You Have More Health Insurance Options Than You Think

Full Episode Transcript

Dan: Welcome to another episode of Uninsured by Choice, where we help you navigate healthcare without insurance. I’m your host, Dan, and as usual, we are presented by our sponsor, Zion HealthShare, a nonprofit medical cost-sharing community. Today, I’m joined by Gary Sumner, who is the founder of Western Insurance Advisors, a California-based agency he’s grown into a team of more than 120 licensed brokers serving clients across all 50 states. Gary and his team specialize in helping individuals, families, and small businesses navigate the complicated world of health and life insurance. From individual and family plans to small group supplemental coverage and living benefits, for Gary, the work has always been personal. He said that helping clients is one of the greatest accomplishments of his career, and he built his agency on the idea of treating every client like family. So, Gary, welcome to the show.

Gary: Thanks for having me. I appreciate it.

Dan: Absolutely. One thing worth pointing out is that, um, when we’re saying in the intro that this is personal for Gary, it’s also personal for me. Gary has helped me over the years, um, get on multiple plans. We’ve been on Marketplace, we’ve been on other things, and so, um, really excited to kind of pick your brain a little bit and help people understand this world of insurance and uninsurance, and I think you’ve got a really great, um, background here because you’ve been in this business since before Obamacare, and then you were and you’re still in it post-Obamacare. Walk us through kind of how insurance has changed, what it used to be, what it’s become.

Gary: Got it. Well, it used to work, and now it doesn’t.

Dan: [laughter]

Gary: Just kidding. Just kind of, uh, making a blanket statement there. You know, prior to the Affordable Care Act, major medical plans, that was a terminology that was used. They typically had a million dollars in coverage per person, 5 million lifetime for the life of the policy, and there were networks you had to participate in and be a part of all of that. And then, outside of that category of health insurance, there were a lot of other types of insurance you could get. You wouldn’t really call it full health insurance, but they were plans that would pay you. So, maybe it’s $300 a day if you were hospitalized, or $25 if you go to the doctor, something like that. They just gave you a limited amount to help you cover your expenses of a medical event. Those were categorized into different sections, different types of coverage there. When Obamacare was passed, the federal government basically created two buckets. One bucket was you have to be a major medical plan that meets all of these certain criteria. And if you do that, and participate in the marketplace, you can be called a major medical plan. If you choose not to do that, you can’t be called major medical anymore. You have to be over here in this other bucket. And that other bucket is called indemnity, or fixed benefit, or limited benefit plans. But there’s now only two buckets or categories, and a lot of consumers don’t understand that they have options beyond Obamacare, if I can use that term, that are out there that are significantly less expensive, but can still provide them with a substantial level of coverage. And they also don’t understand if they’re going to be self-insured, how to really do that. What tools are out there? What can you do to take that pathway, and choose to go without traditional health insurance of some type of thing.

Dan: Those are some of the things that we help people figure out. Let me make sure I’m understanding correctly for listeners who are new to the term indemnity, and might not have heard that before. Is an indemnity plan a form of insurance? It’s just not comprehensive insurance.

Gary: Correct. All these words mean different things to different people. Comprehensive to one person may be something totally different to another person. In this given situation, Obamacare is now the only thing that can technically be called comprehensive major medical health insurance. And that wasn’t the case prior to Obamacare being passed.

Dan: When we talk about being uninsured by choice, generally what we mean is foregoing your major medical traditional health insurance plan for some alternative. And it sounds like indemnity could be a great alternative, but it is an insurance alternative. So it sounds kind of a misnomer to say uninsured by choice, but I’m going to go get an insurance based plan. But it is a form of insurance that’s just not your full major medical coverage. So how does indemnity work then? You said it’s also referred to as a fixed benefit. So what would an indemnity plan kind of look like?

Gary: So with the kind of the major hallmarks, at least how the public was sold on the Affordable Care Act and you know, Obamacare and all of that. There are no maximums on the amount of payout that an insurance company will pay out. They’re all guaranteed to have all of your annual wellness things covered and taken care of. So you know, guaranteed to take you no matter what your medical conditions are in the background. Those are the three major hallmarks of Obamacare. You know, the alternative to that are plans that have like major medical used to, a million dollars per person per year, you know, five million lifetime. So there are caps on it. They may not cover all of the annual wellness screening that Obamacare would cover. And they also choose to underwrite, which means they’re going to look at the medical history of that individual and see what kind of risk they pose to the insurance company and determine are we going to take them or not? And if we are going to take them, do they get the preferred rate or do we put them on a slightly higher rate for a certain time period? Does that make sense?

Dan: Yeah. So if I got an indemnity plan, which I did have, and I got cancer on that plan, and it worked well. It took care of things. But if I was just going to a wellness checkup, I wouldn’t necessarily need to show them my ID card. I could just pay cash and say, “Look, my indemnity plan doesn’t have anything to do with this wellness checkup. I’m just going to pay the whatever $100 to go do that for my annual physical.” But it’s more for other types of maybe larger expenses or something like that. Would it work? Um, or am I describing that correctly?

Gary: Yeah, that is one of the pathways. Although, there are some of the um fixed benefit plans out there that um they do cover a significant portion of a well check. They do have those types of things covered in there. That’s where it gets complicated for people is finding someone that can help them navigate the differences between these alternative options. Some of the fixed benefit plans or indemnity plans that are out there, um you have the ability to go to a doctor, pay cash, and then submit the bill, and they’ll reimburse you. And that is a really great way to go. If I could give you an example, I had a realtor who was on one of these fixed benefit plans. Her son fell at a park, broke his arm on a Saturday night, went to the emergency room. They were there 45 minutes. He’s got a broken arm. They wanted to charge her $17,300 for that visit. I said, “Call them back and tell them you don’t have insurance.” She did. She got a new bill for $1,300, which the insurance plan she had completely paid for.

Dan: That is incredible.

Gary: Cash pay discounts in most cases are staggeringly less. I’ve had clients negotiate — I had a guy that had a spinal fusion up in his cervical vertebrae. Two days in the hospital. They were going to charge $87,000 for that. He got that negotiated down. He got a cash price of 9,700 bucks.

Dan: It is staggering. Does it have anything to do with networks? Do indemnity plans lock you into a network, or can you choose a provider?

Gary: It depends upon the plan that you have. There are some that have a network which provides you a network discount when you go to an in-network provider, but they also give you the option of going outside of that network, getting a cash price, and then submitting that to your insurance company, and getting reimbursed for that. And so, we teach a lot of policy holders to do that. I even have policy holders that are on Affordable Care Act qualified Obamacare plans that we advise them, “If you go to the emergency room at this point, tell them you don’t have insurance because they’re going to get a drastically reduced bill that their major medical insurance company is going to be much happier about trying to process than the original one.” Does that make sense?

Dan: Yeah.

Gary: And I can give you examples of how that happened with major medical if you want, but I don’t know how much time we have for that.

Dan: Oh, no, yeah, go ahead. I’d love to hear an example.

Gary: I had a client on a major medical plan, and she went to the ER for heart palpitations, was there for 45 minutes. They told her to go get back on her anxiety meds, charged her $23,300 and change for that 45 minutes. Well, her major medical company said, “That’s crazy. Yes, they’re in network, but we’re going to disallow 10 grand. We’re not even going to process that. Look at this $13,300 nut. We’re going to pay this amount, this amount. This is beyond our allowable amounts.” All said and done, they paid slightly under 4 grand. She was out of pocket to that hospital for over 15 grand.

Dan: Wow. That leads me to a question because I can’t remember. It’s been a while since I had this plan. Does it have a traditional deductible like the other types of marketplace plans would have?

Gary: Great question. Again, it depends upon the plan that you have. There are some that have that traditional deductible for all your medical care, and there are many of those. Some of the big ones now, like a major fixed benefit provider in the United States, they have a hospital-only deductible. So if you need outpatient surgery, emergency room, lab, whatever, MRIs, there’s no deductible that has to be met. They pay first dollar for all of that care and treatment. It’s only when you’re hospitalized overnight that you have to deal with a deductible, which gives people peace of mind and a lot of freedom that, man, if I use my insurance, I don’t have to pay 5,000 or 6,000 or 7,000 dollars out of pocket.

Dan: And so, even though this isn’t an insurance product, I think it’s important for anyone listening to understand that the subsidies would not apply to indemnity plans, only if you go to the marketplace and get a major medical. Is that right?

Gary: That is true. And then last year, um, especially in January of this year, during the past administration, the amount of income you could make and still get a subsidy was raised really, really high. I mean, I saw people that were making 150, 200,000 dollars a year getting subsidies on their health insurance. It was never designed to do that. It’s not sustainable. Those were all brought back down to the original levels that they started at.

Dan: Yeah.

Gary: And so, there were people that are looking for that same low cost and subsidy on these alternatives, and they can’t get it.

Dan: Now, when I was originally shopping this, I was self-employed at the time, and I didn’t have an offer of coverage from an employer, and I was making too much to go get anything through the government. I went looking around and found Gary, and I said, “Hey, Gary, help me understand my options here.” And you kind of walked me through a lot of them. We’ve had marketplace plans, we’ve had indemnity plans, um, over the years. If someone just wanted to go get an indemnity plan, could they call up an insurance company and say, “I want this indemnity plan”? Is that pretty much not really possible? Do you sort of almost have to go through an agent or broker?

Gary: Yeah, yeah, you do have to go through an agent or a broker, like the number one provider of them in the United States. When somebody contacts them, they send them to an agent or a broker in their area, because they want to make sure people have a really clear understanding of what these plans will do and will not do. They don’t want to be dealing with lawsuits. They don’t want to be dealing with all of that. They don’t want to have to deal with complaints and all of that that’s involved. Not trying to make a plug for me, but I’m, you know, that’s what I do.

Dan: No, hey, I’ll plug for you. You did great. You helped me — I think we must have done four or five plans over the years. The last one I think we had was, um, I was working full-time at an employer and I received an offer of health coverage. But for my family it was going to be like $2,500 and I said I can’t pay that. And so I took that because I was fresh off of cancer and so I felt like I kind of needed that. And it only cost me like $30 a paycheck, but for my family, you got them on — it was a Philadelphia American Indemnity Plan and it was like a quarter of the cost.

Gary: These fixed benefit plans, because they don’t have to take everyone, they can be pickier. They’re not trying to be harsh or mean, but they’re trying to provide lower cost insurance for that 75-80% of the population that’s relatively healthy. That shouldn’t have to pay those ridiculously high premiums. Now, I know there is the mentality there, and I respect it, where we should all share the cost and people that are healthy should be paying for some of the cost of people that aren’t healthy. Not going to make a judgment statement on that — people make their own decisions on all of that. These fixed benefit plans, they are anywhere from 45 to 50% less usually and provide a substantial level of coverage. For example, in Utah, the average cost for a hospital room stay is about $3,700. That’s the average just for the hospital room. California it’s $4,300 — difference there in the states. You can check that in every state. Some of these fixed benefit plans, like Philadelphia has one in Utah, it pays $10,000 a day. You’re going to be covered. So it’s not like you’re taking a risk. Insurers that provide these plans want to make sure consumers understand what they do and what they don’t do. So there’s no one surprised.

Dan: That’s the advantage to going through a broker or agent. I’m glad I did. I think for anyone in consideration, that would be my recommendation as well. Going to your example, hospital stay — if I go have a hospital stay right now and they send me a bill for 5,000 and I have an indemnity plan that pays 10,000, does the plan just pay the hospital? Do they pay me?

Gary: That’s a really good question. So again, it depends on your plan, but for most of them, if you had a $5,000 bill and you had presented your insurance card to the hospital, they’re going to send that $5,000 bill to the insurance company. The insurance company will pay that hospital 5,000 and they’re going to send you a check for the remainder of what they would have paid had it been higher, up to the limit of that coverage of that particular policy.

Dan: I lived it. I can tell you going through cancer, a lot of bills — every day of infusions was a bill that would get sent in and I would just keep getting checks in the mail. Not every time, because some days I would get all three chemo drugs, but some days it was only one and it was just a fixed benefit — you do infusion, this is what we pay. So on the days when it was under, I just got checks. And so it absolutely works. Now, of course, the problem is if you just have a one-off surgery or whatever procedure, if the fixed benefit is $10,000, but the bill you can’t get any lower than say 15,000, they will pay the 10 that they said they would, but then you would be on the hook for the five.

Gary: You would be on the hook for the five. That is true, but let’s think about that for a second, Dan. If you had an Obamacare plan with, like in some of them in Arizona and other states, a 7, 8, $9,000 deductible and you’re paying 50% higher premium on top of that, in the end of the year, you’ve spent way more money than having to pay that $5,000 out of pocket. My daughter needed an MRI of her knee. She was a volleyball player. And with the best place here where I live to do that at, they were going to bill Philadelphia $4,000 for that. The network discount was 75%, bringing the bill down to $1,000. Well, the allowable amount with Philadelphia was 525. That meant I had a copay of 475. I thought, well, that’s basically the same copay or really close to what the Obamacare plans are. I’m okay with that. But I said to the provider, if I just walk in and pay cash, how much are you going to charge me? $320. I paid cash, sent the bill, and got a check for 525.

Dan: I think you have to look at things holistically like you said. It’s not just what would it cost if this, what would it cost if that. It’s thinking, well, what would it cost if nothing? What if I didn’t have any need, any claim, anything like that? What’s it going to cost? Well, this option costs you, whatever, $2,500 a month, that one costs you $400 a month. So at the end of the year, if nothing happens, you’ve paid X dollars more here than there. And then you go, well, now what if I have this thing where I owe 5,000? Well, guess what? You’re already ahead 6,000.

Gary: Those extra checks, that money we get, and half of the money we’re saving in our monthly premium, which I think is over $1,200 a month we’re saving in our monthly premium — we put that and the checks we get into a bank account, and that’s the emergency fund for the extra things that may show up or may come up in the course of the year. And we’ve never used it all.

Dan: This might not be the exact statistic, but I know it was somewhere really close to 80% of all Americans who are declaring medical bankruptcy — 80% of them had insurance at the time of the event. So even having insurance, it still can be so expensive to use that it’s prohibitively expensive. The coverage doesn’t save you.

Gary: Well, it doesn’t save you, and that’s one of the downsides of Obamacare — I personally believe insurance companies were given more loopholes. I have this quote memorized. This is in your major medical health insurance plans: once you have reached your out of pocket maximum, blank company will pay 100% for most covered services received from exclusive network providers. Most — and that’s 51%. Covered? We don’t know what is covered or not until it’s over with, and that’s why people get stuck with these bills. Depending upon who you talk to, you’re right, 75 to 80% of all bankruptcies in the United States are due to medical bills. It’s the number one cause of bankruptcy. I mean, I had that statistic I told you about before we even started on this thing here. 56% of all adult Americans have medical debt. That’s just wrong.

Dan: I mean an indemnity plan wouldn’t necessarily solve all of that, but it could have gone a long way where people just think, well, I’ve got to choose between having this crazy absurdly expensive marketplace plan or nothing at all. This could be a good middle ground option for people, and a lot of that percentage maybe could have avoided this altogether.

Gary: They really could have. And some of the better of these fixed benefit indemnity companies, they actually have concierge services that will help the policyholder go out and find providers, negotiate for lower cost surgeries and treatment, and then manage all of that claims process for the consumer. They’re consumer focused. They also have a concierge service that will negotiate bills down. I just recently had a client here in California. She went to the emergency room, forgot to say “I don’t have insurance, I want to pay cash,” and gave them her insurance card, and they billed $13,000 for her 45-50 minute time in the emergency room. Well, this insurance company’s negotiating team got that down to $1,000. There are tools available to consumers — you just have to learn them and find out who they are.

Dan: We talked a few episodes ago with a gentleman named John who’s the HR director for a bigger company. They had, I think he said, 150 employees maybe. So if you’re in his seat and you’re thinking, “Gosh, this group plan we’ve got is a little too much now,” could you look into indemnity plans, or is that not going to meet the ACA compliance requirement for a 50-plus employee group?

Gary: Yeah, you’re right, Dan. It’s not going to meet the ACA compliance for an employer group of 50 or more employees. It’s just not. Because the whole focus of Obamacare and the Affordable Care Act was trying to force everyone, consumers and insurance companies, into a box that the federal government could control and manage and make it work. You know, ideally the plan was to have 75% of the people in Obamacare healthy, paying full premiums, subsidizing those who couldn’t pay full premiums, or those who were not healthy. Those percentages, I think, are reversed. All the healthy people who can afford to pay — like in California, a family of four, a health insurance plan with a five and a half thousand dollar deductible is $2,800 a month, $3,000 a month. That’s a house payment. A lot of those people are going without insurance.

Dan: So what about the small businesses that have less than 50 employees? They can offer any kind of a cafeteria benefit. Do they make indemnity plans available at the group level?

Gary: Yes, they do.

Dan: So these are widely available — much more widely available than I even realized before. Anyone could really look into these even at the group level. If you’re more than 50, you would have to pair it with —

Gary: You’re going to have to do something. The other issue you run into in that group thing is what if you have a group of 20 and two people have serious medical conditions that are uninsurable on these indemnity plans. There’s ways to manage that. You know, we put them on major medical Obamacare plans and put everybody else on the indemnity plan. The company’s still saving a fortune, cutting their premiums in half. It works, but it takes somebody that knows what to do and can help you navigate that. And I tell every client, and I try and train all of our agents this way: I don’t know you, I don’t know what’s best for you, but I know the insurance companies. I can help you understand them so you can decide. And that’s what we have to do, and I appreciate that’s what you’re doing, Dan, as you’re trying to empower consumers to understand all of their options and take advantage of those options, rather than helplessly twiddling their thumbs in anxiety and going, “I can’t pay this. What do I do?”

Dan: Yeah, and empowering people is really what we’re all about. Uh, we’ve had people on that do health share and health sharing. They don’t restrict membership, for the most part, as far as I’m aware, to where they’d say, “Oh, you’ve got this condition that’s pretty expensive, you’re not allowed to join.” They will just have a waiting period of a year or more till they will share into the cost associated with that condition. But it sounds like with an indemnity plan, they might just straight up say, “Hey, look, either you’re not insurable under this plan, or you have to pay this rate instead.” Something like that. So you’ll know a little more up front if it’s going to work for you.

Gary: The analogy that people seem to understand is the concept of auto insurance. If you had two car accidents and a DUI last year, what would your auto insurance cost you if you could find a company to insure you? Well, the same principle really holds true for health insurance in these lower cost markets, these fixed benefit plans. They’re not trying to be harsh, but they are trying to provide a needed resource, needed coverage, to people that are relatively healthy. And I mean, I have people that are bipolar, diabetic, schizophrenic, epileptic, any other “-eptic” you can think of, right, and they’re on these indemnity plans. Um, it’s just the really big stuff that the insurance company might go, “We’re going to pass on that. We’ll take the rest of the family, we’re going to pass on that.” And that’s where your broker steps in and goes, “Okay, let’s put you on this guaranteed issue plan.” I just did this this last week with a couple — the wife has serious major things and needs surgery going on, the husband’s healthy as a horse. Put him on one of the indemnities and her on a guaranteed issue plan. They both have what they need and they’re saving $700 to $750 a month.

Dan: Wow. And getting what they need — that’s the important —

Gary: — what they need. Exactly.

Dan: And spend less. So, last question before we wrap it up, because I see this come up a lot when people bring up alternatives — they feel like if they need any kind of help with anything related to mental health or prescriptions, that insurance is the only thing that will help them. Do indemnity plans have any kind of coverage or help there?

Gary: Some of them do, some of them don’t. Um, again, it just depends on the company. The big one that I’ve mentioned a couple of times here, they do have coverage for those things. This statement is true for every insurance company whether they’re Obamacare or not — every insurance company has gaps. They have areas where they have poor coverage or they don’t cover well, and you have to find ways to mitigate that risk. And so again, that’s where having somebody that can help you navigate that matters. But the good indemnity plans, they do cover mental health. They do cover prescriptions to some degree. I mean, statistically, 80% of generic medications are under $10 — that’s the number. And Blue Shield of California, once you’ve met your deductible for prescriptions, your copay is $19 on a generic medication.

Dan: Doesn’t even cost that much.

Gary: Your copay is more than the cash cost is for that prescription on a bronze plan.

Dan: Interesting. Well, Gary, I could probably talk about this all day. Um, I just think it’s fascinating to see all these different alternatives out there, the options that exist that people just aren’t aware of. So glad you could shed some light on the indemnity side. So, anyone who wants to get in touch — maybe to learn more about it or shop something — what’s the best way for someone to connect with you?

Gary: Uh, boy, I’ll give you my cell phone number. That’s the easiest way to reach me. My cell phone number is 805-305-7273. Or you can email me — it’s [email protected].

Dan: And then I’m assuming westerninsuranceadvisors.com would be the website to learn more about it. All 50 states, so wherever you are, you’d be able to get some help there.

Gary: Yeah. At the least we can do is give you advice — here’s the options that you have. Uh, some states, like New York, don’t allow these. New Jersey — they don’t allow these types of plans to exist there. But there are alternatives. There are things we can navigate and direct you towards. But yeah, we’re here to help in any way we can.

Dan: Well, hey, thanks again for joining. And for those listening or watching, please be sure to subscribe on YouTube, Apple, or Spotify. And we’ll see you next time.

Gary: Bye-bye.