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Hidden benefit

The enormous value of health insurance

November 2018

Published in the November 2018 issue of Today’s Hospitalist

WHEN IT COMES TO compensation, cash is king. You have an annual salary, with money magically arriving in your bank account every two weeks. At the end of the year, a biggish number appears in Box 1 on your W-2. Hopefully, that number resembles something in your employment agreement and in this year’s Today’s Hospitalist Compensation & Career Survey.

But benefits, which sometimes don’t appear on your pay stubs, are worth more than you think. And health insurance far and away tops that list of perks.

Big numbers
I’m self-employed, so I need to cover FICA and my own benefits. The former, which is short for the Federal Insurance Contributions Act, funds Social Security and Medicare. Normally, employers and employees each pay half. When you’re self-employed, you need to cough up the whole nut.

Benefits include a veritable laundry list: health insurance, CME money, your medical license, 401(k) match and so on. These often appear as cryptic line items on your pay stubs. But your biggest benefit—what your employer pays for your health insurance—is missing, and that number is extremely material.

When I was employed by a health system, I got nicked $4,796 per year for health insurance for a family plan. What I never saw was the $14,389 that my employer was also kicking in. This suddenly hit our checkbook when I struck out on my own and invoked COBRA. (COBRA is an acronym for the federal law that allows you to keep your health insurance after leaving employment. You generally have to pay the whole premium, not just the usual employee portion.)

Total cost: a staggering $19,185 for my family per year. Things actually got worse when COBRA ended and we needed to purchase our own policy. We’re currently shelling out $22,536 in annual premiums. This is before any utilization.

Pretty typical
Although that’s crazy coin—a car, another house payment—it’s actually pretty typical. According to an annual survey conducted by the Kaiser Family Foundation with results published last month, premiums for employer-sponsored family health coverage hit $19,616 per year in 2018.

Of this, employees paid $5,547 or 29%. The total cost for single coverage was $6,896, of which the employee was responsible for $1,186.

Now, nothing’s ever really free. That roughly $14,000 your employer is paying for your health insurance needs to come from somewhere. Actually, it comes from someone, and that someone is you. You need to bang out 190 follow-up visits—99232s at Medicare rates—to cover that expense.

But you’re not just funding your own health insurance. Assume your health system provides health insurance for, say, 5,000 families. The employer contribution is about $70 million per year. Get ready for absurdity: that’s 130 hospitalists, each doing 20 follow-up visits per day, every day of the year.

Which brings us to a future column: why the cost of health care is killing your employer’s bottom line. But in the meantime, be thankful for your hidden benefit.

You need to bang out 190 follow-up visits—99232s at Medicare rates—to cover the cost of your family’s health insurance.

David A. Frenz, MD, is a private practice physician and health care consultant. You can learn more about him and his work at www.davidfrenz.com or LinkedIn.

 

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