Written by Michael G. Kirwan, ChFC, CLU
Published Spring 2007 in the Union and Morris County Newsletters


Proposed Regulation Will Increase Your Health Care Costs! This is the current lead story on the MSNJ web site, alerting physicians and consumers of the proposed regulation by the DOBI (NJ Dept of Banking and Insurance) that would significantly reduce the payment for out–of–network non–hospital provider claims.

In reviewing some of the stated “Social and Economic Impact” cited in the Proposed DOBI Amendments N.J.A.C. 11:22–5.2 and 5.6, I continue to cite the necessity for both providers and consumers to take charge of their own Health Care by participating in their personal education and understanding of the costs associated with, “what has been”, the finest Health Care System the world has ever seen.

There are reasons why consumers determine that they have a need to seek out–of–network services, just as physicians have found that their financial survival has required that they, too, go “out–of–network”.

I believe that we (both the consumer and physician) would significantly change and control the intrusion of government and the stability of our Health Care System, as well as the runaway cost of health care insurance to both the Employer and Individual. If the consumer had to manage their own health care costs by being responsible for a larger portion of the initial costs, we would redirect the conscientious and educated consumer to avoid “unnecessary” office visits, testing, and brand drugs, solely because “they are covered by their plan”. By asking the consumer to pay the initial costs of their “necessary” health care needs, we encourage and promote both a responsible and educated consumer, alleviate the swollen hospital and physician patient burden, improve health care and restore quality and integrity to the system.

One of the most “avant–garde” Programs that has been promoting self–advocacy since 1997 and promulgated into law in 2004, are HSA’s (Health Savings Accounts), originally known as MSA’s (Medical Savings Accounts). These plans carry higher deductibles in exchange for substantially lowered premiums. The initial criteria for considering such a change, is to compare your current premium to the HSA premium and if you can save enough in premium to cover the deductible then you are at least a candidate. You would then be able to take a “tax–deduction” by investing into an HSA–IRA Account, while maintaining the ability to withdraw your savings “tax–free” to reimburse yourself and your family for your expenses. The best news is that this is the only “Use It and Keep It” Program in the country today, since unused funds remain in your account for future use, Retirement and even for the “tax deductible” payment of Long Term Care coverage.

Ancillary ways to reduce your costs would be the utilization of some, or all, of these medicinal/financial solutions:

  • Multiple Plans by the same employer. This gives you the freedom to design your plan to conform to the needs of your participants and pocket book by utilizing not only different types of plans but even multiple carriers. New Jersey permits such a solution.
  • Cafeteria Plans (Section 125) will permit your employees to take advantage of paying their share of premiums “pre–tax”, typically saving the employee at least 25% and the Employer another 10% in unnecessary taxes. Having employees participate in their own health insurance premiums is part of the educational process of being an informed consumer. Give–a–ways aren’t working.
  • HRA–Health Reimbursement Accounts are a recent and welcomed addition to the Small Employer. They can be used in conjunction with HSA’s to allow the employer to only pay (reimburse) for those expenses that are necessary and covered within the plan limits that they have selected, obviating the need to contribute “Well–Care” contributions to HSA Accounts.