Buying health care is the single most difficult thing a small business owner will ever do.
Small business owners are chasing dreams, implementing plans, negotiating deals, and making things work - then along comes the US Health Care system. Suddenly, you have to be an expert of medicine.
For us, our goal was to get the best plan possible for the least cost. Sound like a simple directive? Well, we may as well have been trying to cure and treat disease ourselves.
For us, the best plan means simply this: the plan that will provide the best medical care for those working at Gray Hill Solutions.
The first thing we learned is that most people approach it the other way around, they want the cheapest plan that will provide the best care. In other words, their goals are to get the least-cost plan that still manages to provide some benefits.
After six years in operation, we've found our priorities to be the correct ones. Friends and acquaintances who have inverted their priorities ended up spending more and having more headaches.
So, here's what we've found:
1. Find the right broker
It's a bad time to be a broker. Brokers operate on a very very thin margin. They are squeezed from both sides constantly. When you first engage a broker make sure they know what your priorities are. Then, every time they bring you a plan, make them show you how it fits your priorities and always ask if there's a better plan.
Since brokers operate on a razor thin margin, they are more likely to try to sell you plans that pay higher margins. The plans / providers that pay higher are generally the ones that have less benefits or provide substandard customer service or commit multiple sins listed below.
2. Talk to people in health care
The best people to get advice from are the ones that actually have to bill insurance companies. We have the blessing of having my wife around, who has given us hours of advice. Since she is a Speech Pathologist and a sole practitioner, she has to bill insurance companies every day. She knows which ones pay, which don't, which have hidden fees, and so on. People in health care are on the front lines.
3. Insurance Companies Play Rough
Insurance companies want to make money. Surprise! There are some things in health care that are very expensive. Other things are not. Unfortunately, the expensive things are precisely what you need the insurance for the most. And ... they're the things the insurance companies want to avoid.
So, they shell-game it. They will provide a range of plans, each with 90% good stuff and 10% gotchas, and they'll rotate the gotchas around the various plans. Here's some of the most nasty, unconscionable gotchas we've seen:
Rehab / Physical Therapy
One favorite is to low-ball Physical Therapy (in-patient, out-patient or both). Like 8 hours total for the year type low-balling. And this was from a major provider. It is highly unlikely that anyone requiring PT would ever need 8 hours or less. If you need it, you need it for a reason.
Childhood Illnesses / Developmental Issues
An easy one to bury is kids. Grown-ups buy health insurance and they are scared about their own aging and mortality. We down play the cost of childhood health care because most people have a fairly idealized view of the costs of being a sick kid - we didn't actually pay the bills. Many companies we know end up saying "I can't believe I forgot to insure children!"
Many plans we looked at didn't cover developmental issues like autism at all. It doesn't help that the insurance companies themselves are fighting to have many developmental disorders like autism classified as a mental issue (therefore not covered in most health plans) or an educational issue (meaning the school system needs to cover 100% of the cost).
In-facility care
Some insurance plans we looked at covered only a few days of in-patient care, while covering large percentages of major illnesses. So they've cover the whole liver transplant, but send you home the next day.
Deductibles
We have always had low deductibles. We never want our staff to worry about out-of-pocket costs when dealing with a medical emergency. Recently my wife saw a plan with a $10,000 deductible!
4. Give Me PPO or Give Me Death
Preferred Provider plans (PPOs) are far preferable to managed plans (HMOs, etc), because of the flexibility they provide to the insured. PPOs tend to have better benefits, require less management on the employer's part, and tend to pay with less hassle to the employee.
However, all PPOs are not created equal. PPOs have in-network and out-of-network providers. Some PPO plans make the out of network costs so freakishly high that you may as well just stay in-network. They can do this with either higher deductibles or lower maximum payouts.
5. Claiming to Pay Claims
Many insurance companies get by on a pseudo-Ponzi scheme where, in order to get high returns for their investors, they will tell you a procedure is covered but when the procedure is done they don't pay. (This industry is also litigation happy, so I can't name names). What this means is that you may find that after a major surgery, you suddenly have to shell out for the balance. You could roll out of the operating room and find yourself as good as uninsured.
5a. Giving You the Run Around
This is a little harder now that billing is electronic and they can't lose the primary bill, but what some companies will do now is not pay a bill because they need more "documentation" either from the provider or from the insured. That is faxed in, generally, and suspiciously often - lost. Then, a few weeks later, someone needs to send them in again.
6. Obfuscation of Benefits
To further confuse people, insurance companies send you a statement called an "explanation of benefits" after a procedure. Good insurance companies will send an understandable one. When I was working for a dot com in the late nineties we received an "explanation of benefits" that was so confusing neither I, my wife, nor my HR department could make heads or tails of it.
The problem is, somewhere in there, was an indication that I had to send someone money. If I didn't, I got in trouble and my credit rating suffered. But I couldn't even figure out how much to pay.
7. Misleading Drug Plans
Holy moly! We saw one plan that had a multi-tiered drug plan. It was sold to us as 'great'. It had three tiers. Tier one - $15, Tier two - $20 and Tier three - $50.
For my asthma, I take a small handful of things. So I thought I'd run them through the plan. For my three drugs, I'd pay ... $150 a month. One of them was Albuterol, one of the most widely sold and popular drugs on the market.
So popular is Albuterol that my previous non-tiered plan with a flat $15 rate charged me only $6 for it.
But in this tiered plan, it was $50. Why? Because only generics were in the tier one plan. I have no idea what was in tier two.
Conclusion
We have a fantastic plan now that is about $250 per person, per month. We have a $200 deductible across the board, a $15 co-pay, an annual stop-loss of $5,000 per family and a $15 drug co-pay. We have ample benefits for the areas we described above. Recently, when a new generic of something I was taking came on the market, my health plan gave it to me for free.
We have vision, dental, massages, and extra coverage for physical therapy.
We have never had a problem getting providers paid or getting good service.
We have seen less expensive plans, but we figure that the marginal additional cost is far exceeded by the utter non-issue that health care is for us and our staff.
Even if you hire a company to do your benefits consulting, you need to watch for these issues. Ultimately you as a business owner need to decide whether you'd like to save money in the long run or in the short term.
My advice: Keep people healthy and happy. Cutting costs here will hurt you sooner or later.
