A Fistful of Failures

I gritted my teeth and wasted six hours this week trying to beat the health insurance system.

Commonwealth Care’s online worksheet makes it official: We legally can’t afford health insurance. The state figures that we should be able to pay about $500 a month for insurance, and there’s nothing available that cheap. Massachusetts will graciously exempt us from being fined if we choose not to buy insurance, but they won’t help us pay because we make more than three times the poverty rate. Although it's nice to know that it's legal, going uninsured is a last resort. FAIL

Commonwealth Choice is the state’s insurance clearinghouse. Their website offered 21 plans ranging in price from $732 to $2,071 per month. We currently pay about $925 for Blue Cross Blue Shield of California. A comparable BCBS plan through Commonwealth Choice is $1,112 – about what we’ll pay for our current plan after COBRA expires. The only option that really saves us any money is the $732 Neighborhood Health Plan. It carries a $2,000/$4,000 deductible (vs. our current $500 deductible)...and our doctor doesn’t accept it. Changing doctors is a nonstarter. FAIL

All righty then, what about getting a group rate through some club or association?

Sadly, AARP group insurance (via Aetna) is still not available in Massachusetts. FAIL

AAA offers dental, life, homeowners, auto, long-term care, accident, and travel medical…but no general medical insurance. FAIL

The American Society of Journalists & Authors has nothing for Massachusetts. FAIL

Anne doesn’t qualify for membership in the Author’s Guild. FAIL

The Editorial Freelancers Association has nothing at all. FAIL

Health Service Administrators (HSAmembership.com, formerly the Mass. Business Council) is wicked confusing. All I could find were a bunch of links to insurance company websites with no information about pricing. I need to spend a couple more hours examining all of those links. Provisional FAIL.

The cheapest Fallon Community Health Plan that our doctor accepts is $942/mo with a $2,000 deductible. It does include dental, which we currently lack, so in that way it’s better than our current BCBS plan. FAIL for now, but I might come back to this one after COBRA runs out.

Various online quote finders are really just trolling for my phone number -- they don’t really show quotes online. The two agents who tried to sell me cut-rate coverage were both peddling Mid-West National Life, which Google tells me is the object of numerous complaints and lawsuits. FAIL. We already have enough problems with Blue Cross. (In fact, the next item on today’s agenda after posting this essay is calling a collection agency that’s dunning me over a wrongly-denied medical bill).

Speaking of problems with Blue Cross, here’s a funny story: South Shore Hospital billed BCBS $691 for an X-ray that Anne needed. The hospital settled for the $270.85 that BCBS said was the covered amount. But they raised our deductible last month from $250 to $500, and there was a $20 copay. Bottom line? BCBS paid 85 cents. We got billed for $270.

For this, we pay $925 a month?

CONCLUSION: It is difficult to get a group health insurance rate and impossible to get a subsidy without either having a job or being truly impoverished. Unemployed individuals have no alternatives to paying retail, and Massachusetts has the highest health insurance costs in the US.

So I’m going to have to be creative.

Kraken Enterprises could establish a Section 125 Voluntary Plan and designate Commonwealth Choice as an available health insurance option. (A Voluntary Plan is one to which the employer does not contribute.) I’d then set up an account with the Health Connector (which represents six carriers). My employees – i.e., me – can then enroll in a Commonwealth Choice plan through the Health Connector. Kraken Enterprises would collect my insurance payments via payroll deduction on a pre-tax basis. Kraken is then billed for my health insurance premium on the 15th of every month. Any shortfall is the responsibility of the employee – i.e., me.

The monthly insurance premium is triple my gross monthly salary, so payroll withholding is a joke. But wait. What if Anne’s freelance business became a Kraken enterprise? She’d become an employee of my company and her revenues would filter through my corporate accounting. The accounting would be a nightmare – I’d need to manage a separate operating company. I would need to consult my CPA and probably a lawyer as well. It would certainly complicate our already-Byzantine tax situation. After all of that, I have no idea whether this would actually save us any money. As far as I can tell, the only advantage is paying in pre-tax dollars. I’d need to actually create the Section 125 thingie and get an employer number before I can see the employee pricing – I assume it would offer me the same 21 plans that I saw as an individual, and probably at the same prices. Although I'm reluctant to draw the state's attention, maybe I’ll do that next week.

Having two employees would magically qualify Kraken Enterprises to purchase group-rate insurance outside of the Commonwealth Choice umbrella. (The insurance industry defines a “small business” as 2-19 employees). Creating this legal fiction might get us around the assumptions that are limiting us to individual/family coverage. However, being married might screw that up. Insurers want two potential enrollees. I wonder how we’d make out if we got divorced and bought two individual plans? We are both willing to divorce if it will save us enough money on health insurance.

Next week I should spend a few more hours on this:

• I need to investigate the comparable options available to the self-employed. I really prefer to keep our businesses separate, if we can.

• I need to revisit that inscrutable Health Service Administrators website and see if it can make some sense out of who they are and what they do.

• I might open a Section 125 plan so that I can price the insurance options available to employees of Kraken Enterprises. That’s the first step in figuring out whether taking over Anne’s freelance business and getting divorced make financial sense.

Two things are certain: First, my dad was a top casualty insurance salesman for 35+ years, and my go-to guy for everything insurance related. I wish I could talk to him now. Second, if I was 13 years older I could just get Medicare and wash my hands of all this. I honestly don’t know how we’re going to get through the next 13 months, let alone 13 years.

Incidentally, it does not appear that federal healthcare reform is going to help us. The plan that's taking shape cuts off subsidies at double the poverty rate.

The only thing that would save our bacon now is if Congress extends the COBRA subsidy for another nine months. AFAIK, that has not even been proposed.