American’s Are Making Poor Choices When Selecting Health Insurance

The other day I was scanning a CNBC article by Dan Mangan entitled “How bad are we at buying health insurance? Very, very bad.” It caught my attention because in the first line he wrote, “Health insurance isn’t rocket science, but buying it may seem just as daunting.”

That reminded me of a blog I wrote back in August 2013, Understanding Health Insurance, It’s Not Rocket Science—or is it? My blog was based on the results of a survey conducted by Carnegie Mellon University. Their study revealed that very few people (14 percent) understood the 4 basic components of their health insurance: copay, deductible, coinsurance, and out-of-pocket maximum. And only 11 percent could actually compute the cost of a four-day hospital stay when given the necessary information to do so.

Now, fast-forward almost two years and it seems like our ongoing lack of knowledge and understanding on the subject of health insurance is impacting our ability to select the best options when given a choice of health insurance plans.   

The CNBC article wrote about a new National Bureau of Economic Research working paper that examined health insurance plan selections at a company with 50,000 workers. When given a choice of prices on identical plans, each with the same coverage in and out of network, and same provider offerings, 65 percent of employees picked the wrong plan—even when there was only one financially logical choice. 

The employees picked plans with higher monthly premium payments in order to obtain the lowest deductibles or out-of-pocket costs. Any savings that might have taken place due to the lower deductibles was more than made up for by their higher monthly premium payments. Their poor choices resulted in the needless spending of $373 each year for the average worker.

“Workers who opted for the highest deductible plan, $1000, more than recouped that potential cost from the lower premiums they actually paid,” said the working paper co-author Saurabh Bhargava, assistant professor of economics at Carnegie Mellon University.  (Notice another connection between this article and my aforementioned blog?)

The unnamed company actually believed they were doing something good for their employees by giving them choices on how their plan was financially configured, now they offer only one, high-deductible plan, with a health savings account. 

Mangan’s article also included information about another survey of 5,000 consumers by health-care benefits platform provider, Alegeus Technologies. This survey measured how consumer literate people were when shopping for health care providers or services. 

On a scale of 1 to 100, with 100 being the highest level, health care consumers scored a 48.  The good news is that their score was 7 percentage points higher than it was last year.  The bad news is that consumers were much savvier when it came to shopping for other items: scoring 79 when purchasing electronics, 78 when buying a car, and 73 when shopping for travel deals.  

Since shopping for the latest techno-gadget is a lot more fun than purchasing health insurance coverage, I can see how people become technology aficionados rather than insurance buffs, but when considering the cost of health insurance benefits and how they relate to doctor and hospital bills it’s important to understand your options.  You never know, by making the best choice, you might save yourself enough money to buy yourself a new tablet.

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 10 years.

 

Protect Yourself from the Fastest-Growing Type of ID Fraud: Synthetic ID Theft

ID-theft_200It seems like every time we turn around our private information has been compromised. If it’s not a data breach, it’s something else.  Identity theft is on the rise and it’s a risk we take every time we swipe a credit or debit card, make an online purchase, throw out old financial statements, use unprotected WIFI, or do any number of other activities that take place daily. 

Once upon a time, the predominant type of ID theft was “true name” identity theft.  This is when the fraudster takes on the victim’s identity—like in the Jason Bateman movie Identity Thief.  According to a study by ID Analytics, this type of identity theft now only accounts for about 10-15 percent of all identity fraud.   

Synthetic ID theft is now the fastest-growing form of ID theft and according to the Federal Trade Commission it accounts for about 85 percent of all identity fraud. Synthetic ID fraud takes place when fraudsters combine real and fake information to create a brand new person. Typically the thief will use a real Social Security number and combine it with a fake name, birthdate, and address. 

Since names, birthdates, and addresses have been changed in Synthetic ID thefts and Social Security numbers are the only remaining identifier of the real person, this type of ID theft can go undetected for a long time.

According to an article by certified Identity Theft Risk Management Specialist, Lanny Britnell, found on the FTC’s website, synthetic ID theft could trigger the creation of a sub-file on your credit report.  This happens when there is additional credit report information tied to your Social Security number, but in someone else’s name and address. The negative information can be linked to you and impact your ability to get credit, but since it is a sub-file and does not show up on your actual credit report, it is difficult to recognize and fraud alert and credit freezes seldom help.   

Since real Social Security numbers are used in synthetic ID thefts, it is important to guard your children’s SS numbers along with your own. Children don’t normally have credit reports and certainly don’t worry or check their credit history until they are young adults.  This allows identity thieves the ability to go unnoticed for years without fear of reprisal.

So, what can you do to protect yourself and your loved ones from this type of identity theft?  According to an article by Jean Chatzky from Bankrate.com, the best defense is an alert offense:

  • Check your credit report at least 3 times a year – look for any anomalies or derogatory information you are unaware of
  • Review your annual Social Security Statement – an inflated income could indicate a thief is earning income using your Social Security number
  • Pay attention to any mail that comes to your house under a different name – it could mean your address was used as part of the scam or it could indicate their information is so entwined with yours, creditors and others are looking for them through your known address
  • Monitor your children’s credit reports – children’s SS numbers were included in Anthem’s data breach, don’t assume since they don’t have credit they aren’t vulnerable

“It used to be that I’d tell people all the bad stuff about identity theft and then cheer them up at the end with 10 things you can do to prevent it,” said Neal O’Farrell, founder of The Identity Theft Council and nationally recognized personal security expert.  “We’re running out of things you can do to prevent it. I believe it’s really impossible to stop identity theft, and the focus is really on minimizing the chances it will happen to you, and minimizing the damage and the long-term impact if it does.”

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 10 years.

Who Doesn’t Love Free Credit Scores?

I’ve got good news. There are more Americans checking their credit scores then there were just a few years ago.  According to Bankrate and their Money Pulse survey, almost half of Americans (46 percent) have checked their credit score within the past year. This is up from the American Bankers Association 2013 survey that found only 42 percent knew their credit score.

This increase is partly due to the fact that many consumers are getting their credit scores for free.  According to Bankrate’s survey, 41 percent reported receiving their most recent score—for free—on their credit card or bank statement and 15 percent used a free online credit score service. 13 percent of consumers said they bought their score from one of the 3 major consumer reporting agencies (Experian, TransUnion, and Equifax) and 6 percent obtained their score through a paid credit monitoring or identity theft service.

In an effort to provide an unprecedented level of transparency and help mitigate confusion, the Fair Isaac Corp. (FICO) recently updated its credit scoring model to provide consumers with access to the 19 most commonly used versions of the FICO score from the 3 major consumer reporting agencies.

“We want to help people understand the scores lenders are actually using—FICO Scores—so they can become savvier consumers of credit products,” said Geoff Smith, FICO’s vice president for Consumer Scores.

Knowing and understanding your credit score is great, but it’s not enough. Having a 3-digit number in front of you will not tell you if there is an error on your report or if you are a victim of identity theft. That is why it is also very important to know how to check your credit report—and you can do so for free.

Everyone is entitled to a free credit report from each of the credit bureaus every year. Visit AnnualCreditReport.com to get your free reports. And if you stagger your requests, you can receive one free report three times a year.

After you obtain your free report, read what’s in your credit report carefully looking for errors.  If you find any mistakes be sure to file a dispute with the credit bureau.

It’s important to monitor your credit health by knowing and understanding your credit score and checking your credit report—the good news is you can do it all for free.

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 10 years.