There’s an unfair loophole that forces some Connecticut families to pay off not one, but two high-deductible health plans in the same year.
What? Two high deductibles in one year? Yes, it can happen, and here’s how: If you have a high-deductible plan, and you switch jobs mid-year, moving to another high-deductible plan, you’ll be required to satisfy both deductibles in full, even if your new plan is offered by the very same insurance company. With family deductibles ranging up to $13,500 for 2019, a working family might have to pay $27,000 in deductibles alone — on top of monthly premiums.
But relief may be at hand for at least some folks facing this pickle. There is a groundbreaking high-deductible health plan reform bill pending before the General Assembly that takes aim at this and a few other equally maddening features of high-deductible health plans.
Here’s another galling situation that the bill, Senate Bill 902, addresses: if you start a new job with a high-deductible plan late in the year, you pay the full premium immediately, of course — but the annual deductible is not pro-rated. So if you start new coverage on November 1, with a plan that has an annual family deductible of $10,000, you’re buying coverage for just two months. Your insurance company is only at risk for 60 days, but is protected by the full amount of the annual deductible, so your premiums start to look suspiciously like free money to the carrier. The deductible should be pro-rated to reflect the reduced portion of the year that the insurance is active.
Another wacky problem that the SB 902 takes on: when people successfully comparison-shop (as high-deductible plans encourage) and find that an expensive drug or service is available more cheaply, they often are penalized by not being allowed credit against their deductible. Let’s say a drug costs $1,000 at the in-network pharmacy, but you locate it for $800 at a competing pharmacy, so you buy it there. You’ve delivered on your end of the high-deductible bargain — you found the drug cheaper! Your elation lasts only until you get the Explanation of Benefits from your plan, which informs you that since the pharmacy that you used was out of network, you get no credit against your in-network deductible for the $800 you spent. The proposal would ensure that diligent comparison shoppers get credit against their deductible for healthcare bargains they locate, whether in or out of network.
Now, to be clear, SB 902 doesn’t end or eliminate high-deductible health plans. In fact, it doesn’t even address all of the frustrating anomalies of high-deductible plans. For instance, a client of ours recently sought care late in the year, after his deductible was paid off, but it was denied by the insurance company. We got the denial reversed, but by then a new plan year had started with a new deductible, so he had to pay in full, even though the plan would have paid for it at the time of the erroneous denial.
Still, SB 902 makes a start on fixing some of the more screwy aspects of high-deductible plans. And, the time is right to bring to light the sometimes bizarre ways that high-deductible plans are administered, because if you’re not already in such a plan, you likely will be soon. Employers and insurers, eager to keep premiums down, are increasingly resorting to high-deductible plans. And virtually all of the plans sold on Connecticut’s health insurance exchange now use high deductibles (defined as plans with deductibles of at least $1,350 for individuals, or $2,700 for a family). The bill injects a small dose of common sense into the high-deductible structure, and sends a needed signal to the insurance industry that they should carefully consider patient impact and customer experience — not to mention plain old fairness — each time they look to keep premiums down by boosting deductibles.
Unfortunately, since federal, not state, laws govern an increasing number of health insurance plans, this state law won’t help all Connecticut families. But it’s a start. And, if SB 902 becomes law, perhaps Connecticut as the nation’s capital of insurance innovation can become a model for sister states and even the federal government.
Ted Doolittle is the head of the State Office of the Healthcare Advocate, an independent agency representing the interests of Connecticut healthcare consumers.
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