We’re a very small agency, in a little suburb of a modest-sized Midwest town, but we do provide health insurance for those of our employees who want (and/or need) it. For a number of reasons, we’ve stayed with the same carrier for more than a few years (NTTAWWT). Of course, we’ve changed configurations over those years; the most recent was selecting a slightly higher deductible and installing an HRA (Health Reimbursement Arrangement).
Our renewal came up recently, and we had to make some choices. On the one hand, we’re not dissatisfied with the coverage and overall service of this carrier (they’re no worse – and no better – than anyone else currently in this market), but the experience I’m about to relate certainly earns it a spot in our (not so) coveted Pantheon of Stupid Carriers:
Our current plan is no longer being offered, but was a fairly typical PPO. We had coupled it with the HRA. The carrier’s automatic renewal option (the plan we’d go on by default, unless we specified otherwise, and which we’ll call Option A) is attractive: a $2,000 deductible, then 100%. Office visits are on our own nickel, but count towards the deductible (something the present plan’s co-pays don’t do). There’s still a prescription drug (rx) card, but it would be subject to that $2,000 deductible, which is “non optimal.” On the other hand, the rate is some $700/month lower than a plan with benefits similar to our present one. That would enable us to bump up the HRA numbers to offset the increased out of pocket.
But the deductible/rx tie-in is a non-starter. So I asked if they had a plan that did everything this new one would, but with an rx card that’s “turned on” from the get-go (no deductible). Turns out they do (we’ll call it Option B), so I asked for a quote on that plan.
So far, so good.
So what’s so stupid?
Well, I get all the numbers, and see something very strange : for one thing, they included the numbers for the plan we don’t like (Option A), but the premium is now some $170/month lower than what my actual renewal, which I got from the carrier in the first place, says it costs. They also included the plan we did want (Option B; same as Option A, but the rx card has no deductible), and it’s even less! Now, I’m not usually one to look a gift horse in the mouth, but this is getting stupid: why would the “better” plan (Option B) cost less than the not-as-good one (Option A)? And why are the numbers for Option A now almost $200 a month less than what we were originally told?
But wait, there’s more! I noticed on the speadsheet the carrier sent that there were TWO versions of Option A (the plan we don’t like). They were absolutely identical in benefit structure, but had two different product numbers. Plus: one was almost $200 per month more than the other.
I’ve asked, and I gotten the following response from the carrier (BTW, I’ll give them credit: at least they did respond):
“Yes, the premium is typically higher on the [“better”] plans vs. the [“not as good”] due to the up-front [no deductible] drug card. I have seen a few cases come back where that is not the case but they are pretty rare.
Additionally the [two identical but for price plans] are priced differently primarily due to experience. The [one] series did not run as well as they anticipated which has caused them to receive a higher rate than the [other] series.”
I do this for a living, and am reasonably adept at it, and this blows even me over.
(Warning to those who will say “Well gee, Prof, all the more reason for a national plan, so we don’t have this kind of confusion.” Oh yeah? I’ve got three words for you: I. R. S.)