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Group Health Insurance thoughts and musings

Health insurance options for the independant webmaster

     
7:19 pm on May 18, 2007 (gmt 0)

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So I left a stable but low paying IT job for a contract position that pays close to double, but does not include the health insurance benefits the “employee” position did. (I’m in the US)

No regrets about leaving as all things considered I will still come out ahead in all aspects. (Sanity, opportunity, satisfaction, and money)

While I was well aware that my Cobra option would be some serious $$$ (1k per month for me and the wife), I was pretty shocked at how petty health insurance companies can be in the underwriting process. It was a wake up call to how much influence a large company has when it comes to the insurance of their employees. When you work for a company, they pretty much have to take you. When you’re applying online as an individual it’s like a reverse cafeteria plan of exclusions and increased rates!

Obviously I’m not an expert in the Health insurance business, but I am seeking input on what alternatives exist in terms of group coverage.

Specifically, can a large amount of independent webmasters or online marketers form an organization whose sole purpose is to provide access to cheaper health coverage due to its size? If the answer is yes, does such a group exist for independent technologists?
If not, is anyone experienced in what it takes to make something like this happen?

7:49 pm on May 18, 2007 (gmt 0)

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ACM and IEEE both have group insurance options, and I'm sure there are other industry groups that do. I'm unfamiliar with the details of these programs, though.

Be careful about these professional group coverage plans! If the professional group loses their qualification, you could be up a creek without a paddle. There was a case of this in the news lately. Forget the specific group, but it was fairly high-profile. The organization didn't have a large enough percentage of their members in the plan. This is a particular problem with groups that tend to have younger members, many of whom may opt to go without medical insurance.

Personally, I prefer a high-deductible personal plan. Plans that are compatible with an MSA are a bit cheaper and look quite attractive. (My plan is not compatible with an MSA, as I've had it since before MSAs started. I'm considering changing, though.) deductibles ranges in the $1000-$3000/year range, though there are often some items - such as office visits and medications - that are covered before the deductible is incurred.

I have a Blue Cross PPO with a $2200 deductible, which I am quite happy with. Knowing what my friends go through, I would go nuts with an HMO.

These plans may or may not be suitable for you. They are best for somebody with no chronic conditions and who does not expect to develop chronic conditions in the future, who needs coverage for unexpected acute care. And of course any personal plan can be problematic if you have pre-existing conditions.

These plans can actually cost you quite a bit LESS out of pocket for unexpected large expenses, such a surgery, since the plans typically limit total out-of-pocket expense. With my $2200 deductable plan, my maximum yearly out-of-pocket is $5000. Low-deductable plans tend to not have a cap on yearly out-of-pocket. Even if you co-pay is, say, 20%, major surgery can get you above that $5000 quickly!

In general, with ANY kind of insurance, the best deal is to pick the highest level of deductible that you can manage, and then provide some means of funding the deductible. The MSA is an excellent way of doing this for medical insurance. The insurance industry punishes those who either can't or won't take on low-level risk themselves.

Unfortunately, American corporate culture has brought us up with expectations of medical coverage with low deductibles and small copays. When you go outside of the corporate group system and start paying for it yourself, this kind of coverage is very, very expensive. (Of course, it's still very expensive even in the group setting - it's just that most employees don't see the bulk of the expense and never think about it.) You really have to rethink your needs and requirements, and reasons for wanting a particular type of coverage, when you buy it on your own.

8:56 pm on May 18, 2007 (gmt 0)

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Unless you or family members have something "un-insurable" or a pre-existing condition, it's often cheaper to get individual coverage instead of group coverage. With group coverage, pretty much every one who applies is accepted, so the healthy ones basically have to subsidize the unhealthy ones.

Also, it can often be cheaper to get coverage for individual family members instead of primary/spouse coverage, since many go by the age of the older spouse. For example, when my wife and I started with Kaiser, we each ended up getting individual coverage instead of husband/wife covereage- it was about $30/month cheaper at the time, for the exact same coverage. And almost that exact same coverage would have been about $75/month more expensive had we gotten it through the company where I worked at the time (the company didn't cover any of the costs- just made the coverage available).

5:05 am on May 19, 2007 (gmt 0)

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Stgermain

If you get your insurance through a business association, BEWARE!.

There are legitimate arrangments like the insurance we are now getting through our local chamber of commerce. The chamber is not owned or controlled by the insurance broker.

We were previously getting our insurance through what we thought was an independant business association. They ended up dropping our son for 'nonpayment' because of a MAJOR clerical error at their end. Then they suddently gave us a bill for a couple of grand in back billing.

I was trying to work with the 'business association' and was getting stonewalled. I started doing some research and found out that the 'business association' is completely staffed by the insurance broker. In other words, every day to day point of contact for the business association is on the payroll of the insurance broker. I went to the state attorney general (deceptive advertising - misrepresentation- Possible misuse of a non profit status etc)

The AG was useless. Their party line is "We don't act as your personal attorney).. HOWEVER if you defraud an insurance company the full weight of the AG would come down on you. Same deal with our county DA. They won't get involved in that class of crime..

A wall street journal writer named Chad Terhune published a couple of articles about the situation. Only a few states have taken action to protect consumers. Pennsylvania is NOT one of them.

Anyway, if you incorporate, you have a little more flexibility with health insurance deductions. If you get your insurance that way, make sure that the business association is completely independent of the insurance broker. Ask to see the charter and bylaws of the business association (The association would not provide a copy of the bylaws to me when I wanted to find out how to formally complain about the relationship with the insurance company..). Go to your state's department of state website and look for info on the insurance company. Are there any overlapping names? Then go to the web and do some searching. Again, look for incestuos relationships.

(I found that one of the principals of the insurance/business association was pretty high up in the state's treasury department. Wonder how that affected things)

What I think is happening is that the states are turning a blind eye to this kind of thing. They are providing the illusion of low cost insurance by letting people get away with these scams. In most cases people and companies won't have a problem.. But when you do you find yourself without any support at all.

By the way, because of their screwup, there was a two week period when our son had no coverage. Their contention is that there is no problem because they later retroactively reinstated the coverage. So, we are supposed to believe that the same company that screwed up, stonewalled us, sued us, hired a lawyer who personally threatened me with "I'll take that property of yours" would go to bat to get our son covered had he been seriously injured or diagnosed with a major illness in that timeframe..? yeah.. right..

CAVEAT EMPTOR!

12:40 pm on May 19, 2007 (gmt 0)

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It is a very interesting world. I managed a call center for a few years and dealt a lot with the insurance companies. I quit that job in 1999.

About two years ago, I knew I needed to have hernia surgery and another surgery, so I thought I would get personal insurance. I chose the most expensive since this would not be as much out of pocket. But now I found out they have something also called co-insurance (besides the deductible). So this meant an extra $1,000 out of my pocket.

During that year, I was diagnosed with two another medical problems that will have caused me to stick to the higher paying insurance. I can downgrade but if I ever want to upgrade I go through the approving process again.

Being on a company's plan - that's what most people want because as you see, the insurance company cannot turn you down. On a personal plan, they can charge you any rate they want since they know that I will be going to the doctor at least once a month and the prescriptions that I will be on will cost more than what I pay to them.

For a group plan, you will need to show tell the insurance company that you pay your employees. If ever audited, you might need to show proof as well.

Sure, it is possible to do something but with so many webmasters coming and going and then of course you would be competing with them - most would not want to do something like this. And then who would keep all the records, pay the taxes, etc.

I am also on a group plan as well - started on 1 Jan. They could not deny me of course because of previous illnesses. And I don't pay a high monthly - it's about $45 every two weeks (while the company foots the other 50%).

-Corey

 

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