That doughnut you ate for breakfast or cigarette you smoked after lunch may be costing you more than you thought.

As insurance costs rise, workers are finding their employers are trading in the carrot for a stick and hiking premiums upward of $1,000 annually if they don’t quit smoking or undergo urine or blood tests to assess their health. About 83 percent of U.S. companies offer incentives to employees who take part in wellness programs, and about 45 percent of those are tying the cost to the employee’s insurance premium or health savings plan, according to a new Aon Hewitt survey.

CVS Caremark drug store recently raised hackles when it told employees that its company health insurance would add a $50 monthly surcharge for workers who did not participate in its wellness program, which requires a confidential weigh-in and blood test. Many other companies are doing the same thing, but it’s almost always framed as an incentive rather than a penalty.

CVS is not alone with the surcharges.

At the not-for-profit MaineHealth group, smokers on the company insurance plan now face an annual $1,200 “tobacco fee” if a urine test shows recent tobacco use.

Until 2011, MaineHealth had used only incentives to encourage wellness among its employees.“The combination of carrot and stick seems to work better,” said Laurie Jones Mitchell, the director of Health & Productivity for MaineHealth. “Some people call it a ‘frozen carrot.’”

The tobacco fee is only one element of MaineHealth’s WebMD wellness program, which also offers cash incentives for employees who reach certain health standards. About 7 percent of MaineHealth’s 10,000 employees are currently paying the tobacco fee, Mitchell said. There has also been a big uptick in the numbers of people using the company’s free tobacco cessation programs and free tobacco medications, she said.

The size and type of the incentives (or consequences) of company wellness plans vary widely. Some only offer a $25 cash bonus for taking part, whereas others will increase your health care premiums more than $1,000 if you don't join a wellness program that requires an annual weigh-in and tests to determine blood sugar, blood pressure, cholesterol and nicotine levels. Those results are required to remain private with the employee's doctor or the wellness plan, but can impact how much your insurance costs.

Current law allows employers to tie the amount of the incentive up to 20 percent of the individual’s health care premium. In 2014, that percentage is expected to rise to 30 percent, and then up to 50 percent for smokers.

“Incentives are not necessarily a new thing,” said Stephanie Pronk, the Health Transformation leader for Health & Benefits at Aon Hewitt. But they are "absolutely" increasing, she said, based on Aon's survey of nearly 800 large and mid-size U.S. employers.

Aon has been studying these types of programs for about six years and found they were on the rise before the recent health care reform changes were approved. “We were seeing an overall uptick long before that came into play,” Pronk said.

And while the numbers are increasing, many employers are remaining on the sidelines, said Howard Bye-Torre, an attorney at Stoel Rives LLP in Seattle, who advises companies dealing with wellness plans.

“Some employers don’t really want to get into the issue of their employees’ health. They view it as very personal,” Bye-Torre said. Others, he said, are wary of the complicated federal regulations.

Among the complications is a possible conflict between the American Disabilities Act and the Health Insurance Portability and Accountability Act. While HIPAA specifically allows companies to offer financial incentives to employees who take part in wellness programs, the ADA states that any questions about an employee's health must be voluntary (and not coerced with an incentive of anything more valuable than a T-shirt or hat.)

The U.S. Equal Employment Opportunity Commission, which administers the ADA, has declined to clarify its stance on the apparent conflict, leaving some companies to wonder if there is a legal risk, Bye-Torre said. “Please give us guidance on these,” Bye-Torre said he and other attorneys have asked of the EEOC.

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Some people over age 75 appear to be struggling more with debt.

The golden years are supposed to be a time when you can live off the wealth you’ve accumulated over a lifetime, not feel like you have to take on more debt to make ends meet.

But a new batch of research shows that Americans ages 75 and over appear to have grown more burdened by debt in recent years, and experts say a likely culprit is medical expenses.

A new analysis of government data, released earlier this month by the Employee Benefit Research Institute, found that between 2007 and 2010 people who are 75 and older were more likely to have debt, and their average debt levels increased significantly.

That’s in stark contrast to other older Americans in their 50s and 60s, who generally saw debt levels stabilize during that period.

In general, the good news is that people ages 75 and older are much less likely to have debt, and generally carry far less debt, than other older Americans. But Craig Copeland, a senior research associate with EBRI and the report’s author, said it was still troubling to see that the trend for that group was toward increasing, rather than decreasing, debt burdens.

“It really looked like something wasn’t going well for them,” Copeland said.

He suspects that many Americans who are 75 and older have few options but to take on debt when a big unexpected expense arises, because many are living on fixed retirement incomes and don’t work. That means they can’t, say, work a few extra hours or take on a second job if they need to pay for something.

That unexpected expense may be health-related. Although most older Americans are covered by Medicare, Copeland noted that many are still on the hook for co-pays and other out-of-pocket expenses.

That means a person with a limited income can have their finances thrown into disarray by one unexpected event, such as a broken hip that requires significant co-pays or the sudden need for a very expensive prescription that isn’t fully covered.

“In a lot of cases it seems to be that health care is a particularly vexing issue,” he said.

The percentage of people 75 and above who had debt grew from 31.2 percent in 2007, the year the nation went into recession, to 38.5 percent in 2010, a year after the recession officially ended, according to the EBRI’s analysis of Census data. The average amount of debt for those with debt also more than doubled, from $13,665 in 2007 to $27,409 in 2010.

The debt loads were far greater for people in their 50s and 60s, but the trend lines were far less troubling. The percentage of people ages 55 to 64 who held debt fell from 81.7 percent to 77.6 percent. For people ages 65 to 74, the percentage holding debt held steady at about 65 percent.

The average debt for 55- to 64-year-old debtholders fell from $112,075 in 2007 to $107,060 in 2010. For people ages 65 to 74, average debt fell from $72,922 in 2007 to $70,875 in 2010.

It makes sense for younger people to have more debt because they are still paying off big expenses, like houses, and they also are more likely to be bringing home a paycheck. By the time you reach your mid-70s, many would expect to have paid off the house and retired from regular work.

For people 75 and older, Copeland said his research showed that both median credit card and housing debt increased for those who had those types of debt.

Lucia Dunn, an economist at The Ohio State University, said her more recent research also has shown that older Americans have been taking on more credit card debt in recent years. She also suspects that unexpected medical expenses are a key problem for that group.

But in general, she said the really troubling finding she’s seeing is that younger Americans appear to be taking on more debt than previous generations, and paying it off at slower rates.

That could mean that today’s young people have even bigger problems than their parents and grandparents when they reach age 75 and older.

“The elderly are taking it in (but) not as fast as the younger ones,” she said. “The really young cohorts are really digging a hole for themselves.”

NEW YORK -- Yvonne Dailey opened a medical bill and was left scratching her head about why her insurance company didn't pay for the emergency treatment she received while suffering an asthma attack.

She knew the bill had to be the result of an error. But unlike most consumers who open a medical bill sent due to a mistake, she knew where to look and what to do. Dailey, 43, runs a medical billing company in Toms River, New Jersey, and she was able to see quickly that the explanation of benefits from her insurer showed the nebulizer treatment she received to help her overcome the attack was rejected. Why? Her diagnosis was incorrectly listed as "anxiety" instead of "asthma."

She reported the error to the insurance company, physician and hospital and was able to get the diagnosis code corrected. And the costs -- about $1,500 in all -- were then covered.

Medical billing is rife with errors like this. A recent study by the American Medical Association found that while billing accuracy has improved, one in 10 bills paid by private health insurance have mistakes. And with many more Americans headed toward insurance coverage in 2014 when many of the main provisions of the Affordable Care Act take effect, that just increases the possibility of error.

All involved want to minimize billing mistakes, says Dr. Kaveh Safavi, managing director of the consultancy Accenture's North American health industry practice, but they still occur because from the medical side, it costs money to correct errors.

So, what's a consumer to do? "You should really scrutinize your bills and ask questions," says Dailey.

It isn't easy or simple, but medical billing experts, including Joshua Greenberg, chairman and president of HealthCPA -- a healthcare finance consumer advocacy firm -- say consumers need to understand their ever-changing insurance coverage.

Here are some suggestions they have for preventing mistakes and spotting them when they do happen:

1. Be sure your provider has accurate, up-to-date information on you, Safavi says. A mistake with something as simple as a middle initial or date of birth can lead to all sorts of billing problems. If you're admitted to a hospital, the same issues can multiply -- with so many separate bills being generated from a single stay -- so patient advocates recommend you try to get a friend or family member to help check paperwork while you're being treated. 
2. Understand your insurance coverage. Knowing your deductibles and co-pays -- things you should check before you receive treatment (if possible) -- will help you spot when something might be amiss, according to the Healthcare Billing & Management Association. For instance, your insurance might cover 80 percent of the "usual and customary charges" for an out-of-network visit. That isn't going to be 80 percent of the total bill if the provider charges more than that industry standard, Safavi notes. 
3. Keep track of what services you have received and what you've paid and keep the records, says Greenberg. Bills can come months later and it will be difficult to rely on your memory. 
4. When you receive an "Explanation of Benefits" form from your insurer, don't just file it or toss it in the trash. Many in the industry, including Greenberg, note the importance of that document since it explains what is being paid for and what isn't. If it isn't being paid, that's the main opportunity to find out why. 
5. Don't just pay a bill because you received one. Be sure that what's on it are items that you or your insurance company haven't already paid, Dailey says. Use your explanation of benefits to check against bills you might receive. Also, note that some medical practices will send out statements that look like bills prior to any insurance payments being applied, Safavi notes. 

Dailey says she has seen that a lot of times. "I find that the seniors don't review their statements," she says. They'll get a follow-up bill that crossed their payment in the mail and "they'll pay it again," she says.

In order to resolve errors, the key is to act quickly, those in the industry say. Bring the mistake to the attention of the hospital - or, if you receive multiple bills from multiple providers - contact all of them. A phone number for the billing department will typically be on the bill if there is an issue to be raised, Dailey says. Having documentation available can make a big difference, says Medical Bill & Claim Resolution co-founder Sunni Patterson. It will allow you to demonstrate that you've already paid, were charged twice or received a bill that you shouldn't have.

In addition, there are a growing number of companies like HealthCPA and Medical Bill & Claim Resolution that offer services to consumers to help them resolve medical payment issues. And there are other, newer entries like Simplee, which offers a free online platform where consumers can have all of their medical bills and insurance payments collected online and allow software to try to discover mistakes for them.

When you appeal a bill or are told that a problem is being corrected, follow up to be sure that it has, HealthCPA suggests. And whenever you receive a medical billing notice or benefits explanation, ask about anything you don't understand. "Patients really need to get involved and they don't," says Dailey.

Kaiser Health News

Higher prices charged by hospitals, outpatient centers and other providers drove up health care spending at double the rate of inflation amid the weak economy -- even as patients consumed less medical care overall, according to a new study.

Prices rose at least five times faster than overall inflation for emergency room visits, outpatient surgery and facility-based mental health and substance abuse care from 2009 to 2010, says the report by the Health Care Cost Institute, a nonpartisan research group funded by insurers.  Prices declined in only one category: Nursing home care, which saw a 3.2 percent drop in the cost per admission.

One of the areas with the fastest growing spending, meanwhile, was children's medical care.

"The story really does seem to be prices," said Martin Gaynor, chair of the institute's governing board and a health care economist at Carnegie Mellon University.

Representing one of the broadest looks at actual claim payments made by insurers, the study's findings raise questions that go to the heart of the nation's $2.6 trillion annual bill for health care: Why are prices for medical services rising far faster than inflation? Is a rapid increase in spending on children an anomaly, or a long-term trend with major implications for future costs?

"If you don't know what the cause is, you don't know what the right policy lever is (for a solution)," Gaynor says

He says the Institute, founded last year to make insurance industry payment data available to the public, will address some of those questions in subsequent research.

The findings are based on about 3 billion claims paid by Aetna, Humana and UnitedHealthcare on behalf of 33 million people with job-based insurance nationwide.  The data represent about 20 percent of the people with insurance nationally, but do not include spending for people who are on Medicare, Medicaid or those who buy their own policies.

The report shows that people with job-based insurance "are paying more and getting less," says Chapin White, a senior researcher at the Center for Studying Health System Change, a nonpartisan think tank in Washington. He did not work on the report.

Hospitals and other medical providers "just seem to be able to raise prices faster than general inflation," he says.

Workers' copayments and deductibles, which they pay on top of their share of premium costs, also rose, according to the study. Such "out-of-pocket costs" jumped 7.1 percent between 2009 and 2010 to an average of $689 per person.

Prices and overall use of medical care are major factors driving the cost of health insurance. While the study does not analyze premium increases, those have risen steadily, with one national employer survey by the Kaiser Family Foundation showing a cumulative 138 percent increase in job-based insurance premiums between 1999 and 2010. (KHN is an editorially independent program of the foundation.)

As part of the federal health law, all states last year began reviewing premium increases of 10 percent or more, requiring insurers to justify the increases.  There are no similar national efforts to examine price increases by hospitals or other medical providers.

Insurers argue they are just passing along rising costs to consumers, keeping only a narrow profit margin and are often outgunned in contract negotiations by hospitals, many of which are "must-have" facilities in an insurer's network.

"This is an important study that clearly demonstrates that rising prices for medical services are driving health care cost growth," said Karen Ignagni, president and CEO of America's Health Insurance Plans, the industry lobby. "Reducing medical costs is essential to making health care coverage more affordable for individuals, families, and employers."

Researcher White says insurers must take a more active role. "If insurers are incapable of reining in growth of prices they pay providers, that’s a problem," he says.

Struggling with rising costs, some states and insurers are looking at new approaches. In Massachusetts, for example, supporters and opponents are sparring over a proposal that would impose financial penalties on hospitals or other providers who exceed by 20 percent or more a specified state median for a medical service.

In North Carolina, one major insurer aims to negotiate contracts with hospitals and other medical providers that limit increases to no more than the medical inflation rate.

"We have met that goal for the past two years," says Brad Wilson, CEO of Blue Cross Blue Shield of North Carolina. That effort, along with lower use of medical services, translated into zero to 5 percent premium increases for policies sold to individuals -- the smallest rise in five years.

The report found the biggest spending increases in the Northeast, up 4.3 percent and – surprisingly -- among children under 18, up 4.5 percent nationally. That compares with a 3.1 percent jump in spending on 55 to 64 year olds.  While spending grew fastest among pediatric patients, the report found medical care  for older patients costs more in total dollars – averaging $8,327 a year – than for those under 18, at $2,123.

A future report will probe the reasons for the growth in pediatric spending. Possibilities could include big expenses for premature babies, the rising incidence of obesity and related diseases or an increasing demand for mental health and behavioral services.

It could also reflect families’ increasing struggle to pay their share of medical costs by foregoing or delaying medical visits for their children, says Irwin Redlener, a professor at Columbia University’s Mailman School of Public Health and president of the Children’s Health Fund, a nonprofit that provides medical care to underserved children.

"Even families with employer-based insurance are seeing their costs going up , but not their salaries," says Redlener. So they may be "saving where they can" and foregoing preventive care, such as vaccinations, and treatments for chronic illnesses, such as asthma or diabetes.

Overall, during the period analyzed, prices charged nationally grew the most for emergency room visits, up 11 percent, surgery that did not involve a hospital stay, up 8.9 percent, and mental health and substance abuse services, up 8.6 percent.

The price per hospital admission rose an average of 5.1 percent, hitting $14,662. Surgical admissions had the highest overall price tag, at an average of $27,100,  representing a 6.4 percent increase from 2010.

Spending by insurers and policyholders on medical care rose 3.3 percent per person from 2009 to 2010, about twice the 1.6 percent increase in the Consumer Price Index.

Mary Agnes Carey contributed to this story.

Kaiser Health News, an editorially independent news service, is a program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente. Our stories appear in media outlets nationwide and on our website, www.kaiserhealthnews.org.

National Center for Health Statistics

When we think of the growing burden of paying for health care, we often think of older Americans struggling to pay for medicines and procedures that can become more prevalent as we age.

But new data from the National Center for Health Statistics finds that kids who are 17 and under are the most likely of any age group they studied to be living in a family that has recently had trouble affording their medical bills.

The data, released Wednesday by the government researchers, found that about 24 percent of children ages 17 and under are living in a family that has had trouble paying their medical bills in the past year.

By contrast, just about 10 percent of people who are 65 to 74 years old were living in a family that had had problems paying medical bills in the past year.

Experts say we shouldn’t take the data to mean that kids aren’t getting the health care they need. In fact, most kids have some sort of health insurance.

An analysis of insurance coverage for children, released by the Carsey Institute last fall, found that around 92 percent of children under age 18 were covered by health insurance as of 2010.

The researchers did find that private health care coverage for kids had fallen slightly from a year earlier, but that was more than offset by an uptick in the percentage of kids who were covered under public plans such as the state children’s health insurance program.

Overall, the Carsey report found that about 36 percent of kids were covered by public plans.

“Kids’ coverage is much better than adults,” said Shana Alex Lavarreda, director of health insurance studies for the UCLA Center for Health Policy Research.

Still, just because the kids are covered doesn’t mean that Mom and Dad have health insurance. Lavarreda said, her research has shown that in California many kids who are covered by government insurance programs are in families where the parents are uninsured.

Lavarreda said families that include children may have health care debt in part because their budgets are stretched by family bills such as child care, food, clothing and other expenses. That leaves little wiggle room for covering an unexpected illness or injury.

“There are probably compounding factors here where families with children are also those who have extra expenses,” she said. “And that puts an extra squeeze on being able to pay for other things, like medical bills.”

The CDC researchers found that nearly 39 percent of families with kids under 17 had had some financial burden from medical care, including bills that are being paid over time and bills they couldn't pay at all.

The government analysis  was based on surveys of about 52,000 people conducted in the first six months of 2011. It found that generally, the older a person gets the less likely they are to live in a family experiencing trouble paying for medical needs.

Lavarreda said Americans who are 65 or older may have more health problems and health needs, but also more wealth to use toward those bills. In addition, older Americans are likely have Medicare to help cover health expenses.

The parents of children under 17 may either not have insurance at all, or have insurance but still have to pay out of pocket.

Medical debt can affect people’s financial and personal well-being, Lavarreda said. People with medical debt are more likely to be dealing with financial problems such as bankruptcy, and also to have trouble paying for needed care such as doctor’s visits. In addition, they are more likely to end up in the emergency room seeking care, she said.

Related:

1 in 5 older Americans scrimping on health care to save money

Employee Benefit Research Institute

According the study, 21.5 percent of 50+ households made prescription drug changes, 19.4 percent skipped doctor appointments and 27.5 percent had difficulty making monthly payments.

If you’ve ever thought twice about going to the doctor or taking a pill because of the cost, you likely aren’t alone.

About 20 percent of Americans over the age of 50 are switching to cheaper prescriptions, failing to take the medicine they are supposed to or skipping trips to the doctor to save money, according to a new research from a Washington-based think tank.

It's the latest example of how high health care costs are forcing some Americans to choose between financial and physical health.

The Employee Benefit Research Institute used a comprehensive 2009 survey of 4,433 Americans 50 and over to get a sense of how many older people couldn’t afford to get the health care that was recommended to them.

The survey found that 19 percent said they had skipped or postponed a doctor’s appointment to save money, while 21.5 percent said they had made prescription drug changes to save money.

The most common approach was the least worrisome: Many said they switched to cheaper generic drugs or used free samples.

But about one-quarter of those who made prescription drug changes said they’d stopped taking one or more pills. About one-fourth also said they’d split pills or taken a reduced dosage to make the medications last longer.

Skipping an occasional pill or doctor’s appointment might not affect you much, as long as you are generally in good health. But the researchers found that the people who were most likely to skimp on health care were also the ones who reported they were in poor health.

Single women and African-Americans were the most likely to report making such changes to save money.

Moody's Analytics

Everyone knows that the cost of health care has become a bigger and bigger burden in recent years, but even that pales in comparison to another skyrocketing cost: College.

The folks at Moody’s Analytics crunched some government numbers and found that the cost of tuition and fees has more than doubled since 2000. That’s a bigger percentage increase than, well, pretty much anything else.

Given a chart like this, it’s no wonder we view college as overpriced and unaffordable – but still worth it for the professional and other advantages.

Still, there is a downside to such a pricey education: Debt. The Moody’s paper notes that student loan balances also have risen steadily in recent years, leaving many students starting out their careers with a hefty chunk of money to pay off.

Joe Raedle / Getty Images

The total cost of health care for a typical American family of four will hit $19,393 this year. That's more than double what it was in 2002.

While the rising cost of health care has slowed compared with prior years, the average household covered by a preferred provider plan will pay 7.3 percent more for health care this year than it did in 2010, according to the annual Milliman Medical Index report (.pdf file).

Furthermore, employees' share of the tab for health insurance coverage continues to grow, effectively doubling over the last nine years, according to the index. The typical worker paid $3,634 (36.8 percent of the bil) for coverage in 2002. This year the tab is $8,008 (39.7 percent of the total).

The report points out that coming health-care reform will affect the cost trends measured by the index. Premium rates for some people will be affected, but the overall impact on the cost of health care is expected to be limited.

If you want to stay healthy in retirement, you better start saving your pennies.

Even with Medicare coverage, new research finds that 65-year-olds who retire this year could need more than $100,000 to cover co-pays, premiums and other non-reimbursed medical expenses through retirement.

The costs are likely to be higher for women than men because women tend to live longer, according to the report from the Employee Benefit Research Institute.

Of course, everyone has different health care needs, and no one really knows what their health will be like in retirement, so there are a lot of uncertainties. And although the researchers believe that the recently passed health care reform bill will reduce some costs for retirees, they say out of pocket expenses remain substantial.

If you are comfortable with a 50 percent chance of having enough money saved for health expenses, the report finds that a man retiring in 2010 at age 65 with average health care expenditures would need $65,000 in savings. A woman in the same circumstances needs $93,000.

But if you’re the cautious type and would like to have a 90 percent chance of having enough money to cover your out-of-pocket expenses, the report suggests that men with average health care expenditures should have $124,000 set aside, while women need $152,000.

Even those few people who are still lucky enough to get employee-sponsored health care benefits in retirement should be setting aside similar amounts of money to pay for premiums and other non-covered expenses, according to the report.

For many Americans, just scraping together enough money to pay for daily expenses in retirement is a burden enough. A report released in October found that four in 10 Americans plan to delay retirement because they can’t afford to stop working.

The Commonwealth Fund

One-third of Americans have gone without health care treatments because of cost, a higher percentage than residents of 10 other industrialized countries.

In Britain, for example, only 5 percent of people have ever missed a treatment due to cost. In Canada the figure is 15 percent.

That's according to a new study from The Commonwealth Fund.

The New York-based foundation, which focuses on health care issues, looked at health spending habits of people in advanced Western countries including Germany, France, Sweden and Australia. The study found that Americans were far more likely to take steps to save money such as not going to the doctor, skipping a follow-up or not filling a prescription.

Americans also were more likely to have financial problems related to health care on a number of fronts, including higher out-of-pocket costs, problems with insurers and and difficulties paying bills.

The results were based on phone surveys of thousands of residents of the various countries conducted earlier this year.

Thanks to DailyFinance, which pointed out the study and has more details here.