There are ways to mitigate the effects of cost increases.
Via US NEWS & WORLD REPORT By Elizabeth Renter Aug. 5, 2015
If you have health insurance, there’s a good chance you’ll pay more for it in 2016.
Health care and health insurance costs increase year to year, like most expenses. Since the implementation of the Affordable Care Act, growth in premiums has mostly slowed (as has the rise in health care costs overall), while your share of expenses – like deductibles – has increased. For several reasons, increases in both premiums and other out-of-pocket costs are expected in the coming year.
You can cope with these cost increases by understanding how they’ll happen and what you can do to mitigate their effects. How they affect you depends largely on where you get your insurance.
Employer-Based Health Insurance
About half of all Americans receive health insurance through an employer, less than in years past. Although having a job with health insurance is a perk, that doesn’t mean the benefit comes cheap.
Employer-based insurance premiums have grown relatively modestly over the past few years, according to Sabrina Corlette, senior research fellow and project director of Georgetown University’s Center on Health Insurance Reforms. This is due, in part, to slower growth in health care costs, but also because employers are shifting other costs to their workers, a practice known as “cost-sharing.”
For instance, the number of workers with a health insurance deductible grew from 55 percent in 2006 to 80 percent in 2014, and the average deductible more than doubled, from $584 for individual coverage to $1,217, according to the Kaiser Family Foundation. Further, more employers are offering only plans with high deductibles.
In 2016, if you receive your insurance through your job, you may see modest premium increases and are likely to see increased cost-sharing, like bigger deductibles.
Depending on the size of your employer, you will likely have a few plan options at open enrollment time, which is usually in the fall. Here are some tips for choosing the right health plan to help keep costs in check:
● Opt for a smaller provider network (HMO) or a high-deductible plan if you’ll feel the pinch in premiums. Both of these options could reduce your monthly costs. Remember, these plans have trade-offs. In an HMO, you have less freedom to go to the doctors of your choice. With a high-deductible health plan, you’ll cover more of your health care costs upfront until your insurance starts picking up the tab.
● Choose a higher premium plan like a PPO if the thought of that big deductible scares you. These plans may have higher monthly costs, but allow you greater freedom to visit the doctors you want without such high out-of-pocket expenses.
● Take advantage of health spending accounts no matter your plan choice. These accounts allow you to set aside pre-tax dollars for out-of-pocket medical expenses, and they’re usually taken directly from your paycheck. The two most common types are health savings accounts and flexible spending accounts. HSAs are available only to people with high-deductible plans, but have benefits over FSAs because you are able to carry your unused balance from year to year. With FSAs, if you don’t use the money you’ve allocated to the account, you’re likely to lose it at the end of the year.
“Marketplace”-Based Health Insurance
During the second open enrollment period of the ACA, an estimated 11.7 million people had selected or were automatically re-enrolled in health insurance plans on the federal and state marketplaces, according to the Department of Health and Human Services.
Recent media coverage of planned 2016 premium hikes refers to plans purchased by individuals on these health care exchanges. But these reports don’t tell the whole story.
“The data that’s out there about 2016 premiums is a little deceiving,” Corlette says. “And that’s because, in most states, the only rates that have to be posted right now are those that are proposed to be over 10 percent increases.” Insurance companies projecting more modest increases, therefore, don’t have to share that publicly, creating a skewed sample.
But, Corlette says, that doesn’t mean there won’t be premium increases. They’re driven largely by rising prescription drug costs, insurers having a clearer picture of their policyholders’ health care needs and the end of temporary “risk mitigation” programs that gave cash incentives to insurers for approving everyone.
In 2016, if you buy your insurance on state or federal health insurance marketplaces, you’re likely to see both increased premiums and cost-sharing. But unlike employer-based coverage, increased premiums on these plans are often offset by subsidies.
The solution, as with employer coverage, lies in shopping carefully.
● Reapply for the premium tax credit or health care subsidies. The Department of Health and Human Services estimates 87 percent of people purchasing marketplace plans receive this financial assistance to help lower premium costs. Updating your income information each year will ensure you’re getting the maximum allowable benefit.
● Be flexible and willing to part with your current plan. As costs change, the government may label another marketplace plan the “benchmark,” or the plan to which subsidy amounts are tied. If the price of your current plan goes up and another goes down, that lower-priced option may be deemed the benchmark. By switching plans, you’ll likely avoid cost increases altogether.
“The subsidy is almost like a gift card,” Corlette says. “So if you take it and stay in your same plan, even though that plan has gone up, yes, you’ll be paying more. But if you take it and go shop for a lower-priced plan, you should be fine.”
● Apply for Medicaid or CHIP coverage if you have children. If you make too much to qualify for Medicaid, your children could still be eligible for it or for The Children’s Health Insurance Program. Both are designed to provide health insurance to children at no or low cost. Eligibility varies by state, income and family size. In some states, children in a family of four could be eligible even if the household adjusted gross monthly income is as much as $6,000 or $7,000.
When you’re reading about potentially dramatic health care cost increases, 2016 doesn’t seem so far off. Take this time to understand what is and isn’t working for you on your current plan and what your other options are. This way, when open enrollment comes around, you’re prepared to make savvy decisions about your health care.
By Matthew S. Raphan, Esq. Attorney at The Law Offices of Brian A. Raphan, PC
Every so often a client says to me, “I’ve been gifting money to my children and grandchildren so I can apply for Medicaid.” While gifting may offer benefits to you and your family, if you think you may someday apply for Medicaid benefits, you should be aware that giving away money or property can interfere with your eligibility.
Under federal law, if you transfer certain assets within five years prior to applying, you may be ineligible for Medicaid benefits for a period of time. This is called a transfer penalty, and the length of the penalty depends on the amount of money transferred. (This waiting period can also be costly as you may pay for your care out of your own pocket.) Even small transfers can affect eligibility. Although federal law currently allows individuals to gift up to $14,000 a year without having to pay a gift tax, Medicaid still treats that gift as a transfer.
Any transfer that you make, however nominal, may be scrutinized. For example, Medicaid does not have an exception for gifts to charities. If you make a charitable donation, it could affect your Medicaid eligibility down the road. Similarly, gifts for holidays, weddings, birthdays, and graduations can all trigger a transfer penalty. If you buy something for a friend or relative, this could also result in a transfer penalty.
Some people have the notion that they can also go on a spending spree for themselves or family. Not so fast. Spending a large sum of cash at once or over time may prompt the state to request documentation showing how the money was spent. If you don’t have receipts showing that you received fair market value in return for a transferred asset, you could be subject to a transfer penalty.
While most transfers are penalized, certain transfers are exempt from this penalty. For example, even after entering a nursing home, you may transfer any asset to the following individuals without having to wait out a period of Medicaid ineligibility:
- your spouse;
- your child who is blind or permanently disabled;
- a trust for the sole benefit of anyone under age 65 who is permanently disabled.
In addition, you may transfer your home to the following individuals (as well as to those listed above):
- your child who is under age 21;
- your child who has lived in your home for at least two years prior to your moving to a nursing home and who provided you with care that allowed you to stay at home during that time;
- your sibling who already has an equity interest in the home and who lived there for at least one year before you moved to a nursing home.
Before transferring assets or property, check with us or your elder law attorney to ensure that it won’t affect your Medicaid eligibility.
For more information on Medicaid’s transfer rules, click here.
If you have a question you can send us a message here.
By Michelle Andrews, Kaiser Health News
When Paul Ormond signed John Mitchell into a nursing home in Dennis, Mass., in June, he was handed a few dozen pages of admission papers. Ormond, Mitchell’s legal guardian and an old friend, signed wherever the director of admissions told him to.
He didn’t realize that one of those documents was an agreement that required Mitchell and his family to take disputes to a professional arbitrator rather than to court.
Mitchell had been institutionalized since suffering a stroke in 1999. During a hospital stay early this summer, Mitchell, then 69, had received a tracheotomy and needed to switch to a nursing home that could accommodate him.
A few weeks after Mitchell arrived at the new nursing home, staff members dropped him while using a lift device to move him from his bed to his chair. Later that night Ormond, 63, got a call from the nursing home that Mitchell was unresponsive. Mitchell was rushed to the hospital, and doctors found that the fall had caused extensive bleeding on his brain. He died a few days later.
Mitchell’s sons hired a lawyer to look into the circumstances surrounding their father’s death. That was when Ormond learned that amid all the admissions papers he had signed was an arbitration agreement.
“I thought it was deceptive, and I was pretty angry that I’d been tricked into signing something that I didn’t know what it was,” says Ormond.
A mandatory arbitration agreement is an often overlooked document in the package of admissions papers at many nursing homes these days. It can have an outsize impact if something goes wrong. But anxious seniors or their caregivers often sign every document that’s put in front of them, perhaps only glancing at the content.
Signing an arbitration agreement means that in the event of a problem that is not amicably resolved — Mom slips on a wet floor and breaks her hip, say, or Dad wanders off the premises and gets hit by a car — you agree to bring the dispute before a professional arbitrator rather than file a lawsuit for negligence or wrongful death, for example.
Agreeing to arbitrate is generally not in families’ best interests, say consumer advocates. For one thing, it can be pricey. In addition to hiring a lawyer, the patient or family generally has to pay its share of the arbitrator’s fee, which may come to hundreds of dollars an hour, says Paul Bland, a senior attorney at Public Justice, a public interest law firm based in Washington.
“In court, you don’t have to pay the judge,” he says. “Our taxes pay for that.”
Court proceedings are also conducted in a public courtroom and leave a detailed public record that can inform industry practice and help develop case law, say experts. Not so with arbitration hearings, which are conducted in private and whose proceedings and materials are often protected by confidentiality rules.
The amount awarded — if any — may also be less if an arbitrator hears the case than it would be if a case went to trial, say experts.
Aon Global Risk Consulting analyzed 1,449 closed claims involving long-term-care providers between 2003 and 2011 and found that there was no money awarded in 30 percent of claims where a valid arbitration agreement was in place, compared with 19 percent of claims in which there was no arbitration agreement or the agreement was determined to be unenforceable.
Likewise, nearly 12 percent of claims without arbitration agreements resulted in awards of $250,000 or more, compared with 8.5 percent of claims with arbitration agreements.
The study was conducted with the American Health Care Association, which represents 11,000 long-term-care facilities. According to the report, “loss rates” — reflecting the dollar value of liability claims paid — are increasing 4 percent annually.
“Liability costs for providing care have grown and escalated” in recent years, says Greg Crist, a spokesman for the association. Arbitration agreements help keep a lid on those costs, he says.
That may explain why arbitration agreements have become much more common in nursing homes, experts say. The agreements are increasingly used in assisted living facilities as well.
Arbitration can also benefit patients and their families, Crist says. Claims are typically resolved more quickly than court cases, he says, so attorney costs are lower and patients can retain a larger portion of any financial settlement.
The Federal Arbitration Act, enacted in 1925, allows for two sides in a dispute to agree to binding arbitration to resolve their differences. If a dispute arises and an arbitration agreement is in place, the arbitrators are jointly selected by the patient and the nursing home.
Although consumers usually don’t realize it, there’s a simple way to avoid being forced into arbitration, say experts: Don’t sign the arbitration agreement.
What happens if you don’t sign? Nothing, Crist says. “It’s not a condition of admission to the facility,” he says. The American Health Care Association doesn’t support requiring people to sign an arbitration agreement as a condition of admission, he says, although practices may vary at individual nursing homes.
If you do sign and then wish you hadn’t, arbitration agreements typically have a 30-day “opt-out” provision that allows you to change your mind and retain your rights to sue.
The judge in John Mitchell’s wrongful death case threw out the agreement on the grounds that it was “unconscionable,” a legal term used to describe contracts that are unfair or unjust.
“The judge agreed it was too much to expect me to digest all of this information at once, and that the arbitration clause hadn’t been explained thoroughly,” says Ormond. A trial date hasn’t yet been set.
Arguing that an agreement is unconscionable is one of the few ways people can extricate themselves from arbitration agreements once a dispute arises, says David Hoey, a North Reading, Mass., lawyer representing the Mitchell family. Another possibility is to prove that the person wasn’t competent to sign an agreement or that the family member who signed wasn’t legally qualified to do so.
Better yet, experts agree, is not to sign in the first place.
Searching through her papers is a good first step (obviously, you must be her legal representative or an approved family member to do so). Look in her bank records and canceled checks for premium payments, and check her tax returns for evidence of any taxable withdrawals or dividends, which can help you find the insurer. Also look through her address books for contact information for a life insurance agent, financial planner, accountant, attorney or other adviser and ask if the adviser knows about a life insurance policy. Contact each insurer with whom she had other types of policies and ask if she had life insurance there, too. And keep an eye on the mail for any premium notices.
If your sister-in-law was working at the time of her death, contact her company’s employee benefits office — she might have had some workplace coverage. Check with former employers as well to see if she purchased voluntary, extra coverage and kept it after she left the job.
If your initial search fails to produce results, contact the insurance department in the states where she lived (see the National Association of Insurance Commissioners map for state-regulator contact information) . Several states plus Puerto Rico have new resources to help people track down lost life insurance policies, including Louisiana, Massachusetts, Missouri, New York, Ohio and Oregon. Programs are also being developed in Rhode Island and Texas.
Missouri’s Policy Locator Service, for example, helps track down information about both life insurance policies and annuities purchased in Missouri. Executors and legal representatives of the deceased person, and people who believe they may be beneficiaries, may submit a notarized search-request form with an original death certificate. Requests are forwarded to Missouri-licensed life insurance companies within 30 days, and if a policy is located, the insurer will contact the beneficiary. Since its launch in November 2011, the service has located a total of $148,000 for beneficiaries.
If a state doesn’t have a special program to find lost life insurance, it may still have resources that can help you with your search. Ask the state insurance department for contact information for life insurers licensed to do business in the state, and contact the companies yourself. The insurance department can also help you find current contact information for insurers that may have merged since your sister-in-law bought a policy.
A state’s unclaimed-property office may eventually get the money if an insurer knows a person has died but is unable to contact the beneficiaries. You can search unclaimed-property databases for several states at MissingMoney.com or find links to each state’s unclaimed-property division through / the National Association of Unclaimed Property Administrators. See 4 Ways to Get Lost Money From Government Agencies for more information about tracking down money in the states’ unclaimed-property databases.
The Medical Information Bureau’s Policy Locator Service can also help. Insurers who are members of the MIB share general medical and other information they discover during underwriting about applicants for life insurance policies. The service tracks applications for individual policies made to member companies since 1996. (Although most life insurers are members, the service doesn’t track group policies.)
Not everyone can get the information. You must be the executor of the deceased’s estate or the surviving spouse; if there is neither an executor nor a spouse, the child of the deceased or another eligible representative may make the request. Whoever makes the inquiry must provide an original death certificate.
The service costs $75 and takes about ten days to produce a report. If your sister-in-law applied for life insurance at any of the member companies, the report will include the company’s name, the date the application was submitted and information about how to contact the insurer. The insurer can then tell you if the policy was actually issued, whether it remains in force and who the beneficiary is.
While you’re tracking down your sister-in-law’s life insurance policy, remember to keep good records yourself so you can spare your heirs the same hassle. The American Council of Life Insurers recently introduced a new My Insurance Log tool that helps people pass key information about insurance policies and retirement plans to their beneficiaries and personal representatives. Also be sure to keep the beneficiary contact information up-to-date with your insurers, which will make it easy for them track down your heirs.
Another good resource is the NYS Office of Unclaimed Funds.