A Rough Entry Into The World Of High-Deductible Plans

By Cyril Tuohy
InsuranceNewsNet

It sounded like a no-brainer: Get a high-deductible plan from Aetna and pay $402 a month, dental coverage included, for 2014.

The deductible of $5,000 per family member per year, with a maximum family deductible of $10,000, seemed like a faraway number.

Not since my daughter had a brief stint at the hospital nearly a decade ago to unclog a tear duct did anyone in our three-member family even come close to spending that kind of money on inpatient or outpatient services.

With enough in savings, and the ability to call on nearly $10,000 in cash stashed away in a whole life insurance policy, I wasn’t much worried about coming up with $10,000 on short notice in the face of a medical Armageddon.

That was in the fall of 2013, the year I was booted from the bosom of employer-sponsored benefits and became an independent contractor responsible for my family’s coverage.

We considered ourselves lucky. All year, stories of health insurance hardships surfaced at a steady pace.

Healthcare.gov was a fiasco, more and more workers were becoming dissatisfied with their employer-sponsored benefits, there was no slowing down the inexorable shift in costs from insurance carrier to consumer.

Paying for health care was rapidly climbing the ladder as the No. 1 concern for many Americans, not just from retirees but from all demographic groups. My sister in-law in New Jersey couldn’t find coverage in the individual market for less than $1,600 a month for her family of four.

And here we were, in southeastern Pennsylvania, with in-network primary doctor visits and routine tests covered.

Overall, we’re healthy. We’ve never suffered from chronic, critical or catastrophic illness. Life was very good. Until late summer.

That was when my wife’s back began to flare up, and she was diagnosed with a herniated disk. She could barely walk. We couldn’t wait for her to obtain treatment.

First, there was the X-ray to find out if she needed an MRI, which she did. In August, when the MRI revealed a herniated disk in the L3 vertebra, likely from carrying our daughter on her hip years ago, she went in for two rounds of shots into her back.

The physical pain vanished, replaced by throbbing financial pain.

The Hospital of the University of Pennsylvania billed Aetna $614 for a “radiology disk

test” -- an X-ray, in layman’s terms. Aetna picked up $452, leaving us with $161 out of pocket. No big deal, we could cover that in a blink, and we did.

Then came the MRI. Total cost: $6,061. Aetna picked up $4,521. We were out of pocket $1,540. Ouch, but in the long run, not debilitating by any means. For the first time, though, I was slammed with health care “sticker shock.”

I looked up the price of an MRI on the Internet, kicking myself for not shopping around. But no, $1,540 was about the going rate in this part of the country. Well at least we didn’t get ripped off, I thought to myself.

Besides, there was a payment plan. We could pay the bill off over several months, interest free. It was the first time we’d ever arranged for installments on a health care bill, and it was the first time that I began to approach health care costs like a car payment.

The MRI statement was dated Sept. 7.

On Oct. 7 came the bill from the spine and joint center that administered the shots.

Four shots were administered Sept. 11. Cost of services billed to Aetna: $7,153. Price of the service after Aetna’s “adjustment:” $5,653. Out of pocket cost to us: $1,499.

Another four shots were administered Sept. 26. Cost of services billed to Aetna: $7,153. Price of the service after the adjustment: $5,653. Out of pocket cost to us: $938.

The pair of bills was downright ugly. This latest salvo from the health provider upped our pain threshold by an order of magnitude.

The MRI invoices have been paid off, but we still owe $1,800 for the shots. We intend to reimburse the remaining $1,800 in $300 installments despite a December invoice date asking us to please remit the balance “immediately.”

With luck, we’ll be able to pay back even more than $300 a month. We hope to be completely done by late spring or summer.

Looking back at our claims history for 2014, my daughter and I each came in way below our respective deductibles, as expected.

My wife blew through hers, but in the end not by much. We were nowhere near the $10,000 family deductible above which the carrier would have picked up every last cent for any kind of procedure or prescription.

When I originally signed up for the plan, the number that stuck in my mind was $5,000. All costs above $5,000 are reimbursed, is how I remembered it. When those first bills came in, I called Aetna and they explained the $10,000 family deductible.

I vaguely recalled reading something about a $10,000 family deductible, but I took a calculated risk. I gambled and lost, even if claims for two out of the three of us came in way “below plan.”

In hindsight, knowing my wife suffered from intermittent back pain, I should have settled for a lower deductible plan, had her treated, and then picked a higher deductible plan for 2015.

Remember, though, that even with a regular plan we would have been hit with copays and coinsurance payments.

In the end, we did pay more with the high-deductible plan, but it was due to a one-time event that we could have mitigated. We also like the health savings account features that come with high-deductible plans.

Even so, I feel thoroughly chastened: The MRI and the shots ended up costing us more than $4,000, on top of the copayments for routine care and prescriptions, on top of the $4,824 in annual premium.

Wading through medical bills, deciphering procedure codes, calling billing services and tracking claims on Aetna’s website all take some getting used to. It takes time, and demands extra concentration. You have to hunt down or call up the right documents on your computer, find the right people and ask questions to which you need answers, and know your claims history.

USA Today published an investigative report on rising deductibles and how the move to higher and higher deductible plans are crippling the middle class. I had a little taste of it in 2014 and it’s no fun at all.

If there’s a silver lining, it’s that I’ve come away more educated about health costs, how to navigate the claims process and how to prioritize health needs. In the end, that’s a good thing. I feel like I’ve played a part in the great shift toward consumer-oriented health care where a better-educated consumer is a more astute buyer.

With high-deductible plans becoming more popular, a little health plan buying savvy will go a long way.

Make no mistake, high-deductible plans are coming our way. The portion of workers with annual deductibles rose from 55 percent eight years ago to 80 percent today, according to research from the Kaiser Family Foundation cited in the USA Today story.

Last summer, I was playing goalie, filling in for a players-versus-coaches soccer scrimmage with a group of 10-year-old girls. It was just a punt, but I felt a twinge in the left knee.

At my annual physical in December, I mentioned it to my physician. She let it go because it hasn’t impaired my movement in any way. Still, I feel soreness. It may be nothing. Even if it is, it’s not likely to be very serious.

You never know, though. I’ll see what comes of it. It will likely require an X-ray, even perhaps an MRI, but at least this year we’ve found a plan with a family $3,200 deductible, and individual deductibles of $1,600.

Premiums are higher, yes, but the deductible is far lower than it was last year.

This year, I know we as a family have taken an appropriate amount of risk, an amount with which I’m comfortable. If we’re out another $3,200 in 2015, I won’t be happy but I can live with that. We can cover the costs out of savings.

I can sleep at night.

InsuranceNewsNet Senior Editor Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].