Why Are New Limited Benefit Plans Coming to Market?

[AllenChicago]

I just spoke with my UH1 rep a few minutes ago and he agreed that next year we will see essentially three markets for the individual: exchange, outside exchange and indemnity. Healthy, over 400% 20 somethings I think will fill this last market. The penalty will be low enough that between the premium and penalty, they will save money over a GI premium inside or outside the exchange.

The rep went as far as to say they are currently working on the plans, so I think UH1 is going to be a player. I hope so, anyway as currently they beat out the other carriers I contract with when comparing apples to apples. They also are big enough to control the market; if they offer something that is of value, anyone else that wants to be in the game will have to follow suit.

TimSip,
Thanks for confirming what was said on the UHC-GoldenRule webcast. Although Fixed Indemnity seems better suited to the low income & asset crowd, perhaps the wealthier will want their $10,000 hospital stay covered, but not mind paying $180,000 for the bypass surgery. Gosh.. I don't know. Goes against logic to me.

Anyway, I'm going to call UH-1 tomorrow and see if that Webcast prediction regarding their current plans staying/renewing into future for many years is accurate. I need a new, stable A-rated Illinois carrier ASAP.
-ac

 

[somarco]

They cannot coordinate benefits with a major medical plan (therefore eligibility rules will probably state that you cannot have FI if you have MM).

But what if you buy the indemnity first, and then the MM plan?

Beyond that, how will HHS (or whoever) keep track of what you have?

The old base + MM is not necessarily the new base + MM. I can envision stacking base plans (accident, CI, cancer and possibly HIP or mini-med) and adding a hi deductible plan for cat cover.

The older base + MM had a corridor deductible. You had front end coverage followed by a deductible (or donut hole) before MM kicked in.

 

[Yagents]

Bill, if STM have to be GI and cover pre-ex I don't see that as viable as the base + MM that does not have a time limit.

I've been told the STM will not change, and is exempt from O'care. It's going to survive and be available for those between jobs. It's just that we can maybe use it for a different reason, especially the 12 mo plans. It will not cover Pre-ex and is still not GI.

 

[0b1kanobee]

Beyond that, how will HHS (or whoever) keep track of what you have?

Probably a database which may not exist yet. Right now you can't go from one of these plans into the state plan in Florida as far as I know. I believe you have to be without coverage for 6 months and something like Assurant Health Access is one of the plans you can't have far as I know. That's what ya'll been saying anyway.

This is the Information Age. If you don't think they already don't know just about everything about you well then........

If you take a rx pill believe me they know everything about your health plan whatever it is. One slip up and you use that discount RX card that came from the company and bingo! I'm sure they know before then.

They could always threaten you with fraud, fines, jail time and the party that knows (like anninsurance agent). That seems to work sometimes.

 

[somarco]

I've been told the STM will not change, and is exempt from O'care. It's going to survive and be available for those between jobs. It's just that we can maybe use it for a different reason, especially the 12 mo plans. It will not cover Pre-ex and is still not GI.

Then it has a limited use in a GI world.

Even now I never recommend it for periods longer than 90 days and even that is a risk. I realize others will have a different view and that is their prerogative.

Obi1, PCIP had no way of verifying coverage or if they did they didn't use it.

Can you cite a situation where someone lied on the PCIP app about prior coverage and were denied or had coverage rescinded?

Neither can I.

Not suggesting one should commit fraud, but I don't think in the grand scheme of things anyone really cares if you have stacked coverage or not.

 

[Ann H]

Although Fixed Indemnity seems better suited to the low income & asset crowd, perhaps the wealthier will want their $10,000 hospital stay covered, but not mind paying $180,000 for the bypass surgery. Gosh.. I don't know. Goes against logic to me.

Allen, you are still pairing the terms "fixed indemnity" with "limited benefits". The reason they were so severely limited in benefits in the last 20 years is because they were GI. Think of "fixed indemnity" as a style of payment. And pair that with the term "comprehensive coverage".

As an example, let's talk about copay plans that moved from HMO to PPO. When HMO's came out with the concept of a $5 doctor visit, nobody knew what the term "copay" meant. Kaiser and Cigna could market this idea, because they required you to see their staff doctors who were paid salary by the health plan. So the idea of a copay became paired with the idea of a narrow network of staff providers. That concept morphed somewhat when HMO's came out that used independent providers that were NOT on staff at the health plan. Then along came PPO's and pulled apart the pairing of the idea of "copay" and the idea of "very limited choice of providers". They put the "copay" style of benefit payment alongside comprehensive coverage with a large network and freedom of choice. Now, when you say "copay" you no longer think of the nightmare of HMOs.

Now we have the pairing of 2 other concepts. The term "fixed indemnity" has been paired with the idea of very severely limited plans that aren't even worth the accumulated premium. But "fixed indemnity" is just a style of payment the same way that "copay" is a style of payment. A fixed indemnity plan does not have to be a severely limited benefit plan. If this is done correctly, the day will come when we won't even remember that "fixed indemnity" was at one time paired with the nightmare of severely limited benefit plans.

For instance, what is the dollar difference between these 2 styles of payment:

1 - The member pays a $30 copay for a doctor's visit, the insurance company pays $35 to the doctor, because the doctor's in-network contracted fee is $65.

2. The insurance company pays $35 to the member, which the member assigns to the doctor, the doctor's in-network contracted fee is $65, leaving the member to pay the remaining $30.

The math is the same. It's just that the first way is a copay PPO plan that pays a reimbursement of expenses, and the second plan is a fixed indemnity PPO plan that pays a fixed dollar amount.

Currently some limited benefit plans have a few doctor visits allowed per year. That is because sick people who needed GI took those plans. New fixed indemnity plans can allow a doctor visit every day (or more). They can also allow benefits for the surgery that you mentioned that pay the real cost of those expensive procedures. The reason to severely limit the benefits is over. The GI niche market is now served by Obamacare. The new niche market for Fixed Indemnity is the buyer who does not want Obamacare with its mandated rich benefits, full maternity coverage, 3:1 age bands, etc. They want quality coverage, at an affordable price.

Some say the system can be gamed where people collect $35 for a doctor's visit every day, or richer benefits for hospitalization. But it's kind of hard to put yourself in the hospital, and it's not worth daily waits in the doctor's office for a $35 daily benefit. Besides, fraud alerts would catch some of that when there is no medical necessity.

There is another niche market for this, as Leevena mentioned. To meet MEC (Minimum Essential Coverage), some groups may decide to change those terrible mini-meds into a terrible fixed indemnity mini-med and skirt the law that way. They will probably succeed in skirting the law. But it's just awful that group mini-meds may survive that way.

And lastly, I must say that many states require fixed indemnity plans to say, "limited benefit" on their benefit summary. So, even if a quality comprehensive FI plan comes out, beware that (at least for a while) there will still be a pairing of the two concepts.

 

[AllenChicago]

Allen, you are still pairing the terms "fixed indemnity" with "limited benefits". The reason they were so severely limited in benefits in the last 20 years is because they were GI. Think of "fixed indemnity" as a style of payment. And pair that with the term "comprehensive coverage".

Got it Ann. I have to adjust my thinking. Hopefully the cost of the modernized Non-Limited Indemnity plans + the 1%/2%/2.5% IRS penalty will still be feasible to the +400% FPL crowd. Fingers crossed!
-Allen

 

[Monti_Ray]

Currently some limited benefit plans have a few doctor visits allowed per year. That is because sick people who needed GI took those plans. New fixed indemnity plans can allow a doctor visit every day (or more). They can also allow benefits for the surgery that you mentioned that pay the real cost of those expensive procedures. The reason to severely limit the benefits is over. The GI niche market is now served by Obamacare. The new niche market for Fixed Indemnity is the buyer who does not want Obamacare with its mandated rich benefits, full maternity coverage, 3:1 age bands, etc. They want quality coverage, at an affordable price.

Great insight.. However, that did not happen in the GI states like MA, VT, or WA. There are no indemnity plans in those states so far I know.

Monti Ray
Life Leads | Insurance Leads | Life Insurance Leads - Bestinsleads.com

 

[Norwayguy]

Great insight.. However, that did not happen in the GI states like MA, VT, or WA. There are no indemnity plans in those states so far I know.

Monti Ray
Life Leads | Insurance Leads | Life Insurance Leads - Bestinsleads.com

Maine is GI and we have had these limited benefit GI plans they did not make sense because they were costly for what they offered and Maine was an add on state and the big draw of GI was not important...However we will be going from what 4 GI states to 57 (Obammies numbers) and that could make a difference.

 

[HealthBroker]

It seems like Assurant has really really put some good options on the table with the Health Access & the High Deductible Major Med. A client can keep cost down, avoid rate increases over the next 19 months and also avoid the 1% tax by combing the 2. For a single company to put these options on the table is impressive. Of course you can do the same with other Limited Benefit Plans (not to be confused with mini-meds) and pairing them up with high deductible major medicals. There are some very good options out there that really work. Embrace the opportunity while satisfying the legal requirements.