Understanding Preventive vs. Diagnostic Services


Seeing your provider for regular checkups and exams is an important part of staying healthy. Under health care reform, many preventive care services and screenings are covered at no cost to you when you visit a doctor in your health insurance network. Diagnostic services, on the other hand, may be subject to your plan’s deductible, copayment or coinsurance, and will usually apply to your annual out-of-pocket maximum.

Preventive Services Keep You Healthy

No-cost preventive services such as routine screening tests, immunizations, well-woman visits and children’s well-check exams are intended to maintain your health and identify potential health issues before they become serious. During your preventive care visit your doctor will determine which tests or screenings may be beneficial based on your age, gender, general health and family health history.

Diagnostic Services Diagnose, Treat or Manage Health Conditions

Diagnostic services are intended to treat ongoing or already identified health conditions or issues. For example, lab services may be ordered due to current symptoms that require further diagnosis, or to clarify previous abnormal test results.

Examples of When Services May be Billed as Diagnostic

If you visit your physician for a routine physical exam (preventive) but mention during the appointment that you have been experiencing abdominal pain, your appointment and resulting services may be billed as diagnostic and applied to your deductible, increasing your percentage of the cost.

If you receive a screening test that is sometimes covered as a preventive benefit, such as a colonoscopy, but your physician ordered it because of ongoing symptoms you have experienced, it may be billed as diagnostic.

Although health insurance carriers use the same guidelines for preventive care coverage, they may be explained differently in your benefits summary. See below for examples of preventive care guidelines.

Anthem Blue Cross Guide to Preventive Care

Blue Shield Guide to Preventive Care


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Employer Reimbursements and the IRS

In a recently published Frequently Asked Questions (FAQs), the IRS addressed the deductibility of employer-sponsored reimbursements for individual health insurance premium policies. Read the full Q&A here.

What does it mean?
Beginning January 1, 2014, employers are no longer permitted to reimburse employees for insurance premiums for the purchase of an individual policy – whether the policy is purchased on- or off-exchange – as a tax-free benefit. Instead, any employer-reimbursed insurance premiums for individual health insurance policies are subject to all applicable federal and state income and payroll taxes that would otherwise apply.

The IRS does not prohibit employers from increasing employees’ salaries to contribute to the cost of purchasing individual policies. However, pre-tax reimbursements to employees for individual policies are no longer allowed. Reimbursements now must be treated as taxable compensation for the receiving employee and included in all income reporting.

What is the penalty for providing tax-free reimbursements for individual health insurance plans?
Per the IRS: “such an arrangement fails to satisfy the market reforms and may be subject to a $100/day excise tax per applicable employee (which is $36,500 per year, per employee) under section 4980D of the Internal Revenue Code.”
Read the full IRS Notice 2013-54 notice here.


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Term Life Insurance – What Happens When Your Policy Expires?

Boy and Grandfather
Term life insurance provides coverage for a predetermined amount of time to fit your needs. But what happens when your term nears its expiration date? You have a few options to consider.

1. Pay the new premiums. Don’t assume that your term policy will cancel automatically when the term ends. Depending on your policy, it may continue at a significantly higher premium. This is especially important to note if you have the premiums automatically drafted from your bank account. Premiums may continue to increase annually until you reach 95 or 100 years of age. This is not a feasible option for many individuals due to the high cost. However, it may be a viable option for an individual who needs to continue coverage and is no longer insurable due to health conditions.

2. Purchase a new policy. If you determine that your loved ones would still benefit from financial assistance, you may consider purchasing a new term policy or a permanent policy.

3. Convert your term policy to a permanent policy. Some term life insurance policies include an option to convert to a permanent policy – universal life or whole life – without having to answer health questions or undergo a medical examination. This may be helpful to those with health conditions that would make obtaining a new policy impossible or prohibitively expensive.

4. Let the policy expire/cancel the policy. If you’ve determined that your need for life insurance has passed – due to personal savings, grown children or a spouse who no longer needs financial support in the event of your death – you may decide that the best option is to allow your policy to expire (or cancel it when the term ends).

Need guidance on your life insurance policy options?


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Covered California Announces Special Enrollment Period for COBRA Enrollees


Covered California today announced a special enrollment period for individuals with Federal COBRA or Cal-COBRA coverage who would like to switch to an individual health insurance plan purchased through the Covered California exchange.

Those who currently have COBRA (Consolidated Omnibus Budget Reconciliation Act) healthcare coverage can shop for and buy coverage on the Covered California website during a two-month special-enrollment window, beginning May 15, 2014 and ending July 15, 2014. Gray & Troy Insurance has a team of certified Covered California agents ready to assist you should you have any questions regarding your health insurance coverage options.

Click here for the full article from Covered California.


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IRS Sets 2015 Health Savings Account Contribution Limits

Recently, the IRS released the 2015 inflation adjusted annual contribution amounts for Health Savings Accounts (HSAs).

This applies to individuals with high deductible health plans (HDHPs).

Annual HDHP Minimum Deductibles and Out-of-Pocket Maximums
In 2015…
The minimum HDHP deductible for an individual with self-only coverage will be $1,300, up from $1,250 in 2014.
The minimum HDHP deductible for an individual with family coverage will be $2,600, up from $2,500 in 2014.
The HDHP out-of-pocket maximum for an individual with self-only coverage will be $6,450, up from $6,350.
The HDHP out-of-pocket maximum for an individual with family coverage will be $12,900, up from $12,700.

Annual HSA Limits
In 2015…
The amount for an individual with self-only coverage will be $3,350, up from $3,300 in 2014.
The amount for an individual with family coverage will be $6,650, up from $6,550 in 2014.


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Individual Open Enrollment Has Ended. Can You Still Obtain Coverage?


The individual open enrollment period for 2014 is over, but in some circumstances you may still be able to obtain health insurance coverage without having to wait until 2015.

1. You start a new job.
If you start a new job, you may be eligible to enroll on your company’s group plan during the initial enrollment period. This will depend on your work status (full-time versus part-time, for example) and your employer’s waiting period. If you choose not to enroll at the time benefits become available to you, you will have to wait until your employer’s next open enrollment period, unless you have a qualifying event.

2. You have a qualifying event.
Qualifying life events may include:

  • Change in marital status (for example, marriage, establishment of a domestic partnership, divorce, death)
  • The birth or adoption of a child
  • Loss of Medi-Cal or Healthy Families coverage
  • Termination of employment
  • Your group-sponsored coverage is terminated
  • Your COBRA benefits are exhausted
  • Other involuntary loss of group coverage or governmental insurance coverage

Check with your benefits administrator for details on how to enroll if you believe you have had a qualifying life event, and to determine the eligibility period for the event.

3. You are eligible for Medi-Cal.
You can enroll in Medi-Cal at any time.

4. You are an employer.
Businesses can implement group-sponsored health and wellness plans year-round.

5. Covered California Exemptions and Special Enrollment Periods
In some circumstances you may be eligible for a special enrollment period for Covered California plans.

If you do not qualify for enrollment under any of the circumstances listed above, the next open enrollment period for individual policies purchased “off-exchange” and Covered California plans will be in the fall of 2014. If you are eligible for insurance through your employer, check with your benefits provider to confirm when the next open enrollment period will begin.

If you did not purchase individual coverage or enroll on a group plan, and you do not qualify for an exemption, you may have to pay a tax penalty when filing your next federal income tax return in April 2015.


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Long-Term Care Insurance: Can You Afford It? Can You Afford Not to Have It?

For the vast majority of baby boomers, the question isn’t if you’ll need long-term care, but when.

About 70 percent of individuals ages 65 and older will need long-term care at some point, according to the Wall Street Journal. And the costs of obtaining such care are significant – as seen in the chart below. (You can plug in your own parameters and see the results here.)

Cost of Care Example

Those with sufficient savings most likely won’t need assistance paying for long-term care. Those with very limited resources can receive some assistance from Medicaid (Medi-Cal in California). But what about the individuals who fall somewhere in between? The out-of-pocket costs of long-term care can quickly deplete their available resources.

Those who cannot afford long-term care insurance (referred to as LTC or LTCI) may have to rely on family to help care for them. Sometimes this situation isn’t ideal or feasible, especially for extended time periods. Programs such as Medicare and Medicaid/Medi-Cal do not pay for assisted living or home care services.

Long-term care insurance provides some breathing room by paying for care not covered by health insurance, Medicare or Medicaid.

Timing Is Everything
Knowing when to purchase LTCI can be challenging. If you purchase a policy too soon, you may end up paying for premiums long before your health declines to the point of needing care. If you wait too long to purchase a policy, the cost of obtaining a policy may have drastically increased based on your age, or you may be declined altogether due to your health condition. Up to 25 percent of applicants in their 60s may find they cannot obtain LTCI, or they face premiums up to 40 percent higher, according to the American Association for Long-Term Care Insurance. For this reason, it’s often recommended that individuals consider buying LTCI while they are still in their 50s.

What should my policy include?
You may want to consider the following needs:

  • Personal at-home care, if you need assistance with activities of daily living (ADLs) – bathing, dressing, walking, toileting, eating, etc.
  • Adult day care
  • Assisted living
  • Nursing home

Other Considerations

  • Don’t purchase based on price alone – be sure the carrier is a reliable one with a good rating.
  • Couples may want to purchase a rider that allows them to share benefits as opposed to two separate policies.
  • You may want to consider inflation protection, although it can add 50 percent or more to the cost of the premium.
  • Can you afford to pay the premiums over time? Premiums often increase, and if you are unable to continue paying for the policy, you may be left empty-handed.

Where can I get a LTC plan?
While some employers may offer a LTCI policy as an employee benefit, most LTCI is purchased by individuals outside of the workplace.

Gray & Troy Insurance Services can help you determine whether LTCI is right for you.

Helpful Calculators
You can calculate the average cost of long-term care in your specific region here: http://www.aarp.org/relationships/caregiving-resource-center/LTCC/.
Will you be able to afford nursing home care?


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Urgent Care vs. Emergency Room: Where Should You Go?

When medical care is needed outside of traditional office hours or when an appointment with your physician is unavailable, it can be difficult to decide where to go. In many cases, choosing an urgent care center instead of the emergency room can save you time and money, as well as freeing up emergency resources for those who truly need them.

The Urgent Care Center
Urgent care centers are for non-life-threatening medical conditions that require attention right away but are not emergencies. Examples of reasons to visit an urgent care center include fever without rash, minor trauma (for example, a common sprain), painful urination, persistent diarrhea, severe sore throat, and vomiting.

Depending on your medical insurance plan, the copay for an urgent care visit will vary but it is typically a significant savings when compared to emergency room (ER) costs. Check your plan’s benefits to determine your out-of-pocket costs for urgent care vs. emergency room services.

Generally, your wait time at an urgent care center will be shorter than at an ER. Most urgent care centers have extended hours and can see you when your physician is unavailable, including weekends and some holidays. The average wait time at an urgent care center is less than one hour, and usually no appointment is required.

Many urgent care centers offer physical exams, lab tests, EKGs and X-rays in addition to qualified nurses and physicians.

The Emergency Room
Emergency rooms are open 24 hours a day, seven days a week, making them a popular option for medical situations that arise outside of typical doctor’s hours, or when a patient does not have a primary care physician. Emergency rooms treat severe and life-threatening conditions, and they offer specialty equipment and personnel for a wide variety of medical issues.

The average wait time at an emergency room can be much longer than at an urgent care center. Patients are typically seen based on the urgency of their symptoms, so a patient with a sprained ankle or sore throat may wait for an extended period before being seen.

In terms of immediate cost, an ER copay can be double or triple the cost of an urgent care copay. Beyond that, it is impossible to know the upfront costs of your care in the ER until you receive your bills in the mail several weeks after treatment. From your insurance provider’s viewpoint, the cost of a hospital claim is much higher than the cost of a doctor’s visit or urgent care appointment. On a much larger scale, these costs can be passed on to the members in the form of rate increases.

Finally, the emergency room is a valuable resource for those with medical emergencies. Seeking emergency room care when not medically necessary prevents the doctors and nurses from being able to focus solely on those cases which are true emergencies. Using an urgent care center when appropriate frees up those resources for those who need them.

Click here for a list of medical conditions that would warrant a trip to the ER.

When in doubt, or if you are having a medical emergency, head to the closest ER or call 911. You can also ask your primary care physician to provide guidelines on when to choose urgent care over the emergency room.

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Gray & Troy Insurance Health Care Reform Seminar Videos Now Available

Gray & Troy Insurance Services recently presented Health Care Reform seminars for employers in San Luis Obispo, Monterey and Santa Barbara Counties.  Separate presentations were developed for small and large employers and focused on implementation of the Affordable Care Act and related California legislation to date, employer compliance and communication responsibilities in 2013 and beyond.  The presentations also addressed insurance market reform, changes to the individual, small group and large group insurance markets and the interplay with Covered California, the state’s new health insurance exchange.

Video recordings of both small group and large group presentations may be viewed on the Gray & Troy Insurance YouTube channel.  You may also download the corresponding presentation materials for the small group and large group presentations for reference.

For more information regarding employer responsibilities or other information related to Health Care Reform please contact Gray & Troy Insurance to speak with a Certified Affordable Care Act Specialist, or click on the button below and we will contact you.

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Some Small Employers May Be Able to Defer Adverse Impacts of Health Reform

With benefit changes and possible cost increases associated with the Affordable Care Act (ACA) coming in 2014, small employers may find the Early Renewal Option offered by most California health insurance carriers beneficial. Beginning in 2014, small group health insurance plans and rates from all health insurance providers will change significantly, and the impacts will be varied for affected groups and participants within those groups.

By moving their health insurance anniversary date to December 1, small groups will be able to accept December 2013 benefits and premium costs until December 2014, providing 12 months of plan and rate stability as well as allowing for additional time to evaluate coverage options as new plans are introduced. Although the Early Renewal Option may be appealing to many small employers, it will not be beneficial for all groups. Additionally, certain ACA taxes and fees will apply to health plans on January 1, 2014, regardless of a group’s health plan anniversary date.

Blue Shield of California, Anthem Blue Cross and Kaiser are currently distributing notices of the Early Renewal Option to small group policyholders, along with guidance in the form of Frequently Asked Questions (FAQs) and election forms to opt for the early renewal option. Deadlines to submit the election notices vary by carrier, from October 7th for Blue Shield of California, to November 15th for Anthem Blue Cross. Employers who decline to elect the Early Renewal Option will retain their existing anniversary date and accept new ACA compliant benefits and rate structures on their plan’s anniversary in 2014.

Gray & Troy Insurance is in the process of analyzing the Early Renewal Option for our small group clients and we will provide guidance for employers to evaluate their election opportunity within the time allowed by their respective insurance carriers. For more information regarding the Early Renewal Option or other issues related to Health Care Reform please contact Gray & Troy Insurance to speak with a Certified Affordable Care Act Specialist, or click on the button below and we will contact you.


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