Diabetes and Health Insurance

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Diabetes and Health Insurance

The New Year has arrived and, for many, with that comes the annual resolution to lead a more health-conscious lifestyle. What many people might not realize, however, is that a large part of staying healthy is understanding your exercise, diet, and overall health-care options, as well as which fit best into your budget and routine.

Know your options

Health insurance choices in particular can be daunting. For example, should you go with an HMO, PPO, EPO, or indemnity plan?

Here is a breakdown of four different types of plan options that a patient might consider:

HMO: This stands for Health Maintenance Organization. With an HMO plan, you choose a primary-care physician, through whom all of your health-care services go first. This requires you to obtain a referral before seeing another health-care professional or specialist, unless it is an emergency.

PPO: This stands for Preferred Provider Organization. A PPO plan can allow more fluidity for a patient, as you are not required to select a primary-care physician or receive referrals before visiting specialists. Patients have the flexibility to choose a health-care provider in or out of their network. However, seeing a health-care professional outside of your network will incur higher out-of-pocket costs and limited service coverage, while staying within your network usually provides full coverage and lower copays.

EPO: This stands for Exclusive Provider Organization. An EPO plan melds together the cost-savings of an HMO plan with the options allowed by a PPO plan. With an EPO, you are not required to select a primary-care physician or seek referrals before seeing a specialist. However, the network of health-care providers and hospitals is limited, and there is no coverage outside of your network except in emergencies.

Indemnity: An indemnity plan, also known as a “fee-for-service” plan, allows patients to visit almost any health-care provider of their choosing, with the insurance company then paying a portion of the cumulative charges. With an indemnity plan, the individual is required to pay a pre-determined percentage of health-care service costs. The insurance company then pays the rest.

Within each type, your employer may offer different choices with a variety of co-pays and premiums. For example, some plans might cost you more upfront for the premium deducted from each paycheck, but cover more of your ongoing health-care costs. Others may have low premiums but require higher co-pays for doctor visits and prescriptions, or may have high annual deductibles or out-of-pocket costs. When choosing the correct plan for you, it is necessary to first consider your lifestyle, financial plan, and ongoing health-care needs and costs.

Insurance for diabetes

If you have Type 1 or Type 2 diabetes, you likely have ongoing medical costs. Between regular visits with your diabetes care team, prescription medications, and testing supplies, diabetes self-management can be expensive. So what is the best type of insurance coverage for diabetes patients?

According to Gary Scheiner, owner and clinical director of Integrated Diabetes Services LLC, it is important to keep three factors in mind when choosing an insurance plan. The first is the deductible, which is how much you are required to pay out of pocket before any of the insurance coverage kicks in.

“You want as low a deductible as possible, and that is a challenge with many of the Affordable Care plan programs out there. Many of them have huge deductibles, in some cases as high as $10,000,” said Scheiner. “That is not going to help cover many of your supplies, so you want to look for a plan with a low deductible. Something in the range of $100 to $500 is more reasonable.”

The second factor to keep in mind, according to Scheiner, is the co-pay, which is the percentage that you pay for your supplies. For some plans it can be as high as 50%, and your out-of-pocket costs can get very pricey. A plan with a 10% to 20% co-pay is much more manageable for someone with Type 2 diabetes.

The third variable to consider is the maximum allowance. Some plans have a yearly maximum and will not pay more than $2,000 for durable medical in one year. If a person wants to buy an insulin pump, for example, he or she would exceed that limit very quickly, said Scheiner. That is why it is important to consider a plan with a high annual maximum. While some plans do not have any maximum, it is important to find out if your plan does and ensure it is substantial, at least $5,000 to $10,000, he said.

For patients with Type 2 diabetes, the prescription plan is also important to consider, since most people with Type 2 take multiple medications. That is why it is essential to choose a plan that has a broad prescription component.

Consider an FSA

When you have diabetes, it is important to plan ahead. One option to consider is opening a Flexible Spending Account (FSA) or a Health Spending Account (HSA) through your employer. Many companies now offer these accounts, which renew each calendar year. The plans allow you to have a set amount deducted on a pre-tax basis from each paycheck. The money is put into an account that can be used to pay for out-of-pocket, health-related expenses throughout the year.

According to Scheiner, opening an FSA or HSA is one of the best courses of action to help save patients money. “If you can count on spending X amount of dollars a year on anything health-care related, you might as well make them pre-tax dollars,” said Scheiner. “Let’s say the average person is taxed at 30%. If you put $1,000 in, you are putting an extra $300 in your pocket come tax time. It just makes sense to put as much into an HSA as possible.”

It is important to keep in mind that success with FSAs requires advance planning — the IRS has a “use it or lose it” rule that does not allow you to roll money over from the previous year. This means you lose any unused funds left in your account at the end of the 12-month plan period, making it imperative you budget carefully for the following year.

Using an FSA also allows individuals to purchase over-the-counter products using pre-tax dollars, offering added savings. This can extend from vision care to orthodontia expenses, as well as diabetic supplies. Having the possibility to buy readily available products over the counter also can help those who may not be testing their blood sugar regularly because of the high prices of blood glucose monitors and test strips.

Originally Published January 26, 2016

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