Prescription drug costs are getting a lot of media attention these days, sometimes leaving consumers unsure who to trust. One question raised by news coverage is the question of how much we should trust our insurance plans to get us the best deal. According to a recent study, nearly one-fourth of all prescription purchases would be less costly to consumers if they paid cash rather than having their insurance cover the purchase. In other words, their co-payments were more than the actual cash cost of the medication.
The report said it is common for this overpayment to occur with generics. A news report gave an example where the difference was dramatic — a $285 copay compared to a $40 cash price. It seems unthinkable, yet it happens!
Consumers have told stories about this problem for years, but the recent paper from the Schaeffer Health Policy Center at USC was the first known systematic study, so only now are we learning how widespread the problem was; the study, which examined 2013 data, indicated that 23% of all prescriptions involved this kind of overpayment. A few states (not yet Iowa) have passed laws against this practice, but anecdotal reports suggest that it is still widespread.
I’m reminded of the classic consumer advice: “Let the buyer beware;” when in doubt, we need to check things out carefully, gathering information on our own rather than trusting an outsider’s guidance. In fact, the report mentioned that pharmacists’ contracts often include gag rules which prevent them from telling patients about this, unless they ask.
SO – next time I fill a prescription, I’m going to ask: how much would this cost if I just paid cash? If it’s cheaper to pay for it outright, then I’m happy to leave my insurance out of the equation.
Let’s be truthful, some of us do an excellent job helping our 17-18 year old get ready for the real world even if we also remember situations when we hope they didn’t pay too close attention to our bad habits. Adult finance is complicated by some natural tendencies toward spending and savings. I’ve heard more than one parent wonder out loud how a child could grow up in their house and manage money the way they do.
Whether you have full confidence in their money management skills or expect to get several calls asking for guidance when the issue is totally out of hand, here are some tips that may help you and the 17-18 year old in your life:
Reduce their risks-
- Review your insurance policies and find out if the coverage extends to include their property while they are living away from home temporarily. If they are leaving home permanently, pick up information about renters policies and explain it to them.
- Share tips about auto insurance coverage. Remind them that valuables in the vehicle are not insured. Consider whether it makes financial sense to have them insured through their own policy. If the premium will exceed 10% of the value of the vehicle, it may be time to switch to liability only.
- If they will continue to be covered by your health insurance plan: 1) confirm they will have access to the network providers; 2) make sure they are carrying an insurance card; and 3) share a quick reminder of typical preventive services and what to plan for co-pays.
- Recommend filling out their W-4 with a 0 for withholding exemptions until they have filed their first tax return. Several part-time jobs combined together can result in underpayment of taxes due.
- Consider giving them a list of the records you save, electronically or on paper, for financial reasons.
- Give them a shredder. Not an exciting gift, but important to keep their identity intact.
Keep the door open for conversations without judgement. We’ve all done stupid things with money – why not make sure the young adult learns some lessons from you and not the hard way.
Iowa’s new legislation will allow “health benefits plans” to be sold for coverage in 2019. The health benefits contracts will not offer the ten essential areas of coverage mandated by the Affordable Care Act. Mental health, maternity care, and treatments for addiction are examples of coverage that can be dropped and may result in lower costs.
It’s important to remember the new benefits plans are not insurance. Reading the offered plan will be important to understand what is covered and your rights if you disagree with decisions to not pay a claim. The Iowa Insurance Division will not have authority over the plans and has no responsibility to review issues that arise if benefits are denied. The plans fall under ERISA laws administered by the Department of Labor.
While consumers will be able to consider selection of coverage with fewer benefits, they also will be considering a product that lacks some of the traditional back-up security used by insurance. Health insurance providers participate in a risk pool, where money can be borrowed if there are extremely high claims in any one year. The new benefits plans won’t have this protection, a reason why they are apt to be highly selective when offering coverage to clients.
Extension’s health insurance education programs encourage individuals to compare coverage to needs and to read and understand their policies. Those consumer skills will be equally beneficial when comparing health insurance policies to health benefits plans.
Yes, if you have a Medicare Card, you will be receiving a new card in the mail soon. What is different? Your Social Security Number WILL NOT be on the new card. You will have a unique Medicare Number and this will happen automatically.
Why the change? – to protect your identity. Experts have long recommended that we avoid carrying our Social Security card or our number in our wallets, because if stolen or lost people can use it to set up accounts in our name. Until now, however, people who used Medicare didn’t have a choice. It’s generally important to have your health insurance card with you, and unfortunately the Medicare card contained a Social Security number. Consumer advocates have been asking for this to change, and now it will!
New cards will be mailed between April 2018 and April 2019; not everyone will receive their new card at the same time. Here in the Midwest, the new cards will start arriving after June 2018.
After you receive your new card, destroy your old card by shredding it. Start using your new card right away. Note: If you have a separate Medicare Advantage Card, you may need to keep the old card because you still need it to receive treatment.
Share your new card and Medicare number with your doctors, pharmacists, health care providers, insurers or people you trust to work with Medicare on your behalf.
The new card is paper; you will be able to print your own replacement card if you need one. Keep the new card with you. You will need to provide your Medicare card when you need care. If you forget your new card, health professionals may be able to look up your Medicare number online.
Beware! There will be scams – so watch out for them:
- Don’t pay for your new card – it is free. If someone calls and says you need to pay for it –it’s a scam.
- Don’t give personal information to get your card. If someone calls, claiming to be from Medicare, asking for your Social Security number or bank information – it’s a scam – Hang up.
- Guard your card. Safeguard the card as you would any other health insurance or credit card. Even though it no longer contains your Social Security number, you will still want to protect your card because identity thieves could use it to get medical services.
For more information about changes to your Medicare card, check out this short video or go to medicare.gov
I often talk with people who don’t have health insurance. Mainly that happens when I’m volunteering at a VITA (Volunteer Income Tax Assistance) site, because people without insurance generally need to pay a “penalty” as part of their tax return. What I hear from many of them is this: “Paying the penalty costs a lot less than paying insurance premiums, and I never go to the doctor anyway, so why bother?”
Well… there’s another way to look at that. I recently had a conversation with an administrator of a large employer health plan. He commented that in any given year about 15% of the plan participants never go to the doctor – never use their (employer-provided) health insurance. However, as he looks at the usage data, he has observed that it is very common that when those folks start using their health insurance, they become big users. In other words, they go to the doctor often.
That bit of information struck me as SO important. People who don’t seek health care on a regular basis are likely to miss opportunities for prevention, early detection or early intervention. As a result, they end up with bigger (and costlier) health problems.
When we do outreach to help folks make informed health insurance choices, one of the major points we explore reflects exactly that reality: having health insurance is good for…
- Your finances (by minimizing the financial impact of major health events), and
- Your health (since people who have insurance are likely to have better long-term health outcomes).
So if we have health insurance, let’s ask ourselves: are we making good use of it?
Down the road, we’ll probably be glad we did!
Here are a few places you may want to look into regarding protecting your credit report and personal information.
- To prevent others from accessing your Social Security information follow the recommended security steps listed on the SSA site to establish password protection. Check your work history and contact your nearest SSA office to report errors.
- File your income tax returns early. If a false return is filed in your name the IRS will allow you to file a paper return with additional information. The IRS investigates the false return and will invite you to opt-in to a PIN program. The PIN is sent by mail with a number to attach to your return. New ones are issued annually. Note: If you have put a credit freeze in place – you must do a temporary lift so the IRS can confirm your identity to issue the original PIN. All future tax returns must have the PIN or they will be rejected by the IRS.
- The breach can result in false claims for benefits from private health insurance, Medicare, or Medicaid. Read all correspondence from your health insurance providers including settlement statements. Your first clue that false claims have been filed may be a call from a collection agency. If you have evidence of theft, contact medical providers for your records and take steps to remove the false information.
- Are you aware of MIB – not men in black, but Medical Information Bureau. If you have applied for life insurance or private health insurance they prepare a summary of your health records using information from their member insurers. Milliman Intelliscript reports information about your prescription drug information.
- Your driver’s license number can be used for identification on bad checks. To find out whether any bad checks are attributed to your accounts, request your free annual consumer report from major check verification companies – ChexSystems, Certegy, Early Warning Services, and TeleCheck.
- Ask the motor vehicles department to give you a copy of your driving record; most states charge for this, about $10. To protect yourself, ask the motor vehicle department to flag your license number for the police if they stop someone using your number.
This breach caused more headaches for consumers – protect your identity!
Today, November 1, is the beginning of open enrollment for those who buy health insurance on the individual market. Over the last several months there has been a lot of confusing news about health insurance, so we want to help clear up some of the confusion.
- www.healthcare.gov is still the place where Iowans can find health insurance plans where eligible consumers can use premium tax credits to help them pay their health insurance premiums. To enroll over the phone, the phone number is still 800-318-2596.
- This year, the open enrollment period has been shortened: it goes from November 1 – December 15, 2017. During that time anyone can purchase a health insurance policy for 2018.
- The enrollment site will be closed for maintenance for 12 hours (midnight till noon) every Sunday during the enrollment period, with the exception of the last Sunday, December 10.
- To find local help with enrolling, do a zip code search at Get Covered America.
Plans and Costs
- There has been a lot of news about premiums rising, and it is true. However, if you are eligible for a premium tax credit to help pay your premium, the higher premiums are not a major concern.
Why? With the premium tax credit, you only pay a certain percentage of your income; the tax credit pays the rest of the premium. That means your premium costs for 2018 will be similar to 2017 if your income is similar.
- Find out if you are eligible for a premium tax credit at https://www.healthcare.gov/lower-costs/save-on-monthly-premiums/. Income guidelines vary by family size: for a single individual, the maximum 2018 income is $48,240; for a family of 4, it is $98,400.
- For most of Iowa, there is only one insurance company offering plans through healthcare.gov. Be sure to find out if your medical providers are participating in the plan before signing up. You will be able to find that information during the enrollment process before you enroll. The network appears to be quite broad, but it is still important to know if the company’s provider network will meet your needs; no one wants to be caught by surprise after they have enrolled.
- If you are not eligible for a premium tax credit, you can still use healthcare.gov to purchase health insurance, but you will need to pay the full premium. Before making a decision, it would be wise to compare other options, perhaps through one or more local insurance agents. Health insurance purchased elsewhere may provide reduced coverage, and may be a challenge for people with pre-existing conditions, but it is always wise to check multiple options before making a decision.
- If you are under 30, you may be eligible to purchase a lower-cost, very-high-deductible catastrophic plan. An earlier blog post describes these plans.
My sister lives in Houston Texas. It was stressful watching from afar the water damage in her city. She was lucky with no water but there were many who experienced severe damage to their homes and apartments and possessions. Since that storm, we have also watched the water and wind invade Florida.
If a disaster strikes the property that you rent are you protected? It could be a fire, tornado, or severe storm – whatever the threat, your rental apartment or house could be at risk. Where will you go if your home is unsafe to live in? What if your furniture and other personal items are destroyed?
If you thought it was the responsibility of the landlord – think again.
The landlord has hazard insurance on the property, covering the building but not the personal contents. It will pay for repairs but not for damaged contents. Nor will it pay rent for a displaced tenant who needs to find another place to live while the repairs occur.
Renters insurance protects tenants and covers costs for replacing furniture, clothes, and other property damaged by the disaster. This insurance may include temporary housing while the unit is repaired.
While attending college a friend’s son lived in an apartment where there was a fire in a unit next to his apartment. Because he had renters insurance, the insurance paid for any damage done to his belongings and provided housing while the repair occurred.
According to National Association of Insurance Commissioners, the average cost of renters insurance in Iowa is about $15/month. Fifteen dollars a month is two meals at a fast food restaurant, a small price compared to what it would cost if you needed to replace everything you own after a fire or storm. There are additional protection (riders) you can add if you have tools, electronics, and jewelry.
September is Disaster Preparedness Month. The aftermath of Hurricane Harvey and the anticipation of Hurricane Irma are sobering reminders of the importance of being prepared. Here in the Midwest, hurricanes are not part of our reality, but we are at risk for other types of disasters, many of which strike suddenly with little or no warning.
In a disaster, safety is first priority. We need to be prepared to quickly evacuate from a fire or seek shelter in a tornado, for example, and have a way to stay warm if a winter storm causes an extended power outage. Ready.gov is a central site for information on how to be as fully prepared as possible; they have many useful publications related to specific needs, as well.
There is a second aspect of preparedness that also deserves our attention: we need to be prepared for recovery. This includes:
- Having insurance coverage that meets our needs, and reviewing it every couple of years to make sure it is keeping up with changes in our situation;
- Creating and updating a household inventory (typically via photos or video) to assist in filing insurance claims;
- Keeping irreplaceable documents (birth certificates, military records, property titles, and more) in a safe deposit box;
- Having copies of key documents and information stored away from our home – perhaps with a friend or family member in another community, or in secure cloud storage. This includes insurance policies (or at least policy numbers and contact information), financial account information, most recent tax return, along with key medical information (including vaccination records) and contact information for both professional and personal contacts. Pet vaccination records matter too.
The list above is NOT all-inclusive, but it’s a good starting point. I am reminded that it has been a few years since I took household inventory photos — I’m going to update that this weekend. What are you going to do?
Want more info? University of Minnesota Extension houses an award-winning disaster recovery toolkit (available for free download) and some related resources.
Money Smart Week, started 15 years ago by the Federal Reserve Bank of Chicago, is designed as a public awareness campaign to help consumers better manage their personal finances. There are Money Smart Week programs in every state. Here in Iowa, more than 200 partner organizations have joined in the fun to promote financial education and to provide learning opportunities. All Money Smart Week programs are free, and strictly educational (no marketing allowed).
ISU Extension and Outreach has been a MSW partner for many years. Educational programs are offered for all ages, from preschoolers to seniors. Activities like scout nights, shred events, essay and poster contests, geocache for college cash, piggy banks, books, kites, and chances to win prizes make the learning fun. Educational program topics include establishing a budget, protecting financial information, raising money-smart kids, and more.
Check the website www.MoneySmartWeek.org for more details about activities in your communities. Check your local library for a display as well as programming. Spread the knowledge!