Things Are Not Always As They Appear

Many people have formed opinions about insurance companies and many are negative due to their past experience.  However some of those opinions have no basis.  I’d like to take this time to help the reader know a little more about this mysterious entity.

Many people believe that health insurance companies exist simply to keep their executives rolling in money.  First I’m not sure I understand why it is ok for every other company executive to make millions but not for insurance company executives.  It takes just as much, maybe more, effort to run a health insurance company as any other company(i.e. WalmartGoogle, Facebook ,Trump Enterprises) it is far more regulated.  Since I work and am licensed in New York State I know those regulations and in New York we have had minimum loss ratios of 75% since the 90’s (meaning that 75 cents of every dollar that comes in must be spent on claims).  Now PPACA (Patient Protection and Affordable Care Act)states that insurance on employer groups of less than 25 employees must have an 80% loss ratio and that on groups larger than 25 an 85% loss ratio.  That means that all administration of those insurance companies must be done in that 15 to 20%  – all salaries, equipment, benefits etc of those insurance companies must be done in that 15 to 20 percent.  I’m not aware of many companies that can operate on that very small margin – for instance the “rag trade” alone has mark ups of more that 100%.
Another misconception that many people have is that when they receive a claim denial it is the final word.  Believing that, the insured thinks that he/she must pay large out of pocket expenses.  Here’s where having a good broker comes in handy.  One should never accept a denial at first blush, when that explanation of benefits comes in and states the patient responsibility there are codes explaining why.  If it is not clear call and question why.  If that answer is not clear don’t drop it.  There are many reasons why the claim determination may be an error – coding may be incorrect (either by the providers input or the insurance claims department).  Very recently a carrier’s master computer had serious errors causing the cancellation of many insured’s prescription coverage, although this was not true some people just accepted this and paid for their prescription and then became very angry.  Even those who questioned where told they had no coverage again this is the perfect time to ask for help from a competent broker.

When an insured has a major illness most insurance companies assign that individual an advocate or an advisor (depending on what that particular insurance company calls it).  An instance occurred where a client who had been receiving counseling was told by the insurance company outsourced doctor that he didn’t have a mental illness but dementia and that he didn’t need counseling but a babysitter and his counseling sessions were being declined.  Wow did this cause outrage and rightfully so this physician had never met or even read this insured’s records.  Fortunately the insured recalled that he had an advocate and called her – the denial was immediately reversed.

I hope this clears some of the mystery.  Things are not always as they appear on the surface for everything including health insurance companies.