Short Term Medical-Risk Vs Reward

[FLM2]

I'm being presented with a scenario that people over the subsidy level will increasingly go with short term medical to save premium $ in 2014 and years beyond that.

One of the short term companies, HII, is now public and has sold their financial underwriters on this growing market (the have about 50K subscribers now).

It sounds like a good idea but the problem, for me, is the way pre-existing conditions are defined and the ability to decline claims based on these.

I was on a conference call/webinar on Friday and asked the basic question that every client of mine asks whenever I mention short term medical-'if I am being treated for high blood pressure and have a heart attack then they won't cover the heart attack, why should I get this?'.

The response from the company presentor was such crap I had to ask the question 2 more times before he understood and said he would find out (which probably won't happen).

What they really want is for the agent to gloss over this and, if a claim is made and denied, put it back on us. I don't treat my clients this way nor do I want any E&O claims for misrepresentation.

I'm not really concerned about the denial of small claims, it's really a threat of a large claim caused by heart attack, stroke or cancer that concerns me.

I think the only way I would even think about offering this as a solution would be to package one of the life policies with a critical illness rider (like AGLA's Quality of Life) where you can overlay a very large CI rider for the cost of a term life policy.

I'm sure some of you have gone through the same scenario in your minds, what do you think?

 

[RayNY]

Correct me if I'm wrong, but STM does not qualify as "credible coverage" and would thus generate a penalty, correct?

The money you save probably isn't worth it when you factor in the cost of the CI rider, the 1% of income penalty (for an individual, 400% fpl, about $46k, so $460/yr), and the fact that there will be claim issues for you and the client to deal with.

There are a lot of agents out there that would rather sell garbage than not make a sale.

 

[FLM2]

Correct me if I'm wrong, but STM does not qualify as "credible coverage" and would thus generate a penalty, correct?

The money you save probably isn't worth it when you factor in the cost of the CI rider, the 1% of income penalty (for an individual, 400% fpl, about $46k, so $460/yr), and the fact that there will be claim issues for you and the client to deal with.

There are a lot of agents out there that would rather sell garbage than not make a sale.

Here is a rate comparison using the Kaiser calculator (2 40 year olds, 2 children):
-Silver Plan: $962/month
-STM ($2500 deductible): $464/month, then add about $60 per month for a 10 year Term life product + penalty, final premium is about $550 a month

Savings with STM: $400 a month, about $5K per year.

On this basis, most of my clients in this income range would at least consider the alternative, that is the reason for posting this thread.

 

[Yagents]

You may find fully underwritten STM's come to the market to solve that problem. If the alternative is to go uninsured, I think an STM will be a good solution for those above 400% FPL looking at an additional mortgage payment for health insurance premiums.

 

[FLM2]

You may find fully underwritten STM's come to the market to solve that problem. If the alternative is to go uninsured, I think an STM will be a good solution for those above 400% FPL looking at an additional mortgage payment for health insurance premiums.

That would be great if it happened-HII seems to be the biggest independent player in this market since they are public and haven't mentioned it at all-their plan is underwritten by Companion Life, which is owned, I believe, by BCBS of SC.

Their plan has 5 health questions and a full pre-existing condition exclusion with a 5 year look back.

 

[RayNY]

The pre-certification clause scares me a bit (no pre-cert=50% reduction in benefits). Payment is tied to UCR, and we all know that can be a drop in the bucket depending on what hospital you visit.

There's a long (60-item) list of non-covered services/charges. The RX is just a discount card, and that can kill you if you need medications.

In my mind, I see a dozen ways this could end up being more expensive than a real plan. Be sure to explain all the pitfalls so you're covered when there is an issue.

Also, family of 4 >400%FPL is facing at least a $950 penalty first year, $2500 by 2016. I know you still have a decent savings, but there is a lot of ways a $3000 savings can end up costing more money over a year with 4 people.

 

[somarco]

FLM you sound determined to sell this plan.

Go for it and let us know when it blows up on you.

 

[FLM2]

FLM you sound determined to sell this plan.

Go for it and let us know when it blows up on you.

You are 100% incorrect, I was looking for reasonable, informed input, none of which is in your post.

 

[somarco]

You vote Democrat, right?

Your mind is made up. No reason to confuse you with facts.

 

[Ann H]

The pre-certification clause scares me a bit (no pre-cert=50% reduction in benefits). Payment is tied to UCR, and we all know that can be a drop in the bucket depending on what hospital you visit.

There's a long (60-item) list of non-covered services/charges. The RX is just a discount card, and that can kill you if you need medications.

In my mind, I see a dozen ways this could end up being more expensive than a real plan. Be sure to explain all the pitfalls so you're covered when there is an issue.

Also, family of 4 >400%FPL is facing at least a $950 penalty first year, $2500 by 2016. I know you still have a decent savings, but there is a lot of ways a $3000 savings can end up costing more money over a year with 4 people.

FLM, I think RayNY's post above was excellent. I see a market emerging for alternatives to QHP's. However, anytime products emerge you have products/carriers that take the high road and products/carriers that take the low road. Usually the low-road ones come first (often with high commissions!). It's prudent to analyze all the products/carriers, only pick the best ones, and walk away from products that leave the client with large exposures.

The short-term concept has its own vulnerabilities due to the pre-ex clause and limited term. It serves a purpose of course, but that purpose is limited. If the short-term product has other limitations and exclusions such as the ones that RayNY listed above, most agents won't sell it, particularly not as a strategy for long-term coverage. I expect fixed indemnity plans to emerge too, and we will be faced with some low-road options and (hopefully) high road options. There are other alternatives, too, like a catastrophic plan, or a bronze HSA.