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I've got fairly decent health insurance. But it seems like medical insurance companies always find some way to "scrooge" you.

Example 1: Company switched carriers, was promised that we would get identical coverage as previous plan. Months later after plan is in effect, start getting bills for hundreds of dollars for services that were previously covered. Ultimate conclusion: insurance company isn't going to honor their promise because the plan wasn't written the way they promised, and it was signed by the company. Of course, as an employee, I only know what my HR department tells me and shows me (and that can be a lot to read and try to double check!), and they don't seem to have any liability either.

Example 2: Start receiving bills for thousands of dollars after deductible has been met. After a lot of research into why, it turns out some providers are really slow getting their claims in after we prepaid them, and they owe us a lot of money. In the mean time, we get letters threatening collections that we must pay with money we don't have as the other provider is slow in getting it back to us.

Example 3: Health providers in generally requiring you to prepay up front, even when you are covered. I know someone who claims that he never has to do this and I shouldn't either, but I haven't found any provider (aside from ER or hospital stays) that doesn't require the money up front. We have literally had to rely on loans from friends that months later we haven't been able to pay back yet because the system is so slow to get everything pushed through.

Example 4: Have a recommended procedure done after a discussion with the doctor, only to find out months later that insurance won't pay a large part of the bill because the way the procedure is customarily coded doesn't match with your expectations and conversation with the doctor. And of course the billing office refuses to budge because they are already paid and have no skin in the game.

And of course in all these cases, it seems like the medical insurance companies and billing offices have almost IRS-like powers - they arbitrarily decide what you are going to pay, and you pretty much have no recourse. (And even if you did have legal recourse, with what money would you pursue it?)

This makes it very difficult to responsibly budget - even if you keep your budget, and save, one large unexpected bill, or the need to prepay something that insurance supposedly will cover, and you are very much in the red. Isn't a budget about deciding home much one will spend for each category, allocating funds to those categories, and then sticking to that? Obviously there are certain expectations with regards to health insurance - namely, that I will pay my premiums every month, and certain things will be covered. And then I won't have to worry about what I might or might not have to spend to stay in good health, because I have done the responsible thing and bought insurance. But the billing and service is so disconnected there appears to be no guarantee that this is ever the case!

This isn't a one-off question. This is regarding a problem that seems to recur time and after time, year after year, and which therefore must be planned for and if possible controlled. I have a hard time believing it is just perpetual bad luck!

How can one deal with this sort of issue? There are various approaches that seem somewhat shady or wrong to me (for instance, don't pay them and send your spouse to collections while maintaining your own good credit score), and others that are hardly acceptable (ruin your own credit rating or bankruptcy, which does nothing to solve the problem in the future, as some medical problems don't just go away, ever). Moving to another country that has single payer coverage is tempting, but impractical. Aside from continually alternating between feeling like I am drowning, and waiting for the next tidal wave to hit, how can I deal with medical billing issues that wreck the budget?

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    I have had #2 and #4 happen in my family. We simply "fought" with the insurance company, early and often, called them every day for weeks, until they actually gave up and paid most of what they were supposed to. At the same time kept the medical providers in the loop to prevent them from sending us to collections. This took nearly a year, but the effort paid off. Keep fighting them, stay informed on their policies as best you can, and don't give up. – EkoostikMartin Dec 30 '14 at 20:31
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    See if your state has an insurance commissioner or ombudsman and file complaints. Here's the website for California's. – mkennedy Dec 31 '14 at 20:22
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    @littleadv That's a good point. Now that we're adding a bunch of government regulations and bureaucrats to the process, that should logically and inevitably make it simpler and more efficient. – Jay May 7 '15 at 21:07
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    @littleadv: From what I've seen (wife deals with lots of insurance companies), not only did the ACA not fix this, it made it worse in quite a few ways. She has a good sized list of insurance companies that she now requires her clients to pay cash up front because they use the various regulations to delay payment for 12 months+ and the ONLY person who can put pressure on the insurance companies to pay are the covered individuals. – NotMe May 8 '15 at 0:29
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    @littleadv, yeah, too bad you can only switch once a year during open season. – mikeazo Jul 22 '15 at 14:09
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Unfortunately I've seen every single example you've provided from the health care providers perspective. Trust me, they aren't happy about the situation either - hence the reason they will demand up front payment from you based on who your insurance carrier is. I could name a few of the top brand name insurance companies in this country that do all of this to their clients.

Medical billing is an incredibly over complicated beast. One that insurance companies have been doing everything they can to make worse over the years. The codes can change annually and there are MANY different codes which can cover the exact same situation. Sure the insurance company might cover gallstones, but if you happen to be pregnant, well, that may not covered even though the treatment is the exact same.

What can you do?

Consider locating a new insurance company. You do have options and don't have to go with the one your company uses. The downside is that this is going to take quite a bit of research on your part and it will end up costing you more money on your monthly premiums simply because your company won't be footing part of the bill.

Talk to other co-workers and see if their experiences match yours. If so, try to get a large enough group together to approach management and demand resolution.

A third potential avenue is to get politically involved - but I'm enough of a pessimist that I doubt that would do any good. From what I've seen, neither major political party's current position actually does anything to solve the problem.

A fourth option is suing the insurance company - but that is going to be incredibly expensive and take forever. You might have better luck getting together with a bunch of local people and demand your attorney general review the billing/payment practices. Again, this is going to require a LOT of effort.

A fifth option is to attempt to cash pay your bills and submit them yourself to the insurance company for reimbursement. If you do this you can likely negotiate lower bills with the medical provider. For anything less than about $2,000 I negotiate the amount prior to service. Believe me when I say that providers are more than happy to give decent discounts if they know they won't have to deal with the insurance companies themselves. Slightly more work for you, but could be far cheaper in the long run.

  • That last option intrigues me, but I'm wondering if it would actually save any money. Case in point, I'm looking at a claims detail report for 2018 and I see the following: Total Billed: $115,000, Draft Refunds: $85,000, Ineligible: $22,000, and from there the remaining amount of $8,000 starts getting paid with deductibles and co-pays until the out of pocket maximum is reached. Presumably I would have to negotiate a discount off the total billed price which was in line with $8,000 (93% off) because the insurance company isn't going to pay the refunded or ineligible amounts, right? – Andy Sep 27 '18 at 21:46
  • @andy: the savings are going to depend on a lot of different factors. LIke I said, it's the small stuff (sub $2k) when I negotiate with the doctor. Something like $115k is huge. If these are procedures you know are coming ahead of time then work with your insurance company to find doctors where everything is covered. If it's an emergency type thing, then try to plan ahead on those by knowing which hospitals/doctors/etc in your area are actually fully covered - and review that list every year because they do change. – NotMe Sep 28 '18 at 0:23
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To address the issue in the title of your question: Many expenses strike at what for all practical purposes are random intervals. Roof starts leaking, car needs repair, etc, don't have a fixed cost every month. Medical expenses can certainly be more extreme than many other expenses, but their nature is the same. And so the way to budget for them is the same: You figure out what your average expenses are over a long period of time. Then you start putting away a little more than this amount every month. Keep putting away until you have a reserve larger than any expense you are likely to get hit with all at once.

I have no idea what your particular expenses are, so let me use myself for an example.

My medical bills last year were unusually large: about $6,000. I have lousy insurance and a couple of chronic conditions, so my bills are usually maybe $1,000 to $2,000 per year. So I plan on about $150 per month for medical bills. Most insurance policies have an "out of pocket maximum". This should be the most you'd ever have to lay out in a year. Mine is $13,000. (I told you my insurance sucks.) So I have an account that I have now built up to $13,000. Worst case, I wipe out that account. In any case, if my bills are that large, the doctors or hospital will normally agree to a payment plan. (I still owe a few hundred on my bills from last year and the hospital is letting me pay it off at $120 per month.)

Your question brings up a lot of issues about difficulties of working with insurance and the U.S. medical system in general. I'm not sure if your intent was to get advice on the rest of it all.

Simple -- not pleasant, but simple -- answer: If you're insurance is provided by your employer, you're pretty much stuck with the policy that the employer negotiates. I don't know how much you're contributing to premiums, usually the company pays the bulk of it. You could investigate getting a policy on your own, but odds are that any policy you could get for what you're contributing now would be way worse than what you can get through the company. You could always investigate, but I doubt you'll do better.

You can talk to HR. If it's a big company, they may have some muscle with the insurance company and could help you out.

Failing that, it becomes a political question of how the laws affecting medical care and insurance in the U.S. are set up, and while I have many ideas for how it could be improved, sadly I'm not in a position to do much about it, and I doubt you are either. Unless you have the resources to run for president.

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    out of pocket maximums are a joke. co-pays don't count against them! – Andy Jun 23 '15 at 7:07
  • incidentally, in my case it hasn't been uncommon to pay $10k in a year out of pocket costs on top of another $10k in premiums. – Andy Jun 23 '15 at 7:09
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    "Unless you have the resources to run for president" -- in which case the way to budget for your medical bills is "just pay them, what's the problem?" – Steve Jessop Nov 20 '15 at 0:58
  • "You figure out what your average expenses are over a long period of time. Then you start putting away a little more than this amount every month. " This sounds great in theory, but is more difficult when the amount you need to put away every month exceeds what you make. – Andy Sep 27 '18 at 21:49
  • @Andy If your expenses exceed your income, then yes, you have a problem. Start looking for where you can cut expenses. People often talk about their "fixed expenses" or say that there is just no place left to cut. This are very few true "fixed expenses". Some loan payments, and legal obligations, that's about it. Your rent or mortgage is not "fixed". You can move to a cheaper place. Your heating bill is not "fixed". You can turn the thermostat down and wear a sweater. You can cancel your cable TV. Etc. – Jay Sep 28 '18 at 17:54

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