How an Indie Musician is Taking Control of Her Health Insurance Problem until our Country Awakens from its Dark Age. (What you probably don’t know about the Affordable Care Act and more)
(It is a dark age people: in my dream last night I went to a doctor’s office. Doc pulled me aside and said, “look, we need to talk about how you are going to pay for this before I look at you. If you don’t have insurance it’s ok. If you do, I will have to charge you for every question you ask me.” I said I did and spent the next 3 hours trying to find the receptionist as the tumor on my leg kept growing. I literally woke up crying.)
You probably just decided it wasn’t worth worrying about health insurance. It’s all a scam you think (you’re right by the way). But then you hear the story of your friend who fell off a balcony and spent weeks in a hospital. Or your buddy who thought he was healthy and then had a heart-attack. Or one of your good friends gets a cancer diagnosis at a young age…it’s not hard to believe it could happen to you. It happened to me. I had a small tumor growing on my back that I discovered at age 29 because I accidently touched it wrong got all nauseous and dizzy and almost passed out. I got it cut out. I’m good now. I had insurance.
I don’t want to scare you. And I don’t want to cause you to go out and spend a bunch of money. But until our system changes and we wake from this dark age we need to look out for ourselves as best we can. No benefit concert can help you if you need cancer treatment.
For the past 10 years I have had an individual PPO health insurance plan. PPO stands for “Preferred Provider Organization.” I pay a premium of $200 a month to Blue Cross Blue Shield to have access to benefits from doctors that are in their network. BCBS covers a large majority of patients in TN and therefore has created a wide-reaching network. They also have the ability to negotiate their maximum payable amounts with doctors (more on this later). BCBS is a mammoth and the have a lot of bargaining power.
With my PPO I have what’s known as a co-pay. I “co-pay” with BCBS to get services I need. For example, if I get sick I go see doc and I pay $30. Then BCBS pays the remaining amount of whatever they have pre-negotiated the value of the service to be. Nice right? I don’t ever have to worry about anything except that $30 copay!
The catch is-you don’t know what those negotiated fees are. And they are wildly VARIABLE depending on whether you are insured or not (hence the dream I mentioned earlier). For instance, say I had no insurance plan. I go to the same doctor and pay $60 out of pocket. If the doctor bills the insurance company he will charge them AS MUCH AS HE CAN GET AWAY WITH. It may be as much as twice what he would charge me if I were uninsured. With my copay I never know what things cost and if I have lab work done or any procedure outside of the norm, those fees are gently worked into my premium over time. Read this great article for more info on that topic.
If I have a cold, or even the flu it would be saner to just use the walk-in clinic at CVS.
Now I am paying roughly $2,400 a year for this plan that covers my office visits with a copay. The real major medical coverage doesn’t kick in until I have met my $$ deductible. So what am I paying for? I’m now actually paying $2,400.00 a year plus my copay ($30 a piece) for that doctor visit. Even if I had some crazy lab work, X-rays etc, it would probably be less than $2,400.00. Did I mention my deductible with this plan is $5,000.00?
Over the past 10 years that means I have paid $24,000 for roughly 4 routine doctors visits (for colds or respiratory infections) and one minor surgery that cost about $1000 if I had paid out-of-pocket.
Enter rational thinking.
(Or at least a band-aid until the rest of the country wakes up and stops allowing themselves to be robbed.)(I could have bought a house.) (or a yacht) (or an RV to tour in).(hmm maybe that’s what is wrong with our economy-all our disposable income goes into the health disposal)
Enter in the health savings account. Let me explain this in the simplest way I can.
You cannot open a health savings account without first having a high-deductible health plan in place. You will see this: HDDP-HSA qualified. HSA stands for Health Savings Account. You put money into that HSA. The HDDP covers you in case you end up in the hospital.
HSA’s are offered by banks. HSA’s are controlled by you. YOU decide how much to put into them. YOU decided if and when to withdraw from them. They are like IRAs (Individual Retirement Accounts) except even better because you can DEDUCT your investment from your income taxes. And there are no tax penalties to WITHDRAW the money if you use it for qualified medical expenses? What are those? Well, that trip to doc or that prescription to clear up your infection.
(Here is some more good news. Thanks to the Affordable Care Act, your HDDP will cover preventative services 100%!!! That means you do not have to meet the deductible first! I have attached a list of those services at the bottom of this article.)
These funds that YOU deposit into your HSA earn interest (TAX FREE) and they never go away. You know how you have to meet that deductible every year? Well, your funds don’t start over they STAY in your account from year to year GROWING with interest. If you don’t get sick, you keep the money. NO throwaways. Simple. That money can become your deductible if you ever need it.
How will you know if this is right for you? Well, if you are an independent musician and are relatively healthy and have no dependents, this might be perfect for you. You can save up to $100 a month on premiums and deposit it into an account. You probably don’t have a retirement fund and an HSA can help you in your retirement if you make it that far. If you are past 27 that is…just kidding. This is actually a good plan for healthy families as well. Side-note!!! BCBS is the ONLY company that offers maternity and there is a 10-month waiting period. Don’t get pregnant before you have paid them for a full year for maternity…they won’t cover you.
Here is how I decided for myself. I calculated all my medical expenses over the past year. They were much less than my BCBS shield premium of $2400. In fact, they were about $300 total. The year of 2009 was my worst medical year because I had a cancer diagnosis. Even in that year, my expenses were less than $2400. For me, it makes sense to not waste that money and to save for when and IF I need it. Here are my calculations below. There is a handy online calculator to help you decide too!
Don’t forget to find out how much your prescriptions cost if you have any. I had an Rx copay as well and when I called to find out how much my migraine medicine cost I was shocked to discover it was $299.99 for 9 tablets. BUT-when I asked how much it was without insurance and with Rx discount cards the cost was more like $80. STILL LESS THAN MY PREMIUM if I fill it only 3 times a year. Oh, if I get it from Canada it’s even less.
Then I learned about the various overseas Rx services. That’s right, get your meds from places where health care isn’t INSANE. Check out www.yourrxdiscounts.com and www.canadarx.com. YAY for Canada! CVS also has a great plan for seriously cheap prescriptions and you don’t need insurance to get in on it.
I applied for a HDDP and my premium will be about $115 instead of $220 (which is what it is now).
Check out http://www.health—savings—accounts.com/ for some really detailed info and to get started with a quote.
STEPS TO TAKE:
1. Calculate what you spent on health care last year. Include prescriptions and even contacts and glasses because you can use your HSA for those items too!
2.Calculate your annual cost for your current plan.
3. Apply for a HDDP. (you can use www.ehealthinsurance.com)
4. Subtract #3 from #2. This is the amount you can potentially save in your HSA.
Decide if what you save will cover what you came up with in #2. If it’s close, you stand to save even more that amount in taxes. And if you don’t use it then watch it grow. Just make sure you pick a HDDP that has an out-of-pocket maximum that you can handle in a worst-case scenario.
Contact me if I have missed any pertinent detail or you are confused:)
I (Christina Horn-AKA Hudson K) have provided a sample breakdown of this along with a list of medical conditions that WILL BE COVERED thanks to the Affordable Care Act regardless of which provider you choose. The full article is available on my website. Hudson K is a full time touring musician, producer, educator and journalist operating under the influence of her own independent-thinking.