MONEY Health Care

Americans with Obamacare Are Still Afraid of Big Medical Bills

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Walker and Walker—Getty Images

A new survey finds most Americans are satisfied with their Obamacare plans, but they're still worried about one thing.

Americans gave Obamacare plans high marks in a survey out today from the Kaiser Family Foundation. Three-quarters of those enrolled in health plans through the marketplace say they’re satisfied with the choice of primary care doctors, 73% express satisfaction with their doctor’s visit copays, and 65% say they’re satisfied with their premiums. Overall, 40% say they’ve mostly benefitted from the Affordable Care Act, while only a third say they’ve mostly been negatively affected.

But there’s one nagging problem. Even though Americans are generally happy with Obamacare plans, a large minority—38% of marketplace enrollees—say they still “feel vulnerable to high medical bills.” (A similar proportion of people in non-Obamacare plans agree.)

Most alarmingly, Americans enrolled in plans that meet ACA requirements are more likely to struggle with medical bills than Americans enrolled in plans that do not meet ACA requirements. Americans in ACA-compliant plans are also more likely to report skipping care because of cost. Even though the Affordable Care Act outlawed annual and lifetime coverage maximums—the health insurance provisions that saddled the insured with hundreds of thousands of dollars in medical debt and doomed the sick to bankruptcy—more than half of Americans enrolled in ACA-compliant plans say they’re worried they won’t be able to afford the health care services they’ll need in the future.

One culprit may be high deductibles. In a previous survey, the Kaiser Family Foundation found that Obamacare silver plan enrollees have an average $3,453 deductible, meaning they need to pay more than $3,000 out-of-pocket before insurance would cover part of the cost. On average, Americans enrolled in bronze plans need to pay more than $5,372 out-of-pocket before insurance kicks in.

Unsurprisingly, people with high-deductible plans, whether ACA-compliant or not, feel more financially vulnerable. Only 7% of Americans on high-deductible plans say their health insurance is an “excellent” value for the cost, compared with 19% of Americans on lower deductible plans. And fewer than a third of Americans on high-deductible plans say they could pay a $1,500 medical bill without borrowing money—which is a problem, because a $1,500 bill is a real possibility with a $3,000-plus deductible.

How to save on medical care:

MONEY Health Care

Even an Appendectomy Can Hurt Your Credit Rating

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Steve Wisbauer—Getty Images

The medical billing error from hell

When Saideh Browne had an emergency appendectomy in the summer of 2012, she had no idea it would raise the cost of a car loan three years later.

The 44-year-old personal trainer from New York recently visited a dealership to buy a new Honda Accord and discovered her credit score had been dinged by two lingering medical bills for $770 that had gone to collection.

Browne says she did not purposefully ignore the bills, nor did she shirk them because she could not pay. Like many other people, she got caught in an endless loop of indecipherable paperwork between the many providers involved in her care and the insurance company. The amounts due and the reasons listed for the charges kept shifting. Browne did not want to pay a wrong bill and never see the money again.

“I’m an astute consumer, but it gets confusing,” Browne laments. “You don’t know what bill is what.”

Almost 50 percent of medical bills have errors, according to government data studied by NerdWallet, which has a medical bill review service.

“It’s quite staggering,” says Christina LaMontagne, a general manager for NerdWallet. “Probably all of us have been mis-billed on a medical service.”

That includes LaMontagne, who recently received a medical bill she did not understand that was due in 30 days. Her first recommendation to consumers: ask for an itemized statement.

Therein lies the dilemma for most consumers.

“There are cobwebs in the system,” LaMontagne says.

So what is a consumer to do? Here are the three steps to keep your credit healthy:

1. Communicate immediately, in writing

You can pick up the phone to call your provider and the insurance company, but you need documentation, says LaMontagne. The doctor and insurance company need to respond back to you in writing, or you have grounds for appeal because you were not properly notified.

Disputing a charge should stop the clock, but there is no guarantee your unpaid bill will not be sent to collection.

The average time a provider will carry a bill is usually 120 days, which is how long Medicare providers are required to wait, says Chad Mulvany, director of healthcare finance policy for the Healthcare Financial Management Association, a trade group for hospitals.

LaMontagne says significant anecdotal evidence exists that more bills are being sent to a collections agency after 90 days, so the transition to collection could be quick.

1. Get outside help

If you are getting nowhere with your provider, turn to your state insurance commission.

You can also hire a bill resolution company, such as NerdWallet Health or Medical Billing Advocates of America, which charge either a flat fee or take a percentage of the savings you achieve.

Some workplace human resources departments also offer assistance, or at least can run interference with insurance companies.

Expert help is important because many collection agencies prey on consumer fear and tend to go away quickly if confronted by somebody who knows the law, says Pat Palmer, president of Medical Billing Advocates.

For instance, collection agencies are not supposed to be familiar with your medical details. So the first thing Palmer does for clients is call and ask about the charges. If the agents know what the bills are for, she tells them they have violated medical privacy laws. “You never hear from them again,” Palmer says.

3. Negotiate a payment plan

Most medical providers want to close out your account. Setting up a payment plan could get the monkey off your back, says Healthcare Financial Management’s Mulvany.

Most of all, paying something allows you to move forward, says credit expert Beverly Harzog, author of “The Debt Escape Plan.”

“If you don’t take care of it, it’s going to drag you down,” Harzog says.

That is exactly what Browne has done, setting up a payment plan for the unexplained bills.

“At this point, I just want it to go away,” she says.

MONEY Shopping

Why Stores Can’t Sell You Cheaper Contact Lenses

Getty Images/Adam Gault

Can you say: price fixing?

Costco and online sellers like 1-800 CONTACTS would love to sell you cheaper contact lenses. But in recent years, the country’s biggest contact manufacturers have instituted minimum prices for their products that make it impossible for retailers to offer them at lower price points.

In testimony before Congress last summer, the Consumers Union declared such policies “uncompetitive” and tantamount to price fixing: “Consumers are denied more affordable alternatives. They pay more than they need to, and sellers who would like to make those affordable alternatives available are denied the opportunity to do so.”

The manufacturers are taking advantage of a 2007 U.S. Supreme Court decision that established that it was legal for price floors to be set in certain situations. The one stipulation is that the manufacturers must not be “actively coordinating prices among themselves or with retailers,” as Marketplace put it. It’s impossible to prove that Johnson & Johnson, Alcon, Bausch & Lomb, and other big sellers are conspiring to set prices, yet all have instituted unilateral pricing, which means that retailers aren’t allowed to sell their products below a certain price. The net result is that stores and online sellers can’t discount the vast majority of name-brand contact lenses on the market, so there’s no point in consumers shopping around.

Earlier this year, the Utah legislature passed a bill that would prohibit the setting of price floors on contact lenses. It’s worth noting that online discounter 1800CONTACTS.com backed the bill and just so happens to be headquartered in Utah.

The big contact lens companies followed by suing Utah in federal court, and the latest news is that an appeals court declared the law unconstitutional, blocking it from being enforced. Essentially, the court has said that the contact lens manufacturers are within their legal rights to mandate a price floor.

Novartis, owner of the Alcon brand, has argued that price minimums are necessary to combat “showrooming,” the nickname for the practice in which consumers scope out prices from one seller—often, the optometrist’s office where they receive prescriptions—before shopping around and getting the product at a cheaper price elsewhere, typically online. “Eye-care professionals incur the cost of studying and appraising the new technology, but online and big-box retailers do not,” the company wrote in defense of price floors.

Costco, which says the price minimums have forced it to charge prices that are 20% higher than they would have for some contacts, warned that if eye care professionals don’t have to compete on price, they will “leverage their control over prescriptions and brand selection to also control and monopolize contact lens sales.” The result wouldn’t be bad just for Costco; it would negatively affect consumers too.

For the time being at least, the discount retailers—and by extension, consumers seeking contacts at lower prices—are on the losing side of the battle.

MONEY Health Care

How One Company Beat High Hospital Costs by Setting Its Own Price

surgical tools on top of paper money
Getty Images

Employers who pay workers' health costs directly are pushing back against astronomical hospital bills.

In the late 1990s you could have taken what hospitals charged to administer inpatient chemotherapy and bought a Ford Escort econobox. Today average chemo charges (not even counting the price of the anti-cancer drugs) are enough to pay for a Lexus GX sport-utility vehicle, government data show.

Hospital prices have risen nearly three times as much as overall inflation since Ronald Reagan was president. Health payers have tried HMOs, accountable care organizations and other innovations to control them, with little effect.

A small benefits consulting firm called ELAP Services is causing commotion by suggesting an alternative: Refuse to pay. When hospitals send invoices with charges that seem to bear no relationship to their costs, the Pennsylvania firm tells its clients (generally medium-sized employers) to just say no.

Instead, employers pay hospitals a much lower amount for their services — based on ELAP’s analysis of what is reasonable after analyzing the hospitals’ own financial filings.

For facilities on the receiving end of ELAP’s unusual strategy, this is a disruption of business as usual, to say the least. Hospitals are unhappy but have failed to make headway against it in court.

“It was a leap of faith,” when Huffines Auto Dealerships, which provides coverage to 300 employees and their families, signed on to the ELAP plan a few years ago, said Eric Hartter, chief financial officer for the Texas firm.

What he says now: “This is the best form of true health care reform that I’ve come across.”

Huffines first worked with ELAP on charges for an employee’s back surgery. The worker had spent three days in a Dallas hospital. The bill was $600,000, Hartter said.

Like many businesses, the dealership pays worker health costs directly. At the time it was working with a claims administrator that set up a traditional, “preferred provider” network with agreed hospital discounts.

The administrator looked at the bill and said, “‘Don’t worry. By the time we apply the discounts and everything else it’ll be down to about $300,000,’” Hartter recalled. “I said, ‘What’s the difference? That doesn’t make me feel any better.’”

Instead he had ELAP analyze the bill. The firm estimated costs for the treatment based on the hospital’s financial reports filed with Medicare. Then it added a cushion so the hospital could make a modest profit.

“We wrote a check to the hospital for $28,900 and we never heard from them again,” Hartter said.

Now Huffines and ELAP, which launched this service in 2007 and has been growing since, treat every big hospital bill the same way. The result has saved so much money that what the dealership and workers contribute for health costs stayed unchanged for six years while benefits remained the same, Hartter said.

More than 200 employers providing health coverage to about 115,000 workers and dependents have hired ELAP. Company CEO Steve Kelly said he is aware of only one other, smaller, benefits consultant with the same approach.

Normally customers who don’t pay bills get hassled or sued. This sometimes happens to ELAP clients and their workers. Hospitals send patients huge invoices for what the employer refused to pay. They hire collection agents and threaten credit scores.

ELAP fights back with lawyers and several arguments: How can hospitals justifiably charge employers and their workers so much more than they accept from Medicare, the government program for seniors? How can hospitals bill $30 for a gauze pad? How can employee-patients consent to prices they will never see until after they’ve been discharged?

The American Hospital Association and the Federation of American Hospitals did not respond to requests for comment about ELAP.

ELAP is not merely a medical-bill auditor, like many other companies, combing hospital statements for errors. It sets the reimbursement, telling hospitals what clients will pay.

Eventually, “overwhelmingly, the providers just accept the payment” and leave patients alone, Kelly said. A federal district judge in Georgia decided a 2012 case against a hospital and in favor of ELAP and its furniture chain client.

Most patients being dunned by hospitals are unlikely to meet with the same success on their own, lacking backup from ELAP and its legal firepower.

Under ELAP’s main model, neither employers nor their claims administrators sign contracts with hospitals. Employers detail the reimbursement process in documents establishing how the plan covers workers. That gives it legal weight, ELAP has argued in court. ELAP agrees to handle all hospital bills for an employer and defend workers from collections in return for a percentage fee tied to total hospital charges.

There is no hospital network. Employees may use almost any facility. Payments are made later based on ELAP’s analysis.

That may change, Kelly said. Often it makes sense even for medium-sized employers to contract directly with hospitals to treat their workers, he said. That way prices are clear.

But for now ELAP clients such as Huffines and IBT Industrial Solutions are giving hospitals a different dose of medicine.

At IBT, a Kansas distributor of bearings and motors, “runaway health costs were starting to threaten the long-term viability of our company,” said chief financial officer Greg Drown. After reading “Bitter Pill,” a critical Time magazine piece about hospitals, IBT executives decided to try something else.

They hired ELAP, which was “not a simple or risk-free move,” cautions Drown.

About one IBT worker in five using a hospital gets “balance billed” for amounts the employer won’t pay, he said. That can take months to resolve even with ELAP’s legal support. But ELAP’s program cut health costs by about a fourth, he added.

Recently managers at a big medical system in metro Kansas City “finally figured out we were doing something a little bit different,” sent “a nasty letter” and followed up with a call, he said.

The hospital executive on the phone “was very condescending and thought I was stupid and had been duped by a predatory consultant and had been sold a — quote — crappy plan,” Drown said.

Drown listened. He told the man he would consult with his colleagues and reply.

“I called him back a week or two later and left him a rather detailed voicemail that said, ‘We’re not changing anything. We’re staying where we are.’ And the guy never called me back.”

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.

MONEY Health Care

7 Strategies for Lowering Your Medical Bills

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Getty Images

Pay less out of pocket by being a smart negotiator

Can you imagine buying a car a piece at a time — and trying to figure out what the total cost is? One person sells you the tires, another a steering wheel — oh, and a specialist will give you a transmission. And you need an engine? The cost will depend on which network you’re in.

That is, of course, how health care is sometimes sold in the United States. You want to know the price of your surgery? OK, but that doesn’t include the operating room, the anesthesiologist or the pathologist . . . they’ll be billing you separately.

But things are beginning to change, partly because Americans are now demanding answers. Motivated by high-deductible health plans and other health care changes, we want to know what we are paying for, and whether the services we receive are competitively priced. And the health care world is responding.

Stephen D. Neeleman, MD, founder and vice chair of HealthEquity, which offers health care savings and spending accounts, says many consumers don’t yet know how to negotiate for the best prices.

And to understand how to work within that system, it’s important to know a few things. First, hospitals may bill for about twice what they actually expect to receive, he says. Networks with negotiating power have agreements with the health care providers that allow them to pay less than the price you’ll see on your bill. So the amount you are billed can depend on whether you have insurance and which network you’re in. Different people pay different prices for the same service. Why can’t you get the best discount? The good news is, you may be able to. Here are some of Neeleman’s tips.

1. Offer a lower lump sum cash payment instead of payment in monthly installments. Yes, they give up a little money, but they are assured of payment and that there will be no need to write off the bill or send it to collections.

2. Talk to the right person. The right person is typically the office manager, and you can open the conversation with, “I’m here, and I’m ready to pay. I realize there are other patients that get better discounts because they are in bigger networks. I want the best deal you give anyone if I pay right now.” Even if your plan has a negotiated rate that is on the high side, the health care provider is free to charge you less than that, Neeleman said.

3. Call at the right time. The right time is as far ahead of your procedure as you can. Having surgery? There can be a dramatic difference in what facilities charge. You have time to find out where your surgeon performs surgery and if having it done at facility X on Tuesday is cheaper than having it done at facility Y on Wednesday, you’ll want to know that. Explain that you want to understand how the charges are determined because you will be paying for a lot of your expenses yourself. (Neeleman said you may be surprised to discover that many conditions don’t require emergency treatment, citing an example of a patient who, on a doctor’s advice, flew cross-country with a complex fracture so that she could be treated within her network, for a much lower price.)

4. Request that your services and procedures be recoded and verified for accuracy. You can look online to check the meanings of the CPT codes. Make sure those agree with what you believe the diagnoses and services were, and ask questions if they do not. Mistakes happen. Neeleman compares it to when grocery store cashiers keyed in prices and now when items are scanned. There is no scanning of medical procedures, and you need to check your bills at least as carefully as your mother checked her grocery receipts.

5. Know what the cost should be before making any payment. Your insurance company may have a tool to help you figure it out. You can find similar information here:

  • clearhealthcosts.com
  • healthcarebluebook.com
  • newchoicehealth.com

6. Don’t pay your bill right away. Give yourself time to be sure the bill is accurate, checking codes and expected prices carefully. However, you do want to pay on time. Medical bills can affect your credit. If you don’t pay, the account may be turned over to collections. (In fact, try to figure out which providers should be sending you bills, and ask questions if you don’t get one. Even bills you never received can wind up as collection accounts.)

7. Be nice. Understand that patients and providers who actually know what things cost is a fairly new phenomenon. So ask rather than demand, and let them know that you’re looking for a solution that will benefit both parties. Your mother was right: It pays to be polite.

Health care is changing, Neeleman said, but it’s slow. In some cases, charges are now being bundled so you DO know the final cost of a procedure. But it’s a whole new world. He compares it to being an early buyer of a Model T — you have the car, but where are the roads? Where are the gas stations? Concerned consumers are forcing a new transparency, though, and that can only be good in the long run.

More from Credit.com:

MONEY Health Care

Now You Can Really Get Free Birth Control Under Obamacare

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Ted Morrison—Getty Images

The Obama administration just tightened the law that says insurance companies must cover all types of contraceptives.

Following recent reports that many women still pay for birth control methods that should be covered by insurers under the Affordable Care Act, the government just released a new document clarifying and tightening the law.

“Insurance companies have been breaking the law and today the Obama administration underscored that it will not tolerate these violations,” Gretchen Borchelt, National Women’s Law Center vice president for health and reproductive rights, said in a statement. “It is past time for insurers to adhere to the law and stop telling women that their chosen method isn’t covered or that they must pay for it.”

Whereas previous government FAQs about Obamacare were not as clear about the types of birth control covered under the law, the new guidance includes an explicit list—printed below—of all the contraceptive methods insurers must cover.

Until now many women, including one MONEY staffer, have found that insurers have been able to skirt the law by lumping together certain categories of contraceptives and charging expensive co-pays on all but a small number of methods. Since the previous language was vague, insurance companies have been able to deny coverage of brand name contraceptives—even when an equivalent generic is not available.

In particular, the new rules are especially good news for those who use IUDs, patches, and vaginal rings, since those are the birth control methods that women have had the most trouble getting covered, according to a recent study by the NWLC.

If your insurer is still making you pay out of pocket for your preferred method of birth control—and a generic substitute is not available to or appropriate for you because of, say, side effects—you should fight back by first talking to your doctor, who could advocate for you to your insurer.

This should be especially effective since the rules make it clear that doctors get the final say over whether a particular birth control method is medically necessary.

According to the new statement: “If an individual’s attending provider recommends a particular service or FDA-approved item based on … medical necessity … the plan or issuer must cover that service or item without cost sharing. The plan or issuer must defer to the determination of the attending provider. Medical necessity may include considerations such as severity of side effects, differences in permanence and reversibility of contraceptives, and ability to adhere to the appropriate use of the item or service.”

If that doesn’t work, consider resources like the National Women’s Law Center: Its website has templates for appeal letters and a free hotline (866-745-5487) you can use to get further help.

Here is the list of contraceptive methods that are now fully covered. Insurers must cover at least one type of birth control in each of these 18 categories:

(1) sterilization surgery for women
(2) surgical sterilization implant for women
(3) implantable rod
(4) IUD copper
(5) IUD with progestin
(6) shot/injection
(7) oral contraceptives (combined pill)
(8) oral contraceptives (progestin only)
(9) oral contraceptives extended/continuous use
(10) patch
(11) vaginal contraceptive ring
(12) diaphragm
(13) sponge
(14) cervical cap
(15) female condom
(16) spermicide
(17) emergency contraception (Plan B/Plan B One Step/Next Choice)
(18) emergency contraception (Ella)

The new government statement also clarifies that insurers must cover preventive services for transgender people when such services are medically appropriate, anesthesia services during preventive colonoscopies, and preventive screening for mutations in the BRCA-1 or BRCA-2 gene.

TIME Health Care

How a New Study on Premature Babies Could Influence the Abortion Debate

Pro-life advocates say the research supports their arguments

A new study showing that a tiny percentage of extremely premature babies born at 22 weeks can survive with extensive medical intervention could change the national conversation about abortion, though the research is unlikely to have a major effect on women’s access to abortions in the short term.

Anti-abortion advocates said the study—which was published by the New England Journal of Medicine on Wednesday and found that 3.5% percent of 357 infants born at 22 weeks could survive without severe health problems if hospitals treated them—could benefit the anti-abortion movement by sparking discussion about the viability of premature babies.

“Some people are strongly committed to pro-life, some are strongly committed to the other side,” but many fall somewhere in the middle, said Burke Balch, director of the Robert Powell Center for Medical Ethics for the National Right to Life Committee, the non-profit advocacy organization. “The fact that those children could survive will affect those in the middle.”

The anti-abortion movement has tried to shift attention away from women who seek abortions—as in, debates on whether abortion should be allowed in cases of rape or incest—and instead focus on the unborn baby, using the argument that fetuses can feel pain at 20 weeks to justify state bans on abortion after that time. Some 13 states have banned abortion after 20 weeks, according to Naral Pro-Choice America, a non-profit advocacy organization. Other states, such as Wisconsin, South Carolina and West Virginia have started debating such measures this year. The 20-week bans, Balch said, are partially designed to bring the focus back to the child—and the new data on premature babies will make that easier. “It strengthens the persuasiveness argument, even if it doesn’t impact the legal argument,” he said.

While anti-abortion advocates hope the study will shift public opinion, the fact that a small number of babies can survive at 22 weeks with extraordinary interventions will likely not have a large impact on a woman’s ability to get an abortion today, experts said.

The Supreme Court has held that states can restrict abortions if the fetus is viable—able to survive outside the womb—even if the mother’s health is not threatened by the pregnancy. But there is no strict legal definition of viability; instead, it is determined on a case-by-case basis by the individual doctor. While it is possible that the study could affect a doctor’s decision about the viability of a pregnancy, doctors would usually focus more on the details of the specific case. And few doctors and clinics offer abortions at such a late stage anyway, experts added.

“Viability has never been a set number,” said Eric Ferrero, vice president of communications at Planned Parenthood Federation of America, the reproductive health non-profit. “It is determined by each doctor based on the woman and the pregnancy and it varies. That’s what the medical community has said and what Roe v. Wade says, and that’s unchanged by this study, which is about the extremely intensive care that is provided in some places.”

Though the new research has sparked discussion of abortion, its real relevance is for expectant parents researching the medical treatment available for premature babies, particularly those who may want to find out whether their hospital provides interventions to save babies at 22 weeks.

“I think it’s important information, especially for women excited about having a baby,” says Elizabeth Nash, an expert on state laws governing reproduction at the Guttmacher Institute, a research and advocacy group focused on reproductive health. “It’s much more tangential to abortion, except that abortion opponents will look to this information to try to restrict access, and that’s where we have to pay attention.”

MONEY Longevity

Why Only the Super-Rich Will Live to 150

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Jana Leon—Getty Images

Only the 1 percenters will be able to afford the cutting-edge healthcare that will meaningfully extend lifespans, according to a leading expert on longevity.

Could the one percent soon get to live twice as long as the rest of us—maybe even forever?

Immortality may not be in the cards just yet, but exponential breakthroughs in technology and medicine will make possible lifespans of 150 years or more, according to Ken Dychtwald.

Dychtwald, a pioneering expert on gerontology, longevity and how the baby boomer wave will impact society, says dramatically longer lifespans will not necessarily translate into healthier years, and the longevity gains will not be experienced by everyone.

Instead, we are headed toward a one percent phenomenon, with only the very wealthy able to afford the cutting edge healthcare that adds meaningfully to life.

Uneven gains in longevity are nothing new. American men live an average of two years longer than they did in 2000, and women have an additional 2.4 years, according to mortality projections released last year by the Society of Actuaries.

Along with the gender gap, higher-income white-collar workers outlive blue-collar workers by 2.5 years, on average, from age 65. Other research points to a sizable longevity gap by educational attainment and race.

Lifespan tells only part of the story, though.

“We also have people dying longer,” says Dychtwald. “We are able to keep people alive without much quality of life in many cases. We haven’t done a great job of making healthspan match up with lifespan, which is both miserable and unbelievably costly—and frightening.”

The biggest healthspan concern is Alzheimer’s, which strikes at a 47% rate among the over 85 population.

“If we just keep living longer, but we don’t knock out this horrible disease, it will be the sinkhole of the century,” Dychtwald says. “It will take us down – every country. It will be a horror beyond horrors. And how much do we spend for research on this disease? Hardly anything.”

Other debilitating diseases that decrease healthspan include obesity, heart attacks, strokes, cancer and diabetes.

Substantial attempts to extend healthspan through more emphasis on fitness and prevention are coinciding with breakthroughs in pharmaceuticals, stem cell therapies and genetic manipulation.

Dychtwald points to the entry of a new breed of Silicon Valley entrepreneurs with big resources at their disposal.

“The talent migrating into the field is like nothing I’ve seen in my 40 years in the field, and they’re convinced there is nothing you can’t do if you can turn biotechnology into information technology,” he says.

LONGEVITY INC

Craig Venter, one of the first scientists to sequence the human genome, launched a company last year called Human Longevity Inc that plans to apply genetic sequencing to some of the most challenging issues involving aging.

Calico, a company focused on extending lifespans, was launched by Google Inc in 2013. There is also big money chasing longevity from the Facebook, eBay, and Napster fortunes.

A recent headline in The Week magazine summed it up well: “How Silicon Valley’s billionaires are trying to defy death.”

The new research money is largely private and unregulated. The big breakthroughs will be very expensive and available only to the very wealthy, at least initially.

“There will be breakthroughs in the next 15 or 20 years that will have to do with aging itself—actually stopping the biological clock,” says Dychtwald. “And I think that really rich people are going to get access to it, people who are willing to spend almost unlimited sums of money. Imagine a time when ten thousand really rich people get to live forever, or not have to get dementia.”

Those remarkable medical advances will become more widely available and affordable over time, Dychtwald says.

“But in the meantime, there will be a whole lot of people ailing and suffering,” he warns.

MONEY Medicare

How to Make Sure Medicare Really Covers Your Hospital Stay

hospital patient in bed
Masterfile—Radius Images

Many Medicare patients are surprised to learn they weren’t officially admitted to the hospital—and they face big bills. Here's how to avoid the problem.

If you’re on Medicare and you have to be admitted to the hospital, don’t make the mistake of assuming your costs are covered. Find out whether your visit is being treated as an inpatient admission or a so-called observational stay. The distinction could cost you a lot of money—and it may even limit your access to a skilled nursing facility if you need follow-up care.

There’s a growing likelihood that you may be given observational status—a kind of Medicare limbo that is akin to being an outpatient. Observational hospital visits soared 90% between 2006 and 2012, according to federal data.

The reasons for the shift are partly driven by Medicare’s efforts to restrain increases in health care spending, which include financial penalties for hospitals and doctors if they readmit too many patients. Classifying patient visits as observational helps to limit those readmission penalties—and in some cases, it may reduce costs. Medicare research in 2013 found savings to both Medicare and patients from observational stays vs inpatient stays lasting fewer than two nights.

Still, whether you see any cost savings will depend on your health care needs. Observational and inpatient stays are paid for by different parts of Medicare, even if the services provided are identical. Out-of-pocket costs for observational stays may be much higher, though patients and their doctors may be unaware of this until the bills are presented. Medicare does not require that patients be informed how their stay is classified, so some consumers have been hit with unexpected charges after being discharged.

Observational status may also limit your coverage for follow-up care in a skilled nursing facility. That’s because Medicare coverage kicks in only after you spend at least three days as an admitted hospital patient. If your stay is classified as observational, it won’t count toward this total. For many seniors, that rule has limited access to skilled nursing care.

A recent AARP report, based on an analysis of Medicare hospital visits in 2009, found that most visitors placed under observation required only outpatient services. But 10% of observational patients wound up with larger health care bills than they would have had if they had been admitted as inpatients. These patients were also likely to face higher costs for follow-up care.

So how do you know which category is really best for your finances? You don’t. As the AARP report noted, inpatient status may mean lower costs if you need nursing care later. But for some short stays, your unreimbursed expenses may be lower with observational status. “Few Medicare patients will be able to anticipate into which group they are likely to fall,” the report said. “If they guess wrong, they are likely to face higher out-of-pocket costs.”

AARP advocates changing the rules for Medicare hospital stays, including capping out-of-pocket costs for observational stays and allowing that time to be credited toward skilled nursing care. Reforms are supported by several Medicare advocacy groups and the Medicare Payment Advisory Commission, which advises Congress on Medicare issues. Legislation to amend hospital stay rules is also pending.

Still, it may be years before any rule changes take place. So if you or your family members are on Medicare now, here are three guidelines for reducing the risks of observational status:

  • Find out your status. Demand that the doctors and hospital clarify how your stay is being classified. If you disagree with the decision, bring it up with your doctor right away. This is especially important if the patient is likely to need follow-up care at a nursing facility after their hospital visit.
  • Understand what’s covered. Check out the differences in Medicare payment rules between inpatient expenses (covered by Medicare Part A) and observational or outpatient expenses (covered by Medicare Part B). You can find some of this information here and here.
  • Ask to use your own meds. Many hospitals do not allow use of medications brought from home. But if yours does, you’ll be able to sidestep the steep costs of hospital dispensaries.

Philip Moeller is an expert on retirement, aging, and health. He is co-author of The New York Times bestseller, “Get What’s Yours: The Secrets to Maxing Out Your Social Security,” and is working on a companion book about Medicare. Reach him at moeller.philip@gmail.com or @PhilMoeller on Twitter.

Read next: Here’s What You’re Really Going to Spend on Health Care in Retirement

MONEY Health Care

How to Cushion the Costs of Long-Term-Care Insurance

box with styrofoam peanuts
Victoria Snowber—Getty Images

Policies that help pay for nursing care can be costly. Here's what you can do to keep down the price.

A lengthy stay in a nursing home could wipe out your savings—the national average for a shared room in a nursing home is $77,380 a year. Long-term-care insurance can protect you and your family, but the policies are increasingly expensive and not always needed.

The decision to buy a policy—something I’m grappling with now—comes down to many factors, including what assets you have to protect, whether or not you want to leave behind an estate, your ability to pay premiums for decades, and your odds of needing care in the first place. But if you end up on the side of buying insurance, you have options to keep down costs.

How to Insure Yourself for Less

Buy just enough coverage to provide a cushion. “We advise insuring for a core amount and planning on using other sources if that runs out,” says Claude Thau, a long-term-care expert at Target Insurance Services in Overland Park, Kans. It’s like the peace of mind you get from having a fixed annuity in retirement. You lock into enough income to cover your housing and utilities, say, and fund travel and entertainment with other savings. Even modest long-term-care insurance will cut down your out-of-pocket costs.

The cushion approach appeals to me. The Department of Health and Human Services projects that the average 65-year-old will need three years of long-term care, but about two-thirds of that time will be spent at home, with the rest in either a nursing home or assisted-living facility.

I’m leaning toward insuring for that level of coverage, knowing that if my wife or I need more care, we have sufficient assets to pay our way. That would come out of our financial legacy. But so would excess premium payments over 30 years for coverage we didn’t need. I’m comfortable with that tradeoff.

Keep long-term affordability in mind. These policies have been around for decades, but only in the past five years have buyers filed claims in big numbers—exposing an underwriting disaster. MetLife, Unum, and Prudential are among dozens of insurers that have quit the long-term-care business. Others, including industry leader Genworth, have absorbed huge losses and won state approval to boost premiums on older policies to stay afloat.

New policies incorporate more realistic assumptions—and prices reflect that. “These policies have gone up so dramatically it makes them hard to recommend,” says Clarissa Hobson, a financial planner in Colorado Springs.

Can you be sure double-digit premium hikes are over? Long-term-care experts say the industry is on firmer actuarial footing. “By far, the worst is behind,” says Michael Kitces, director of research at Pinnacle Advisory Group.

Yet others are skeptical. “The baby boomers aren’t even there yet,” says Jane Gross, author of A Bittersweet Season: Caring for Our Aging Parents—and Ourselves. “What’s going to happen when boomers start making claims?” Gross, 67, bought a policy in her fifties and began to regret it soon after.

Think hard about how much you need. When you shop for a policy, the variables include the daily benefit (often $100 to $200), how much the benefit goes up for inflation (3% or 5%), how long payments last, from a few years to no cap, and the so-called elimination period, or how long before insurance kicks in.

A 90- to 100-day elimination period is virtually standard (92% of policies). You can adjust the daily benefit to save, but since nursing-home costs vary widely, first check local prices to get a sense of what you might face.

Inflation protection is an important lever. For years experts recommended policies with benefits that grow 5% a year to keep pace with medical inflation, and to be safe most still do. But that option costs about two-thirds more than a 3% adjustment.

Going with 3% may be fine, says David Wolf, a long-term-care insurance planner in Spokane. The cost of in-home care and assisted living is rising less than 2% a year, he says. Nursing-home rates are going up 5% a year, but stays are shorter than they once were.

Note that while premiums are tax-deductible, the write-off is capped based on age ($1,430 in 2015 for ages 51 to 60). And they are deductible only to the extent that they, along with other medical expenses, exceed 10% of your income (7.5% if you’re 65 or older).

Money

Buy a little flexibility. Three years is the most popular benefit period. As a couple, odds are only one of you might spend more time in a nursing home. A shared benefit can help you insure against that financial catastrophe.

Rather than five years of coverage each, you buy 10 years to be split as needed—five and five, say, or two and eight. A 60-year-old couple can expect to pay about 15% more for a shared policy with six years of total benefits than for a joint policy with three years of benefits each, says Wolf, but in exchange you have a better shot at covering a single long stay in a facility.

Don’t wait too long to shop. The average age of a buyer is now 57, down from 67 a dozen years ago, and it’s easy to see why. Premiums go up modestly before age 55. The curve steepens after that, with the sharp turn at 65, when prices begin to rise about 8% a year, says Jesse Slome, director of the American Association for Long-Term Care.

What’s more, you are fast approaching an age when your health can lead to higher premiums, if it does not render you ineligible altogether. “By 65, almost everybody has some kind of medical condition,” Slome says. Once you reach your sixties, the average denial rate jumps from 17% to 25%.

Gather multiple quotes. For the same coverage, the highest-cost policies can cost twice as much as the cheapest ones, Slome says. Go with a broker who sells coverage from at least five insurers and specializes in the field. Search for an agent at aaltci.org.

Know what it takes to collect. Stalling and claims denials sometimes command frightful headlines, but just 1% of denials are without merit, the federal government reports. Still, make sure you know exactly when your claim will qualify. One common hang-up is home care. Especially with an old plan, your policy might require a licensed home health aide when all you need is less-skilled (and less costly) help with simple chores.

The Alternatives to Insurance

If you decide against a traditional long-term-care policy—or are turned down—you have other insurance options. None provide as much coverage for care. But they have the advantage of guaranteeing you cash in old age or a legacy for your heirs.

How other policies can help. Hobson likes hybrid life insurance policies, which let you draw on the death benefit to pay for long-term care, or leave it to your heirs if none is needed. But the upfront cost is steep, and the premiums are not tax-deductible.

A deferred annuity is another option. For a single premium now, you lock in guaranteed income for life at age 82 or 85, which can go toward long-term care or anything else. Or if you can afford to self-insure and want to preserve money for your heirs, you can buy a whole life policy with a death benefit equal to your assets.

The bottom line (for one). I’ll probably end up in a shared policy with six or eight years of care. My wife is younger than I am. She may be able to help me if that time comes. So I will need less coverage, leaving her with more, assuming she outlives me. And by then she can sell the house if need be.

But I’m not quite sold on this either. If I invest at 8% the $7,500 a year I would spend on reasonably complete coverage, I could amass $343,214 in 20 years. That would be taxable and amount to less than half the benefit I’d enjoy with a long-term-care policy. But it would be mine no matter what. What I am sure of: I will keep weighing the options until we’re settled on a plan. I won’t leave either our care as we get older or our kids’ inheritance to fate.

Previous: Do I Really Need a Long-Term Insurance Plan?

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