I moved to Japan immediately after graduating from college, so for the first ten or so years of my professional life my only exposure to health insurance was socialized Japanese health care.  When I began working on my own in Tokyo, I was initially shocked that I didn’t have a choice of vendors, and that my monthly payment was more like a tax than the purchase of a service.  I avoided paying for awhile.. at least until the government started sending me scary looking warnings in a gigantic red Japanese font (seriously, like a 200 point font).  I relented and paid.  In hindsight I’m glad that I did:  I started actually using the health care system.  It was inexpensive and straightforward.  I took better care of myself.

When my wife and I began the process of moving back to the US, my father nervously admonished me about getting health insurance as soon as possible.  I thought this a bit odd, but didn’t dwell on it.   I figured that the miracle of capitalism would provide us with a smorgasbord of inexpensive, high quality health care options.  Besides, if that didn’t pan out, I was sure that whatever the the national plan was, it would be fine.  I put it off.

On a return trip to the US I stopped by the hometown insurance agency ready to review the rich bounty of health care options due to me as an American.  The hometown agency listened, looked at me like I had two heads, and then gently sent me on my way.  As someone self-employed, they said, my only option in the state of Massachusetts was Blue Cross Blue Shield.  Blue Cross Blue Shield?  The geezer company with the dodgy Vitruvia Man/Staff of Asclepius double logo thing?   What the heck?   Where’s my laundry list of super affordable health insurance options from modern companies with cool logos??  I put it off again and went about my business.

Finally, a month or two before we were scheduled to move back  — about the time we finally learned how to sneak my wife past Homeland Security — I caught a 60 Minutes report on hospital pricing and the uninsured.  The obvious dawned on me:  In the US, unlike Japan, one is not automatically insured.  There’s no national safety net.  You don’t purchase a health care plan that you think is better than the national health care plan, you purchase a health care plan because there is no national health care plan. Holy crap!  I finally understood what my father was talking about.  If I didn’t get insured immediately, an injury could potentially bankrupt my wife and I.  Or even my parents.  No wonder my father was nervous.

I called Blue Cross Blue Shield the next day.

Back then, in 2006, Massachusetts did not require health care insurance.  The selection Blue Cross Blue Shield provided for the self employed was limited to four simple plans.  At the time I was just discovering the brilliance of Health Saving Accounts (HSAs), so I selected a high deductible plan that was HSA compatible.  Although I wound up paying for all of our own moderate medical expenses for the next year, care was not nearly as expensive as if I had not been on health insurance, and the HSA turned out to be a great way to save money while reducing taxes.  All good.

Earlier this year, however, two important things happened:  1. health care reform in Massachusetts, and 2. the upcoming birth of our first child.   Both require significant changes to how I have been managing our health care.  Hence, this blog entry.

I started this as an anecdotal note about what to consider when switching from pre-reform Blue Cross Blue Shield health insurance to post-reform insurance.   I figured I would post a few questions, do some research, and answer them.  Notes to self, plus maybe useful information for someone else.

The number of individual plans offered by Blue Cross Blue Shield of Massachusetts has gone from four to roughly fifty.  Wow.  Yet while there may now be a veritable bounty of health care options available to folks like me, no one seems to understand how they work.  A few questions has become dozens.

Hopefully this unorganized mini FAQ about choosing a plan with Blue Cross Blue Shield in Massachusetts will be useful to others.  If you have any additional questions, feel free to shout out a comment.  Better yet, call the Blue Cross Blue Shield 800 number and ask.  The sales agents are generally quite helpful.  (That said, knowledge about the plans and the system itself seems to vary rather drastically from agent to agent.  If you unsure about some of the answers you’re getting, call back to the main switchboard.  You’ll get a different agent; ask again.)

In the the below please note that Blue Cross Blue Shield is abbreviated “BCBS” and that Blue Cross Blue Shield of Massachusetts is abbreviated “BCBSMA”.

Q: In general, where can I learn more about available health care plans if I am uninsured?
A: Check out the Commonwealth Connector.

Q: How different is the BCBS provider network from plan to plan?
A: Difficult to get a straight answer on this. BCBS agents recommend searching the plan/network you are considering via “Find a Doctor” on the bcbsma.com website. Be warned that there is no direct correlation between the list of plans under “YOUR PLAN’S NETWORK” and the actual names of all the new plans. If you are looking at the various HMO plans, your best bet is to sift through the providers listed in the “HMO Blue” network.

Q: Does coverage change from plan to plan?
A: In general coverage seems to be about the same (from my still rather shallow analysis) however the manner in which services are covered varies drastically from plan to plan. Holistic health services such as chiropractic services may or may not be covered from plan to plan. Check.

Q: Different plans seem to be applied to different calendars. What is the difference between “plan year” and “calendar year”?
A: As you might expect, calendar years start from January 1st. Plan years start from the the day you purchase them. It might be unwise, therefore, to purchase a deductible calendar year plan in November.

Q: How do you change from “couple” to “family” plans?
A: Upon the birth of a child, simply call the number on your insurance card and they will add the new family member. Rates will adjust from that day. (Expect your rate to go up 35% or more when switching from couple to family!)

Q: What’s this thing about pharmacy benefits being required from 2009?
A: This is a question that the BCBS sales agents often can’t answer. In Massachusetts, plans from January 1, 2009 must include pharmacy benefits. If you are on a plan that does not include pharmacy benefits, you may be charged a tax penalty. (Sheesh.. talk about a windfall for the pharmaceutical industry.)

Q: My current claim summary shows “Amount Charged” and “Amount Allowed” columns. What is the difference between these?
A: “Amount Charged” is the amount that the hospital would have billed you had you walked in without insurance. “Amount Allowed” is a lower price the hospital and BCBS have negotiated.

Q: The claim forms make it look like “Amount Allowed” is what BCBS has already paid on my behalf. You mean that it’s actually just a lower, agreed-upon price?
A: Yes. And it differs from hospital to hospital. Moreover, this is what 60 Minutes and other news programs are talking about when they report on problems with hospital pricing. When you purchase a health insurance policy in the US, often what you purchase is their bargaining clout.

Q: If I potentially want to plan for medical expenses, how can I know what the negotiated price is in advance?
A: You can’t. There seems to be no way to learn these agreed upon costs in advance. You can, however, purchase a plan with a higher monthly premium that does not have deductibles but, instead, has fixed copays per incident.

Q: Is there any way to know how much I might pay for a medical expense without insurance?
A: Yes, actually. BCBSMA has two health care cost calculators available from the Member Self Service page. Click on either “Treatment Cost Estimator” or “Treatment Cost Advisor”. The Advisor is from Subimo and generates “in network” versus “out-of network” estimates. The Estimator is from Benefit Nation (which would appear to have a defunct website) and generates national estimates. The two seem to be fairly close, though the Estimator produces weird stats, such as “only 67% of women use a hospital for birth”. Huh?

Q: How are “Out-of-Pocket Maximums” different from “Deductibles”?
A: A “deductible” is the amount you have to pay before BCBS will render coverage. If you have a $5,000 dollar deductible, then you personally have to pay $5,000 before BCBS will cover you. An “out-of-pocket maximum” is the maximum you would “copay” if you were on a non-deductible plan. So if you had to share in the payment love for every expense, say $25 for every doctor’s visit and $500 for a hospital stay, and your out-of-pocket maximum is $1,000, then once you have paid $1,000 for the year, BCBS takes over payments completely. (Note that there seem to be some hybrid plans that have both deductibles as well as copays/out-of-pocket maximums.)

Q: If I switch from one deductible plan to another, does the amount that goes towards my deductible carry over?
A: No. Be very careful here. Plans “refresh” when you change them and any amounts that would have gone towards your deductible are reset back to zero. Switching from a plan with a deductible to a non-deductible plan also, of course, means that you will lose any money already paid towards your deductible. (The sales agents are rather reluctant to explain this..)

Q: Does BCBS provide benefits after one person meets their deductible, or does everyone on the plan have to go over the deductible before BCBS will take over?
A: This seems to depend on the plan. If it is a couple plan, in general it seems as though benefits are provided on a per-individual basis. In some of the newer plans I have noticed this disclaimer: “The entire family deductible must be satisfied before benefits are provided for any one member enrolled under a family membership.” So, think carefully about high deductible family plans.

Q: Speaking of deductible and non-deductible plans, why would I chose one over the other?
A: Good question.

1. If you are young and healthy, chances are you will not spend much time in the doctor’s office. In that case go with a deductible plan: On the off chance that you do get sick, it’s a safety net. You know your maximum possible medical expenses for the year and, most likely, you won’t spend it. Take that money and what you would spend on expensive monthly premium and invest it in an HSA instead.
2. If you expect to require considerable medical care, a plan with a higher premium and no deductible may be more suitable. This is especially useful if you know you have a large medical expense coming up. It’s nice to know, for example, that the max you will pay on that expensive little bundle of joy being born will only cost $500, rather than the five or six thousand dollars the hospital would bill you directly.

Q: But wait.. speaking of HSAs, which plans are HSA compatible?
A: Only four! And I personally have received details on just three. Ask for the “Saver” plans.

Q: Exactly what does “HSA Compatible” mean?
A: This was interesting. The agents at BCBS didn’t seem to know; they just knew that a plan was “compatible” or not. I called my HSA provider (HSA Bank) and got this answer: “The plan itself must explicitly state that it is an HSA compatible plan. If you switch from an HSA compatible plan to a non-compatible plan, you can use your HSA account through the end of the year and then must close it.” Woah, glad I checked.

Q: Some of the HSA compatible plans require a “Utilization Review”. What is that?
A: Actually, all plans require this, though only a few of the Saver plans seem to explicitly mention it. Utilization Review is a department within BCBS that reviews claims, presumably for fraud.

Q: When switching plans, does BCBS provide the alternative coverage immediately, or is there a transition period?
A: Alternative coverage can take over as immediately as you want; I requested that my new plan take over on that day. (I was particularly interested in this issue since, when I first signed up in 2006, I was limited to only emergency medical coverage for the first year! Seems this restriction is no longer in effect.)

Q: How often can you switch plans?
A: Once per year on renewal. Exceptions can be made for subscribers who experience financial difficulties and need to move to lower priced plans.

Q: What plans have a lifetime maximum?
A: Since health care reform, seemingly none. My plan from 2006 had a lifetime maximum of a million dollars; this would appear to be somewhat anomalous.

Q: Is there any significant difference between “individual” and “self-employed” plans?
A: Yes. Plans for those who declare themselves as self-employed may be cheaper than “individual” plans depending on the work you do. Ask.

Q: How did you find out about the self-employed plan thing?
A: There was an option in the toll free call tree for “self-employed plans press one; individual plans press two”. I couldn’t find information anywhere else on the website about self-employed plans so I asked.

Q: If I change plans, when does the new plan go into effect?
A: For individual plans, immediately on the day of plan purchase, or a future date that you request. Self employed and/or small business plans may take up to thirty days.