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Open Enrollment, What to Expect

This is going to be quite an open enrollment season – many large corporations that provide healthcare insurance to their employees through self-insured plans are changing the model for providing benefits.  What many employees will see are higher co-pays, higher deductibles, higher co-insurance levels, and finally, severe penalties for seeing their physicians out-of network.  Forget about going to an out of network hospital or diagnostic imaging facility.  Those costs will be too high for most to afford.   As corporations struggle to make money in a bad economy, reducing healthcare costs has become an easy target.  Since the country does not yet appear ready to tackle rising costs, the easy solution is making the employees pay more for the same coverage…

The formulas are quite simple:

  1. If an individual goes to a doctor, there are higher co-pays.  The higher the co-pay, the less the insurer (in this case the employer) has to pay.  Each employer sets the level from $5 to $50 being the typical range.  In some cases, employers are dropping co-pays all together and moving to co-insurance where the employee shares in the cost with the insurer (higher amounts).
  2. If an individual needs a service or procedure where a higher deductible applies, he will pay more money out of pocket before the insurance pays any portion of the claim.  Once the insurance kicks in, with a higher co-insurance amount, he will be sharing more of the approved costs with the insurer (again, the employer).
  3. Lastly, going out of network is going to be harder and harder.  If an individual goes to a non-participating physician, expect to pay a much larger portion of the physician fee.  Self insured plans typically paid on average between 70% to 80% of the reasonable and customary charge leaving the individual to pay the 20%-30% balance.  Now, we are seeing plans where the insurer pays a portion of the Medicare allowable amount (a much lower level than the reasonable and customary fee) and leaving the balance to individual.  Translated into simple math, in some cases the insurer now only pays between 20% to-30% of the physician fee.  Bottom line, it leaves the employee with the bulk of the bill to pay.  Most employees will not be able to go out of network anymore and be forced into seeing in-network physicians.

There are other changes and it depends on the employer.  Some changes can be a reduction or elimination of certain benefits. Some of these ideas are fair, like encouraging employees to stay in network with big financial penalties for leaving the network.

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