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UNION, JACK!

OT, but important...

In Ohio, the law says that, in an emergency, one should go to the nearest facility, regardless of whether or not it’s in-network. In fact, the law says that one’s insurance carrier must cover the treatment in such a case as if it was in-network, even if it’s not.

“Emergency” is defined under the “prudent layperson” rule: “a prudent layperson is someone with average knowledge of health and medicine.” In other words, even a rocket scientist could be a prudent layperson, as could I.

The definition continues:

“An emergency is a condition of such strong pain and severe symptoms that a prudent layperson could reasonably expect that a lack of immediate attention would

- Place the person’s health in serious risk;

- In the case of pregnancy, place the baby’s health in serious risk;

- Cause serious damage to bodily functions; or

- Cause serious damage to an organ or other body part."

In such a case, one’s “managed care plan [HMO, PPO, etc] must pay your medical bills for that emergency, no matter where you receive the services…In an emergency, you should go to the nearest hospital, even if " it’s out of network.

Pretty straightforward: If there’s an emergency, you go to the nearest facility, get treated, and pay as if you’re in-network. On the one hand, it doesn’t mean the care is “free:” you might still have deductibles, co-pays, etc. But you’re not subject to out-of-network penalties, either.

Or so I’ve understood for lo these many years. But I received an email today from a carrier, which shall remain anonymous (for now), which seems to fly in the face of long-established health care procedure and knowledge. Because this carrier has been unsuccessful in coming to terms with several local hospitals, it has decided to punish its own customers. To wit:

“When a member receives emergency care at an non-contracted hospital, [Carrier X] will pay for the services at the in-network level subject to a maximum allowable amount…If a non-contracted hospital charges the member more than this amount, the member will be responsible for the difference.”

[note: I am deliberately withholding the url until the matter is resolved]

See the problem here? Me, too.

One thing that I have never been called is a shrinking violet (or shrinking anything, really). So I just had a nice conversation with the helpful folks at the Department of Insurance, who were also quite concerned. I've forwarded this email to them so that they can look into the matter with a bit more “ammo.”

I’ll let you know how things turn out.

HSA’s and HRA’s, Part Deux…

So what, exactly, is an HRA? Well, it’s a tax-advantaged Health Reimbursement Arrangement that allows an employer to reimburse employees (and/or their dependents) for some of their medical expenses. In this regard, it’s similar to the Health Savings Account (HSA), because it means that the employer can help the employee by cushioning the blow on a major claim. And, the same kinds of expenses that are approved for reimbursement on an HSA plan are okay for HRA, as well.

So what’s the difference? It really comes down to who contributes the money for reimbursement, and who ultimately owns that money.

In an HSA, either the employer or the employee (or both) can contribute to the “rainy day” account, but – no matter what – the employee “owns” whatever money is in that account, and is free to spend it however he chooses (subject, of course, to potential wrist-slapping if the funds are misused). Whoever makes the contribution gets the tax deduction (again, could be both). The type of insurance plan that can be used with an HSA is dictated by the government, so there’s not much flexibility in plan design. And, of course, HSA’s are available to both groups and individuals.

With an HRA, though, only the employer can contribute the funds. The employee doesn’t ever own them, because it’s not an “account,” it’s an “arrangement.” That’s not splitting hairs, because the point is that the employer decides (“arranges”) what claims will be reimbursed, as opposed to just dumping money into some bank account. HRA’s are available only to groups, not individual plans, and offer a lot more flexibility. For one thing, there’s no governmental regulation over what kind of plan is used, so an employer has more choices. For another, HSA plans require that, if the employer is making a contribution, he has to contribute like amounts to everyone in the pan. There are no such rules for HRA’s.

In Part Three, we’ll look “under the hood,” to see how each plan works in real life.

July 4th Update...

Lest anyone fret, I'm taking some family time over the long weekend.

InsureBlog will be back on Tuesday the 5th with a new installment on HSA's vs HRA's.

Have a great 4th!

Thoughts on HSA’s & HRA’s...

One of the hats I wear says “Continuing Education Provider” on it (not really; it’s a metaphor, okay?). In preparing for an upcoming class, I’ve had my own learning opportunity:

Sometimes, a cat is a dog.

There’s been a LOT of press in recent months about how much more successful Health Savings Accounts (HSA’s) have been than Medical Savings Accounts (MSA’s) ever were. It seems that everyone’s talking about them, and they’re selling like hotcakes.

Except that they’re not (and no, I can’t back that up with hard numbers; no one can - yet. But I’ve got pretty good instincts on these things)

Turns out, a LOT of folks -- particularly employers who offer health coverage – are asking about HSA’s, but precious few are actually installing them. Why is that?

Well, it helps to know that HSA’s aren’t free. That is, just because the employer may save some premium dollars (and not as many as one might think), it doesn’t mean that he gets to keep them. By the time one adds in the actual contributions an employer has to make to the savings account to make it attractive (or even palatable) to employees, the savings don’t amount to much. Then, add in the admin costs, and all of a sudden they’re not so great a bargain.

Don’t get me wrong, I am still a tremendous advocate of the concept; I just have some issues with the execution of it. The problem is that HSA’s really aren’t about saving money; they should be about empowering the health care consumer to make better decisions (however one chooses to define “better”).

In any case, what I’m finding is that more often than not, when employers talk about HSA, they really mean HRA.

What’s an HRA? It’s a Health Reimbursement Arrangement (notice the “A” here is not for “Account”). With an HRA, the employer still offers a plan with a higher deductible, for example, but offers to subsidize said deductible. In other words, instead of just handing out dollars willy-nilly, the employer can control to whom the dollars go, and can actually look forward to potentially saving real money.

Next time, we’ll look at an actual case.

Tuesday Update...

This week's Grand Rounds is up over at Health Business Blog.

Enjoy!

A Radical Idea?

Joe Kristan at Roth & Co, tipped me off to a rather interesting forum recently held in our nation’s capital. The panel included members of the President’s Advisory Council on Federal Tax Reform, and included folks from The Heritage Foundation and the Galen Institute.

In fact, the representative from Galen, a Ms Turner, opined that “the tax code contributes to employees' ignorance about the costs of health insurance, leading them to demand more expensive health insurance from their employers and raising healthcare costs.”

Robert Moffit of the Heritage Foundation added that "(i)f you want to reform the health insurance markets, you must reform the tax system." He went on to advocate the elimination of the tax-free status of employer-provided health insurance.

Right problem, woefully wrong answer. If one frames the dilemma in those terms, then the only fair, equitable, and reasonable answer is to make health insurance premiums deductable for everyone, not just those covered under a group plan. That would solve a lot of the affordability problem simply and rationally.

It also blithely ignores the rising impact of qualified reimbursement plans, such as HRA and HSA. These serve several purposes, not the least of which is empowering insureds to be more proactive in their healthcare, and raising their awareness of what coverage and services really cost.

As one could imagine, this issue has caused quite the kerfluffle in several areas of the blogosphere, including insurance and tax related sites.

Over at Tusk & Talon, Chad posits that “(t)here would be a massive amount of social upheaval if the employer based system were scrapped either in favor of socialized medicine or free market individual health insurance.” He’s concerned that the costs of transitioning to a system where these tax breaks are absent would be staggering. He’s also concerned about how such a change would affect availability and quality of coverage.

We’ve been here before:

Back in April, we dissected an article by Dr Greenburg of George Washington University in Washington. He also proposed this course of action, believing that this would make the coverage even more attractive. As we stated then, and restate now, the tax advantages of employer-based coverage are, if anything, a minor issue.

Let’s review for a moment the underlying raison d’etre of this tax deduction: During the 2nd World War, private sector wages were frozen. Employers still needed to attract employees, though, and so lobbied Congress to let them offer benefits tax free. This seemed like a good idea at the time, and it has now become enshrined in the pantheon of worker bennies.

So, would eliminating the deduction really cause widespread panic?

Conversely, would such a measure resolve the issue of the uninsured?

No, on both counts, because the whole issue of group insurance deductability is a straw man. The real issue is benefit configuration, guaranteed insurance and portability. That is, group insurance (typically) covers more things than individual, e.g. maternity expenses. And, because group coverage is by law guaranteed issue, folks don’t have to worry about being declined for coverage, or having pre-existing conditions excluded.

Neither of these area are even remotely addressed by eliminating tax advantages. If anything, such a move would highlight the very real benefits of availability and portability, and underscore how very little the tax break figures into the equation.

The good folks over at T & T express the understandable concern that they’d “likely be out of a job if (this) proposal were to become law.” While I won’t pretend to offer vocational advice, I’m less sanguine about this possibility. From the time I got into this racket some 20 odd (or these odd 20) years ago, I learned that when Social Security was first proposed, life insurance agents panicked, convinced that their business was doomed. And in the mid-60’s, when Medicare came into being, the health insurance industry reacted in much the same way.

Of course, history teaches us that neither eventuality occurred.