Alternatives to using Medical Insurance

I was reading an article in the St. Louis Business Journal about a friend of mine who owns and operates two massage therapy franchises, and is planning on opening a new franchise that provides chiropractic services.  Customers would not need to make a reservation and they do not bill through insurance.  They would charge $19 for an initial assessment and $49 for four adjustments.  The article got me thinking about other medical services that are starting to advertise and market themselves as a lower cost option.  Retailers such as Wal Mart, Target and some local grocery stores have the $4 generic prescriptions.   Select Walgreen’s locations offer their Take Care Clinics, and CVS has their Minute Clinics.

I believe that programs and retailers like these will help bring down the cost of health care and health insurance.  When meeting with clients, I always get asked, “how can we lower the cost of our health insurance premiums.”  I jokingly respond, “Don’t use it!”  Even though I am joking, I am kind of serious.  If there are lower cost options for receiving medical care where we do not need our insurance to respond, we should take advantage of it first, before incurring claims for the insurance companies to pay.

People who are covered on high deductible health plans (HDHP), along with a health savings account (H.S.A.) already know this and are taking advantage of these programs.  They are looking for the most cost effective way to receive care, so as to preserve their H.S.A. balances the best they can. They are responsible for meeting their deductible for all services before their insurance starts paying.  This is the main reason premiums for HDHP plan are generally lower than those for PPO’s.

Even if you are not on a HDHP plan and are still covered on a PPO or HMO plan, you should still take advantage of these programs.  It will cost you less and possible help reduce future premium increases.

Don’t misunderstand me, I know there are situations where we have no choice and must go to the doctor or hospital and use our insurance to receive care.  I am just saying for those situations where you can find an alternative to using your insurance, it will help you reduce your medical out of pocket, and hopefully insurance premiums.

I have to think in the near future, we will see more of these types of medical care delivery options.

Let me leave you with something to think about.  If every American was on a health plan where the insurance didn’t start paying claims until you have incurred  $1,500 or $2,000, or some percentage of income in medical expenses, including hospitalization, doctors visits and prescriptions, what do you think would be the affect on health insurance premiums?

Express Scripts vs. Walgreens!

Walgreens, the country’s  largest drug retailer, and Express Scripts, one of the country’s largest pharmacy benefit managers (PBM), are currently in negotiations to renew their contract set to expire on December 31, 2011.  If your insurance company or self funded plan uses Express Scripts as their PBM and you fill your prescriptions at Walgreens, you may have received a letter from them stating that the negotiations are not going well and the two parties are not going to renew their contract.  The last time you got your prescription filled at Walgreens, the pharmacist may have told you that your insurance will not cover your medication there after January 1.  In return, Express Scripts has filed a lawsuit in U.S. District Court accusing Walgreens of breach of contract and making false and misleading statements that are designed to persuade Express Scripts members to switch to health plans that include Walgreens in their network.  It’s getting ugly!

You may not care about this now, but you will when you try to get a prescription filled at Walgreens after January 1, 2012 and are told that your medication is not covered by your insurance.

Before you get upset at your insurance company and start contemplating moving your coverage, keep in mind a few things…

In 2008, Walgreens agreed to pay $35 million to settle allegations it substituted more expensive versions of medications for Medicaid recipients.  This past July, Walgreens settled a civil lawsuit with state and federal officials agreeing to pay a sum to resolve allegations that it fraudulently billed Medicaid for prescriptions by submitting duplicate or multiple claims to Medicare & Medicaid.

Walgreens is notorious for charging insurance companies more for medications than other retailers.  Most consumers are not aware of this.  They are getting their prescriptions filled at the closest pharmacy because regardless of where they go, they pay the same co-pay.  Consumers are shielded from the true costs.   Personally, I like knowing I am paying my premiums to an insurance company that is using a pharmacy benefit manager that is truly trying to keep costs down.  Lower costs mean lower premiums!

Do not fear.  There is no reason to panic.  Even if Walgreen and Express Scripts do not reach an agreement, there are plenty of other pharmacies.  You will still be able to get your prescriptions filled within a 3 to 5 mile radius.   National chains, such as Wal Mart, Target, CVS, Costco & Sam’s Club, and local grocery stores that have pharmacies, can fill your prescriptions.  You may find at some retailers, such as Wal Mart & Target, you pay less for your medications through their $4 generic program.  One local grocery store, Schnucks, if providing generic antibiotics & prenatal vitamins for free!  Walgreen currently does not offer these programs.

Sometimes these negotiations go down to the last minute, literally 11:59, and they resolve their differences and renew their contract.  They may even have a new contract after the deadline with a minor disruption in service.   Wall Street analysts believe the two companies will probably resolve their differences before the deadline.  Either way, I have already made my decision as to my pharmacy.  Change your pharmacy now and avoid the rush in January!

My Story, Part II

Bradley D. Snitzer, REBC, RHU

A year after I started working, I got a call from a friend, Richard Steinbaum, who started his own employee benefits agency, Corporate Benefit Consultants, and said he would like to bring a new broker into his business.  At the time I didn’t think I was interested, but I was flattered he contacted me so I agreed to meet with him to learn more about the opportunity.  I met with him at his office and he told me about what he had in mind and the potential of the position.  After that meeting, I realized that working for the entertainment company was fun, but I needed to seriously consider this opportunity.  I always thought I would have to find a job, not that the job would find me.

I took the weekend to decide which way I wanted to go.  It was one of the hardest decisions of my life.  I wrote down the pros & cons of both positions.  I told myself, the reason I was struggling with this decision was because I knew I should take the position as an insurance broker.  That next Monday morning, I called Richard and accepted his offer.

As I was studying for my licensing exam, I got scared that I had made the wrong decision.  I passed the exam and started making a lot of cold calls.  I was miserable.  I couldn’t go back to the entertainment company because they filled my position.

I started working with a career counselor and planned to continue working at Corporate Benefit Consultants until we determined exactly what I wanted to do with my life.  After a few month of weekly meetings and exercises to help uncover my career ambitions, the counselor determined two careers for me.  The first was radio advertising sales, and the second, insurance producer.  She help me realize I was getting everything I wanted from a career; I just hadn’t given it enough time.  Since I was already working as an insurance broker, I skipped pursuing the radio advertising sales.  From that moment on, I focused on insurance and stopped looking around for another career.  Since that day, I haven’t looked back.

A footnote to my story, the entertainment company called my back a couple years after I had left and offered me a position booking and promoting local concerts in small venues.  A couple years ago, I would have been ecstatic and jumped at the opportunity, but I turned it down and the rest is history!

My Story, Part I

Brad Snitzer with Sammy Hagar

When I first meet with a client, I like to ask them about how they got to where they are today.  Everybody has a different and interesting, sometimes inspiring stories.  I get asked a lot how I got into the insurance industry.  It is a common joke within our industry that if you always wanted to be in the insurance industry, you need your head examined.  I am not afraid to admit I never thought I would be working as an insurance consultant.

My story starts when I was in college in the early ‘90’s.  I didn’t know exactly what I wanted to do, so  I thought it would at least be important to have a business degree.  From there, it was in fate’s hands.

In August 1993, a friend was finishing an internship at a locally owned entertainment company, producing concerts and special events all over the world.  I had always had an interest in music and was an avid concertgoer.  I was familiar with the company because their name was on every concert ticket.  I ask her if there was an opportunity for me to be an intern.  She took my resume’ to her supervisor and they called me in for an interview.   I got the job as a non-paid intern.  I knew that if I were to find a good job after college, I needed some practical business experience on my resume’ so I wasn’t too concerned about not being paid.

I worked in their corporate special event division as an associate producer working with corporations that were hosting special events, such as conventions and grand openings.  We would produce the event which included the entertainment, everything from bands & comedians to magicians and circus acts.  After my first semester as a non-paid intern, they hired me as a part time employee.  I thought this was what I would be doing full time after college.  To be continued…

Big Business Benefits, Big Promises Broken!

A Professional Employee Organizations (PEO) is an arrangement where the employer leases their employees from the PEO and it is the PEO’s responsibility to provide the benefits, payroll  and other HR related services.  They market themselves as “big business benefits at big business prices.”  They were also promise the employer  less administrative burden and the PEO assumes the liability of the employees.

Often times with a PEO, the employer is purchasing a bundled product, meaning there may be some services included that they do not need, but are not able to remove because it is part of a package.  I know one PEO in particular that requires all they customers purchase their Long Term Disability (LTD) benefit with a minimum benefit of 50% of the pre-disability salary with a monthly maximum of $1,000.  Since it is employer paid, a disabled employee would receive a maximum monthly benefit of $1,000 per month that needs to be claimed as ordinary income.  Most employees would net approximately $650 after taxes.  I don’t know many disabled employee that can live on $650 a month!  The PEO gives the customer the option to increase the benefit, but they have no choice to pay for the minimum benefit.

In January 2011, a company with 45 employees contacted me and said they wanted to explore their options if they were to come out of the PEO.  They were scheduled to receive a rate increase and wanted to find out if they were still getting a good deal.  My approach was to put together a benefits package that closely resembled the benefits that were being provided by the PEO.  When it came to the LTD benefits, I included the ridiculous 50% to $1,000 monthly maximum benefit the PEO required, but I also quoted what is an adequate amount of protection for all their employees, in this case was an $8,000 monthly maximum benefit.  When my benefits package was underwritten and compared to the PEO, I was able to save my client approximately $88,000, with the increased LTD benefits!

Every client I have worked with that came from a PEO tell me that they were doing the same level of administration even though they were promised less.  The employer will be responsible for communicating that a new hire or a termination whether inside a PEO or administration benefits on their own.

Also, regarding the promise that the PEO assume the liability of your employees, the employees are still the employer’s responsibility.  The PEO is not at your location every day and if there is an issue that ends up in a lawsuit against the employer company, the PEO is going to pull out the fine print in the contract you signed relieving them of responsibility.  Their way around that is to sell their customers Employer Practices Liability Insurance (EPLI).  I recommend my clients to purchase EPLI coverage, but there is no advantage from a liability standpoint with a PEO.

The moral of the story is don’t fall for the line that you can get “Big business benefits at big business prices” if you use a PEO.  A competent insurance broker can provide the same competitive benefits and services that PEO’s promise.