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| The Basics | 9 ways to stretch health-care dollars
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Even people with health insurance aren't immune to financial hardships from serious illness or accidents. Here's what to do if your insurance isn't enough.
By Bankrate.com
The bad news isn't just that you've got colon cancer. It's that, while you've got a good chance for long-term survival, you are underinsured and your checking account may not recover from your illness, even if you do.
Most employees assume that because they have health insurance through their employer, they can weather any medical calamity. The sad truth is that even if you have health insurance, it probably won't be enough if you face a serious illness or an accident that requires extensive hospitalization or rehabilitation. In addition, while it's good news that people are surviving longer due to better treatment for life-threatening illnesses, their increased longevity comes at the cost of bigger medical bills.
A Harvard study of bankruptcies in 2001 showed that roughly half were due to medical causes. Of those that filed for such medically related bankruptcies, 75% had insurance at the onset of illness.
"Medical debtors were 42% more likely than other debtors to experience lapses in coverage," according to the study. "Even middle-class, insured families often fall prey to financial catastrophe when sick."
Employers cut back on what's covered
More people are underinsured as companies face increased costs for providing or supplementing their employees' health coverage. Medical costs for companies increased by 59% in 2000 alone, and continued to rise by double-digits in subsequent years. General Motors alone spends close to $6 billion a year on health care for its employees and retirees.
Businesses can't afford the high rates charged by insurers, so they're passing at least some of the added costs on to their employees. They do this by raising deductibles, increasing the amount of co-pay for each doctor's visit or treatment, and cutting back on what's covered. "Costs have gone up and employees' medical benefits have eroded over the years," says Dr. Steve Neeleman, CEO of HealthEquity, a health-savings account administrator in Salt Lake City.
For example, Kim Zieglowsky, a labor-and-delivery nurse at Bozeman Deaconess Hospital in Montana was diagnosed with a rare form of bone cancer and had to seek treatment in Seattle. While she has medical insurance through her job, Zieglowsky's care will cost several hundred thousand dollars and she will have to pay a major portion of that. A mother of five, she can't afford to pay for her own care. Family and friends recently set up an account at a local bank where people can donate funds to help her.
Zieglowsky is not alone. A 1995 study published by the Journal of the American Medical Association estimated that nearly 29 million people in the U.S. were underinsured. Given the rise in medical costs since that study was published, the number of underinsured has likely risen, too. A more recent study by the Commonwealth Fund, a nonprofit health-policy research group in New York, indicates that about 16 million U.S. adults with health insurance (or 12% of the insured population) in 2003 found themselves under financial duress due to medical bills.
Ways to protect yourself
A family can take preventive measures to weather the financial storm of a serious -- and expensive -- illness. Some to consider:
Set up a health-savings account. HSAs are a boon, but can only be set up if you have a high-deductible health plan ($1,000 or more for individuals; $2,000 or higher for families). You contribute pretax dollars to the account, and funds are withdrawn as needed. The amount saved is rolled over from year to year. The big problem is financing an HSA if your family's finances are already stretched to the limit. Neeleman says one way to save money is to raise your deductible and lower your monthly insurance premiums. Then you can deposit the difference into your HSA. (For more on health savings accounts, click here.)
Buy a critical-illness policy. Almost unheard of three years ago, these policies are becoming better known in the U.S. (They are also popular in the United Kingdom and Canada.) Such companies as MetLife, AIG and Colonial Life offer them, among others. Most work in the same manner: You pay a monthly premium, and when illness strikes, you are given a lump sum to use as you wish rather than having payments go to your medical-care providers. For example, MetLife's covered illnesses include cancer, heart attack, kidney failure, stroke, coronary artery bypass surgery and major organ transplant. Introduced in March, MetLife's critical-illness insurance pays a lump-sum benefit of up to $100,000, offering what the company says is "a way to help maintain and protect (consumers') financial quality of life while better enabling them to focus on their treatment and recovery." The amount of insurance purchased, and the type of illness, determine the amount of the paid benefit. However, cost of premiums may be prohibitive for some.
Hire an advocate. Companies such as Patient Care and HealthEquity have sprung up to help people find their way through the medical-coverage maze. You can find these and similar companies through a Web search, but be careful to check references and otherwise certify that the company is legitimate. Patient Care helps its members best use their health insurance, and file claims and grievances. Employers offer Patient Care's services to their employees for $2 to $3 per month, or individuals can sign up independently for slightly higher fees.
When you don't have critical-illness insurance
If you're diagnosed with a serious and expensive illness and don't already have critical-illness insurance, there are still steps you can take to make your illness more affordable and less likely to break the bank.
Start by analyzing your policy. "Don't assume that things are covered," says Jane Cooper, CEO of Patient Care in New Orleans. "It's important to understand what is covered, and find out what you'll be reimbursed." For example, some insurers consider chemotherapy under medical coverage, while others make it part of your drug-prescription plan. How it is accounted for can make a huge difference since "chemotherapy can be one of the biggest expenses when you have cancer," Cooper says. Read through your policy to find out what's covered and what's not. Ask for help from your medical team and your human-resources department. Even if the news is grim, knowing precisely what is covered, and what is not, will help you formulate a plan.
Don't go it alone. If you're having trouble getting coverage for required care, enlist the help of your doctor, the hospital provider and your HR representative. Have them help make the argument that your treatment is a medical necessity.
Act promptly. If benefits are being denied, promptly demand an appeal or an explanation. The longer you wait to protest, the less likely you will get approval, Cooper says.
Ask for help from family and friends. Because many families can't afford a serious illness even with medical insurance, they are turning to their local communities for assistance. If you live in a small town, you've probably seen advertisements seeking charitable contributions for people like Kim Zieglowsky. Consider setting up a bank account at your local bank. See if there are any local charities or foundations that will help. In the state of Montana, for example, the Payden Memorial Foundation aids and gives financial support to families with children who have cancer.
Negotiate. Cooper says it's rare, but hospitals and doctors may reduce their fees if you make it clear you can't afford to pay the whole fee. "Sometimes you can get a reduction, but it has to be done in advance, not after the fact," Cooper says. Also, don't be afraid to compare costs and negotiate for lowered prices based on what the "hospital down the street" is charging. You may be buying your life, not a used car, but that shouldn't stop you from haggling.
Appeal. If a benefit is denied, appeal it. And if that doesn't work, "then it's lawyer time," says J. Peter Fennell Jr., vice president of employee benefits at Haylor, Freyer & Coon, an independent insurance agent in Syracuse, N.Y.
Overall, the best way to succeed is to be organized. Keep good records by filing each bill or notice you receive from your medical plan. Take notes whenever you are on the phone with your insurer: Jot down what was said, the name of the person you talked to, the agreed-upon course of action, your next course of action, and the action the insurer is supposed to take. Also be sure to schedule appropriate follow-ups. If a customer-service representative is supposed to get back to you on the 15th of the month and doesn't, call him.
Unfortunately, being underinsured is becoming more common. Each year between 10% and 15% of Americans are hospitalized, according to Kaiser Commission. If you're facing a serious illness, you need to take the necessary steps to receive good care and to ensure that you are financially healthy when you regain your physical health.
-- By Jenny C. McCune, Bankrate.com
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