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IS IT JUST ME OR HAS dealing with health insurance companies become more confusing and frustrating? Trying to figure out who to speak to feels like that classic Abbott and Costello comedy routine, “Who’s on first?”
My wife retired last July. For the previous four years, we’d used her employer-provided medical benefits and now we needed to shop for coverage. Under my old employer’s pension plan, pension-eligible employees like me—who retired prior to beginning Medicare—were eligible to sign up for one of the company’s medical plans. You paid full price, less a subsidy that depended on your years of service.
I had more than 30 years of service, so I was eligible for the maximum subsidy of $735 a month. After the subsidy, a high-deductible health plan for my wife and me cost about $900 a month. This seemed like our best option for medical insurance when we enrolled in August 2021 and renewed for 2022.
I started my pension in August 2017. In the four years since, the company I had retired from merged with a larger company, went public in an initial public offering, and then merged with another, even larger company. This final merger brought the company back into private ownership, so its stock was delisted. Needless to say, human resources (HR) and benefits providers have changed many times.
I was a senior manager for the last 20 years of my career. I always made it a point to build strong relationships with HR. It was important to know who the experts were, in case you needed support. This was especially true for employee benefits.
Over the years, more and more of the benefit functions were outsourced. Benefit plans changed frequently, especially as my old company changed hands. As far as I can ascertain, my current health insurance requires five different companies to manage the process. Figuring out who to call if you have a question is getting harder all the time. Here’s my simplistic view of the five companies involved and the roles they play:
Company No. 1 is the one I worked for and retired from. It owns the pension plan and contracts with the other four companies to provide the entire menu of health insurance services to employees and retirees.
Company No. 2 is a full-service benefits administrator. It administers the benefit plans for company No. 1. This includes health plans, retirement plans and a menu of other offerings. Company No. 2 created and manages the web portal that employees use to sign up for benefits. This website is also used for annual enrollment, as well as any changes due to life events. Company No. 2 also handles the billing and payment of premiums.
Company No. 3 is a third-party administrator that processes claims. I looked the company up—it administers benefit plans for more than 100 companies. I think it interprets the insurance company’s plans and makes determinations of what’s covered. Company No. 3 keeps track of claims, deductibles and out-of-pocket totals. I also believe it sends out the explanation-of-benefits statements.
Company No. 4 is supposed to make health care personal. It’s the company you actually speak to when you call company No. 2 or 3. It administers wellness plans and can provide limited information about your health coverage.
Company No. 5 is the actual insurer, one of the Blue Cross Blue Shield companies. It doesn’t appear to interact with the insured—me—in any way. I remember speaking directly with Blue Cross 15 years ago, advocating for my mother when she was ill and the company was denying her rehabilitation care. It was a challenge, but I kept working my way up the ladder until I spoke with a supervisor who agreed with me and got the services approved. I have no idea how, or if, I could do that now.
Last year, my doctor recommended an outpatient diagnostic procedure for me. I scheduled it for late December. The doctor prescribed two procedures at once. He presumed the results of the first would justify the second procedure based on his examination and discussions with me. Before I had the procedure done, however, the outpatient facility contacted me to say the procedure had not been approved. That came from company No. 4, which communicates with you about your insurance coverage.
The outpatient facility worked with my doctor to get a new prescription for the first procedure only. Company No. 4 approved the new request. Its response said that the procedure was medically necessary and appropriate. But it specifically stated that this approval did not imply that the procedure was covered by my insurance. That one really confused me.
Later, I received notice that it would be covered. Since we have a high-deductible plan, and my rescheduled procedure would now be early in the new year, I suspected we would pay most and perhaps all of the cost. I called the outpatient facility’s business office to get an estimate. The employee there was able to give me the amount the facility would charge the insurance company, but not what the negotiated price would be under my insurance plan.
The business office recommended that I contact my insurance company to find out what the negotiated cost would be. I called the number on my insurance card and got someone from company No. 4. The representative had trouble understanding my question. He could tell me what our family deductible was, and how much we had used to date. He recommended I call company No. 3, the one that processes claims.
I called company No. 3, using the number on its website. A representative of company No. 4 answered. She thought only company No. 5 could know the answer to my question and recommended that I call company No. 2, the benefits administrator. I’m sure you’ve guessed by now that company No. 2 had no idea of what I might be billed.
That’s when I gave up. It will be what it will be, and we will pay the bill.
Richard Connor is a semi-retired aerospace engineer with a keen interest in finance. He enjoys a wide variety of other interests, including chasing grandkids, space, sports, travel, winemaking and reading. Follow Rick on Twitter @RConnor609 and check out his earlier articles.
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My father had a good company insurance plan which operated very similarly to the way Richard describes (though not a high deductible plan). My father was convinced it was a great deal and the monthly premiums were a little lower than what Medicare plus a good Medicare Supplement insurer would have charged, so he never seriously considered dropping his employer coverage.
Reimbursements for his medical treatment were always excellent, although his 2 or 3 copays for service and drugs each month more than made up the difference for his share of the cheaper monthly premiums. But my mother had several issues typically requiring 6 to 8 monthly appointments that always required co-pays and frequently required my father’s interaction with one or more of the providers to get coverage for service and for drugs. One of her favorite providers was “out of network” so my parents had to pay more for her visits to that one. And her coverage was often denied or limited, so my parents’ annual out of pocket cost was always very significant.
His employer changed primary insurers at one point, and that led to a great deal of aggravation as the two insurers argued over which one was responsible for some of my mother’s pre-existing conditions. Neither company was willing to pay for her usual appointments in January and February that year, and my mother had to pay out of pocket to continue her treatment, though by March or April that all got sorted without extra cost to my parents and several thousand dollars was eventually reimbursed to them.
When my father died, my mother was not eligible to continue in his plan and she was terribly upset that she was forced to go on to Medicare. She was very worried that her coverage would deteriorate significantly and she would be forced to change physicians.
We chose the plan F supplement insurance for her. Every physician happily accepted Medicare, including the one who had been “out of network” for my father’s insurance. The mountain of paperwork arriving in the mail almost every day grew significantly as Medicare seems to need at least twice as much paper to explain the same thing as an insurance company does, and then the supplemental insurer would duplicate that paperwork showing that it had topped off the payments for each service, but at the same time there were no more co-pays and very few bills that were not covered in full with no need to beg for coverage. Her annual costs aside from the standard Medicare and Supplement monthly premiums were negligible.
As a result of this experience, I strongly recommend to my friends that anyone covered by retiree medical insurance plans should look more carefully at Medicare rather than dismiss the Medicare option without a close comparison.
“That’s when I gave up. It will be what it will be, and we will pay the bill.”
Too soon, maybe! Would it help if you pretended it was a video game and you were working your way through the levels?
I am hoping some boomer retirees will start a cottage industry of contact mappers and phone callers. I’d pay someone