a bigger issue than ever. While I didn’t find all the answers in my search for medical Mecca, I did find some good suggestions and background information that will hopefully help you make a more informed decision.
HEALTH SAVINGS ACCOUNTS
In my search for medical insurance, I found the closest thing to medical nirvana for freelancers – HSAs, or Health Savings Accounts. These accounts were created as part of the Medicare reform package that took effect Jan. 1. They replace Medical Savings Accounts, which were a pilot project approved by Congress in the 1990s.
An HSA is like a savings account that helps people save money to pay for the high deductibles of a separate health insurance program. A high-deductible plan means smaller monthly insurance payments, but most ordinary medical costs – doctor’s visits, etc. – have to be paid out of pocket. An HSA is a way for individuals to save money for those ordinary costs.
“Think of HSAs in car insurance terms,” said Jeffrey E. Rothchild, senior vice president of sales and marketing for Wellness Services LLC. “If your insurance covered every oil change, tire and windshield wiper replacement, we’d all have to pay a lot more for car insurance. Health Savings Insurance is similar to car insurance. You pay for only what you use.”
Despite having to pay for day-to-day medical expenses out of pocket, an HSA – combined with a high-deductible insurance plan – is cheaper in the long run for people who are healthy. Even though a $15 co-pay may seem cheaper than paying in full for a doctor’s visits, the overall cost of a paying a high monthly cost for a low-deductible plan is more expensive.
“What most people don’t realize is that they prepay for insurance when they pick low deductibles,” said Brian Will, CEO of Premier Financial Group & Insurance, who also works for Wellness Link. “When they prepay, they buy medical benefits they don’t need or use.”
To take advantage of an HSA, an individual must participate in a health insurance plan with a deductible of at least $1,000 for a single person or $2,000 for a family. The money in an HSA can be invested, and it grows tax free – much like a Roth IRA. An individual or an employer can contribute to these accounts, and unused funds are carried over from year to year and job to job. Funds can be spent on such expenses as doctors’ appointments, prescription drugs, long-term care insurance premiums, COBRA premiums and health insurance premiums for those receiving unemployment benefits. Medicare beneficiaries can use HSA money to pay managed care and standard Medicare premiums but not Medicare supplemental premiums.
In 2004, the maximum annual contribution is $2,600 for a single person and $5,150 for a family. The annual maximum HSA contribution will change each calendar year.
People can withdraw money from an HSA for any medical reason until the age of 65, at which time they can use the money for anything. If they don’t use it, they keep the extra money as the interest compounds. When they die, all residual funds become a part of their estate that heirs can receive tax free.
An HSA might not be the best option if an individual or family can’t afford to fund the HSA or if they aren’t healthy, because they would have to pay for more regular medical expenses themselves.
THE CHALLENGES OF FINDING AN INSURER
When considering what company to use for a health insurance plan, Will says it’s the type of plan you get – rather than the name of the insurance company – that is important.
According to Will, most PPO networks are the same because they are in the PHCS (Private Health Care System), and as long as your insurance has a good network, you will have good coverage. One exception is Unicare, which is proprietary, so it has its own network. Unicare also owns Well Point, which is Blue Cross of California and Blue Cross of Georgia.
Obtaining coverage can be a challenge, though. Bruce Shutan, a freelancer who has been writing about the medical industry since 1988, also has faced obstacles with his wife, a self-employed movie producer.
“Within the past few years, we’ve tried three times to switch from a group to individual plan under the Blue Shield of California umbrella,” he said. “But each time, my application was rejected for what the insurance industry called ‘pre-existing’ conditions. In my case, I’ve had injections for seasonal allergies since I was a teenager, and about two years ago I developed a slipped disc in my right lower back.
“Underwriters consider pre-existing conditions the kiss of death on insurance applications,” he said.
The Medical Information Bureau (MIB) database has a lot to do with how much you pay for insurance. Established in 1902, this Boston-based company provides information to about 600 life insurance companies – many of which also offer health or disability. In return, member companies report medical information to the MIB. It’s a way for insurers to compare notes on applicants without having to contact one another directly.
According to MIB.com, insurance companies today underwrite risks based totally upon information they can obtain from blood, urine, and lab findings; current medical history records; some basic family history information; financial information justifying the amount being applied for; and vocation and avocation risk information.
All doctor visits are recorded, and the information eventually ends up in the MIB database, including anything discussed between a patient and the doctor. That’s because insurance companies fall under the “people who need to know” umbrella within the HIPAA Privacy Security Standards. About 230 different conditions and test results, from high blood pressure to back strain and abnormal lab results, can end up in the MIB database. Having a record in the MIB doesn’t necessarily mean that you’ll be denied coverage, but it could mean you’ll pay higher rates. One way to protect yourself is to call the MIB at (781) 329-4500 or go to MIB.com and request a copy of your medical records to make sure they are accurate. Unless you’ve been denied insurance coverage because of your MIB record, you will also need to send an $8.50 payment with your request.
Faced with mounting medical problems, there is an alternative. By law, insurance companies now must offer everyone what they call a “guaranteed issue” policy that is not underwritten and features high deductibles of anywhere from $1,000 to $5,000, depending on the type of options available and whether it’s for an individual or family. That pretty much guarantees that the people covered by these policies will pay all routine expenses out of pocket, but it provides safety net is for catastrophic illnesses or injuries that require hospitalization. During my research, several insurance companies mentioned Affinity insurance for high-risk people, because they insure every medical condition except AIDS.
Besides health history, location is large factor in finding health insurance. The most difficult and expensive states are in the Northeast – New Jersey, New York, New Hampshire, Rhode Island, Vermont, Massachusetts and Maine. Alaska, Hawaii, Washington, South Florida, Miami and Dade County are also difficult. That’s because state regulation in many of those states increases rates, or the insurance companies don’t make a large profit in certain locations, so they refuse to insure. The Midwest is the most inexpensive area for health insurance.
OPTIONS FOR FREELANCERS
With all these factors, where do you look as a freelancer? Here are some suggestions:
• Mediabistro.com just started offering nationwide medical, dental and vision coverage that is backed by Wellness Services, which offers 140 insurance carriers that have a B rating or higher. They also offer “wellness benefits,” which give additional discounts. This is the best overall freelance insurance site I could find.
• SPJ offers major medical, catastrophic major medical, term life, disability income, accidental death and dismemberment, group hospital indemnity program and short term medical with Marsh Affinity Group Services.
• American Society of Journalists and Authors (ASJA.org) has several insurance plans for its members. But you have to apply to be accepted into this elite membership prior to receiving insurance.
More than anything, make sure you are your own advocate. No one else will be. If a person won’t give you a quote on the phone or they want to pressure you into buying, look somewhere else. Make sure your insurance company is reputable and that they truly will pay if you become ill or injured. And as always, try to find a plan that’s right for you.