Things Young Adults Need to Know

Posted May 5 2021, 12:10 pm in cancer, insurance, medical care, school doesn't prepare you for this, young adults

Hi! I hear so many young adults complain that school didn’t do a good enough job preparing you for real life. You were taught things like geometry, trigonometry and calculus but you can’t balance a checkbook or file your taxes or understand health insurance.

You do have health insurance, right?

If you’re over the age of 26, you are no longer covered under your parents’ insurance. And, you probably don’t yet have a job that provides medical benefits. There are a few places you can check to get medical coverage. First, try the Affordable Care Act, better known as Obamacare. Second, you may be able to get a student health plan if you’re still in college. Third, you may be able to purchase an extended plan from your parents’ insurance company in the period after you turn 26.

You’re probably asking why you should bother, right? You may be thinking that you’re healthy and need the money you’d spend on insurance for other things like student loans and car payments. But here’s the thing about your health. All it takes is one hospital stay to accumulate debt so staggering, you might never financially recover from it.

At the end of March, my son called me, as he usually does. He’s twenty-eight years old and lives in North Carolina, while I live in New York. I never expected to hear these words:

“Mom, I have a mass in my testicle. They think it’s cancer.”

…

…

It took a minute for me to remember how to talk. How could it be cancer? He’s so young! He’s been perfectly healthy his whole life.

But it was cancer. We later learned testicular cancer often strikes young men while still in their teens.

What followed next was a blur as we quickly packed and started a road trip south to be with him for surgery scheduled just five days after this phone call. He was referred to a urologist for surgery, which would be performed at his local hospital. He had a sonogram and a CT scan. Soon, he’ll meet an oncologist and a fertility specialist to determine his chemotherapy treatment and solutions for preserving healthy sperm.

All of these things cost money.

A lot of money.

My son has medical insurance provided as a benefit from his employer. But even with this coverage, he found he was completely unprepared for this ordeal. The urologist wanted a $2,000 payment up front. My son emptied his bank account to pre-pay that bill. The CT scan cost more than the surgery did and even though he was told his portion of the bill would be a specific amount, the actual fee he was charged was many times that amount because the person he spoke to neglected to include the cost the hospital charges and not just the doctor.

Every time he’s sent for a new test, he knows it’s going to cost hundreds if not thousands of dollars he does not have.

So here’s a brief explanation about what young adults should know about the cost of medical care in the US and how to operate your insurance.

Managed Care

Managed Care: Most employers offer managed care as a health care benefit. The cost to buy this insurance comes out of your paycheck each pay period, typically, before taxes. Most insurance plans currently available fall under this term. This means you, as the patient, agree to visit doctors and facilities that are ‘in network.’ Those doctors and facilities who are listed as in network have negotiated and agreed to specific fees for their services. Any time you visit an in-network provider, your portion of the bill will be much lower than if you go outside the network.

Remember: every time you receive medical care outside a doctor’s office, both the facility and the provider may bill separately. If you go to an emergency room for stitches, it’s possible that even though the ER is in your network, the doctor on call at that time may be out of network and charge you a much higher fee. Whenever you possibly can, always confirm that all providers as well as the facilities are in-network.

When you need care that goes beyond a routine visit, contact the insurance company for authorization. This helps you avoid financial surprises later. Things like sonograms, CT scans, MRIs, and x-rays can cost thousands of dollars. Many doctors’ offices will obtain authorization for services like these on your behalf.

If you need a procedure like surgery, ask your doctor’s office manager who else will be there. Will there be an anesthesiologist? Will there be a radiologist? Will they bill separately or be included in the hospital’s bill?

Pre-Payment

You are not required to pay anything up front. When asked for payment, you may tell your providers to bill your insurance directly. Some insurance plans include a healthcare account, which comes with a debit card. These accounts are typically funded by your paycheck using pre-tax income. You can use your debit card for expenses like copayments or deductibles (see below). But you aren’t required to pre-pay anything and providers cannot turn you away.

Deductibles

A deductible is that portion of medical expenses you agree to pay before your insurance kicks in. For example, if you have a $2500 deductible, this means you pay for the first $2500 of medical fees and then your insurance company will begin paying subsequent fees. Many insurance plans have high deductibles for young adults because they keep plan costs down. It’s sort of a bet. You’re betting that because you’re young and healthy, you won’t need to use your insurance unless you have an accident or serious illness. You can check with your insurance company, either by calling their customer service department or checking their website, about what types of services get applied to the deductible. For example, some plans don’t apply your well-care visits or prescription drug costs to your deductible. So this could mean you may never meet your deductible unless you have a catastrophic healthcare emergency, like my son.

Co-insurance

Remember, managed care is an agreement among you, your providers, and your insurer. Co-insurance is what the insurer agrees to pay after your deductible is met. Some plans are 80/20, meaning the insurer pays 80% of costs and you pay 20%. Other plans are 70/30. Again, it’s important to understand how expensive this can get. For example, if you have a 70/30 plan. You need to spend one day in the hospital. That one day stay could cost more than $10,000, of which you’re responsible for $3,000. So even WITH insurance, your debt could be significant.

Co-pays

This is your cost of services, usually the routine ones, regardless of the total bill. For example, office visits may be a flat $20 or $30, prescription drugs may be $10.

Out of Pocket Limits

This is a debt ceiling that protects you from bankruptcy. Plans with low out of pocket limits are typically more expensive in your monthly costs, but protect you from a huge expense. For example, suppose your plan has a $25,000 out of pocket limit. This means that when your medical bills for the year reach $25,000, the insurance company begins paying all subsequent bills at 100%. Looking back at the daily hospital stay rates, it’s easy to see how a single week in a hospital could put you at your out of pocket limit for that year. Luckily, your plan has that cap on it, so you know what you’re comfortable paying.

Explanation of Benefits forms

Whenever you use your medical coverage, the insurer sends an EOB or Explanation of Benefits form. It shows the name of the patient (in case a whole family is covered on your plan), the date of the service, who provided it, and what it cost. The form will also break down what portion of that cost they paid and what you must pay. Frequently, you won’t need to pay the full amount. Remember when I said Managed Care is an agreement? Well, this is why that’s important. When doctors agree to join a plan, they’re agreeing to accept what the insurer feels is reasonable and customary for that particular service. So even though the doctor may CHARGE $25,000 for surgery, if the plan states the insurer will pay $18,000 for that service, then that’s the figure that will be used. The insurer will compute their portion of the $18,000 agreed-to rate if your deductible is met. If you have an 80/20 plan, they’ll pay 80%. You would pay the 20% that’s left. The difference between the $18,000 and original fee of $25,000 is NOT your responsibility.

When the bills arrive

Use a spreadsheet or notebook to track all your bills. Hospitals charge separately from doctors. Sometimes, radiologists and anesthesiologists also charge separately. You always have the right to question every line item on your bill. You will very likely find items that have been billed before. Flag them and notify your insurance company representative. Make sure bills reflect YOUR portion of the fee based on the insurer’s EOB and NOT the full amount. Remember, you’re not responsible for that difference.

Don’t panic when a large bill arrives. If you cannot pay the entire balance (and few of us can!), contact the provider to negotiate what they WiLL accept.

Pay portions of the bill regularly to avoid damage to your credit score.

If you’re a young adult, I hope this post helps you understand how your insurance works. Let me know in the comments what could be more clearly explained.

 

No Comments