Waiver or surcharge?

[somarco]

TX suggested a thread on waivers vs. surcharge, so here goes.

In many situations, I prefer waivers over surcharges. In most cases the cost of treating the condition is insignificant and for minor conditions (HTN, GERD, etc.) the add-on charged by carriers is through the roof.

I recently submitted a case to Coventry. 47 year old female, non-smoker, normal ht & wt treating GERD with one Rx.

Coventry's offer was a 50% rate up. Had they decided to go to 51% she would have been declined.

Of course Coventry does not offer pre-screens. When they entered the GA market 5 months ago they were approving 90+% of the apps in 3 days and most at standard rates.

Now they are closer to 70% approval and rate ups on close to 80% of the apps.

Aetna - 25%
Blue - 20% and no coverage for GERD for at least 12 months
Celtic - 25%
Humana - Standard
Golden Rule - Standard
KP - 20%
Time - 20%
World - 20%

After adjusting for rate ups, Coventry was still less than the other carriers, even those at standard rates.

The 50% rate up was brutal and annoyed the client to the point she may end up staying where she is.

Humana or Golden Rule would have been a better choice but she was dazzled by the benefits & low rate of Coventry and I could not get her off that trek.

In most situations the waiver would have been preferable. Humana has not been a player until this week when they unveiled their new series. In this particular situation, where the lady wanted a very rich benefit plan, the rates were skewed in favor of Coventry.

Had she taken my advice she would have saved a lot of premium dollars & grief over the rate up. But she insisted on a copay plan to cover the cost of her doc & meds, even though the Rx copay would not have kicked in until she paid "full price" for the Rx for 6 months.

 

[J.R.]

TX suggested a thread on waivers vs. surcharge, so here goes.

In many situations, I prefer waivers over surcharges. In most cases the cost of treating the condition is insignificant and for minor conditions (HTN, GERD, etc.) the add-on charged by carriers is through the roof.

I recently submitted a case to Coventry. 47 year old female, non-smoker, normal ht & wt treating GERD with one Rx.

Coventry's offer was a 50% rate up. Had they decided to go to 51% she would have been declined.

Of course Coventry does not offer pre-screens. When they entered the GA market 5 months ago they were approving 90+% of the apps in 3 days and most at standard rates.

Now they are closer to 70% approval and rate ups on close to 80% of the apps.

Aetna - 25%
Blue - 20% and no coverage for GERD for at least 12 months
Celtic - 25%
Humana - Standard
Golden Rule - Standard
KP - 20%
Time - 20%
World - 20%

After adjusting for rate ups, Coventry was still less than the other carriers, even those at standard rates.

The 50% rate up was brutal and annoyed the client to the point she may end up staying where she is.

Humana or Golden Rule would have been a better choice but she was dazzled by the benefits & low rate of Coventry and I could not get her off that trek.

In most situations the waiver would have been preferable. Humana has not been a player until this week when they unveiled their new series. In this particular situation, where the lady wanted a very rich benefit plan, the rates were skewed in favor of Coventry.

Had she taken my advice she would have saved a lot of premium dollars & grief over the rate up. But she insisted on a copay plan to cover the cost of her doc & meds, even though the Rx copay would not have kicked in until she paid "full price" for the Rx for 6 months.

Does Coventry have caps on meds like they do up here?

 

[Crabcake Johnny]

I'll take choice C - condition specific deductibles which are far better than riders or rate-ups. No, they are not available in all states. Not my problem - go complain to your DOI.

If that's not available riders are far better for a recovered condition. They will almost never be presented to my client for an ongoing condition and that's just a personal business preference.

If I have a client currently paying $700 and with rate-ups I can get them to $450 I really don't care if I could get them to $400 with riders. The savings, though, have to be "significant" to justify that. If I had a client paying $500 and with rate-ups the best I could do was $460 and with a rider it would be $350 then I'd consider presenting the riders.

95% of my clients are small biz owners and 95% have current plans that they are quite happy with. Unless I can save them at least 30% I don't even bother. Although some of them are paying "$800" a month they are not gonna budge if they're signing riders for conditions regardless of what the new rate is. Especially women.

I lost a recent case like this - client paying just over $600 and the Assurant rate-ups wouldn't have saved them much. However, GR with two riders would have saved them over $200. No-go. The owner said "I think we'll just stick with what we have." Both of those conditions were fully recovered. We, as agents, make the mistake of thinking it's all about the rate. If it was all about the rate I'd write $60,000 a week in business.

 

[GreenSky]

I used to think that California was more progressive than the other states. Here there are no waivers at all. Carriers can rate up, but can't exclude any conditions.

However, someone with carpal tunnel syndrome will be declined instead of waivered. It doesn't matter if that person is covered under worker comp and would be happy to have a waive - he or she is still declined.

The same holds true if they might be seeing a shrink.

This is what happens when legislators decide what is best for us. Can't wait for single payor system.

Rick

 

[BKrocko]

Had she taken my advice she would have saved a lot of premium dollars & grief over the rate up. But she insisted on a copay plan to cover the cost of her doc & meds, even though the Rx copay would not have kicked in until she paid "full price" for the Rx for 6 months.

LOL Bob, how does that old saying go? - "If you can't sell them what they need, sell them what they want".

 

[somarco]

No caps on meds for Coventry.

CSD's not an option. The problem is Time, not the DOI. They can't figure out how to price the CSD in GA.

CA isn't more progressive. Just more liberal. So much so that carriers are more likely to decline an applicant than in other states.

Many conditions cannot be covered at any price so the result is a decline. That is not an option either. Waivers are much more preferable.

I gave the lady what she wanted, now she doesn't want it. Can't say I blame her. The rate up was ridiculous. Given the sudden about face in Coventry's underwriting approach this would most likely be issued at standard 2 months ago.

 

[Crabcake Johnny]

I'm quite bitter that there's no caps on meds in GA for Coventry and not only is there a $1,500 cap here, but no name brand coverage on $2,500 deductibles or higher. Insanity.

 

[TXINSURANCE]

I guess it's my turn to jump in...

First let me start by saying I run a call center, that is my business model - which may help you understand my position.

I am a FIRM believer in FREE markets and OVER REGULATION is one of the reasons we are in the mess we are in now with Health Insurance.

I believe a carrier has a right to waiver a conditions, and I believe this is the best model for the following reasons:

1. When you do not waiver, you increase premium which increases the number of uninsured.

2. Many times a customer is fine with a waiver - i.e. instead of a $100 rate up for a $30 allergy med scenario

3. When you can not rate up your declines are going to be very high, since it is the only way a carrier can protect themselves from claims

All that being said there is a responsible way to apply waivers. I do not believe waivers should be permanent - they should automatically fall off after X years (some do, some do not). I believe the max waiver should be 5 years, any more is essentially permanent.

I also believe in a lot of cases the client should be given a choice or rate up vs. waiver - although this opens up a lot of tech and sales issues. If a client is rated up right now - we have the ability with most carriers to waiver in lieu of rate up , this is the clients choice and it is nice to have this ability.

The other issues is the UNINSURED - we need to be flexible to obtain more members - waivers allow flexibility and increase membership counts. Also with no prior CREDIBLE coverage the client is looking at a 12 month (or more) wait on pre-ex issues anyhow (yet still paying the rate up for that period).

Then you get into the issue of prior credible coverage - in Texas a law was just passed to FINALLY allow prior INDIVIDUAL and SHORT TERM as credible - it is about time. This varies state to state and carrier to carrier and is a major problem when people get the "individual blocking death spiral" and we have trouble going individual to individual.

Then there is the subject of AGENT ETHICS. I believe we approach this issue with the best of ethics and best intentions. We flat out ask the customer "IS THAT SOMETHING YOU NEED COVERED AND ARE YOU WILLING TO PAY $XXX MORE TO COVER IT?" We let the client drive this decision.

Take Asthma as a classic example.. 30/yr male, 2000 deductible

Carrier #1 - $80/mo - 5 year waiver
Carrier #2 - $150/mo - no waiver, 12 month pre ex

Client only takes inhaler "as needed" they might not be willing to pay $90/mo more in premium. We also clearly explain the CONDITION is ridered no just the RX.

Same with THYROID - I have people on $8/mo thyroid replacements that some carriers charge $60/mo extra premium to cover?

It goes back to letting the CLIENT decide which is BEST for THEIR situation and giving ALL options. Waivers are very important when you do volume business and gives you and the client flexibility and allows more people to obtain coverage.

Remember if they don't like the waiver I have carriers that do not waiver in EVERY market - we can try them (for additional $$$) and if all else fails EVERY state has a HIGH RISK POOL or HIPAA plans - there are options and safety nets. With the safety nets in place I don't see why waivers are not permitted other than the fact that it is not politically correct and a lot of people write their senators.

Bottom line is I like the flexibility and let the client drive the final decision.

 

[somarco]

I have a hard time offering a waiver on asthma. Patient can have an attack, go into distress, lose oxygen to the brain or heart. Even if they haven't been to the ER in yrs, I would still suggest the rate up over the waiver.

GERD, hypothyroid, most psych conditions, HTN (in some cases), cholesterol (in some cases), athritis, osteoporosis, osteopenia . . . I can name more but mostly the things that are maintenance situations with little or no risk for a major claim that would not be covered by the carrier.

Some waivers are quite specific while others are broad. A broad form waiver is "we will not cover your HTN treatment including meds & office visits as well as anything that could possibly be tied back in to your HTN."

Rate ups are hard to sell especially when you got a person on a $50/month maintenance med and the carrier wants an extra $120/month to cover those meds after they meet a $250 Rx deductible.