Health Insurance Strategies for 2019
Health Insurance in 2019
At this time if you are looking for additional options for health insurance then this is one strategy that I suggest that you consider. It involves the use of an indemnity style policy to cover charges for medical expenses combined with rolling 90 day stm (short term medical) policy to address the possibility of much large larger than expected medical bills that are beyond what is being covered by the indemnity plan.
An indemnity style policy is one that pays a specific benefit for triggering a service regardless of what the actual cost of your service is. For example if you chose a plan with a $2,000 per day hospital benefit the policy will pay $2,000 per day you are in the hospital regardless if your actual costs were $1,500/day, $2,500/day or $10,000/day. I know someone who recently spent 4 days in LGH and her bill was $8,800. It is my understanding that $2,000/day is a typical hospital bill for the Lancaster area. Here is a link to a brochure that describes the policy that I am recommending. Specifically I believe the Choice Plus policy described on page 3 is a good one that will cover most people’s needs. The Choice Plus plan pays $2,000 per day for a hospital stay and each year you own the policy that benefit increases by $500/day up to a cap of $4,000 per day. https://www.uhone.com/FileHandler.ashx?FileName=45173-G201812.pdf
But what if you are in intensive care for 10 days and your hospital charges are $10,000 per day and you have a $100,000 bill and only receive a check for $20,000, your stated benefit for the indemnity policy?
Here is where the use of a 90 day stm policy comes in to use to address the costs of medical expenses over and above a selected limit. There are various versions of stm policies that have copays above the deductible limit. This means that even when you pay for medical expenses out of pocket to your deductible, you continue to pay a portion of your bill for the full amount. I do not like these plans with a copay above the deductible. I believe it is better to choose the 0% copay policy. Using the example of the policy that I recommend, once your medical bills total $12,500 out of pocket, the insurance company pays for everything else that is medically necessary. This places a top end limit of what your out of pocket expenses are. In some cases it may work out that you actually are paid more than your total medical bills. Using the simplistic example cited where there is 10 days of $100,000 worth of bills and a $20,000 insurance payment and the 2nd policy covering all expenses above $12,500, you would have $7,500 left over.
There are several important limitations to understand about stm health insurance policies. First, they will not cover payments towards any pre-existing conditions, pregnancy, and mental health issues. Secondly, there are certain pre-existing conditions that are automatic denials for coverage such as cancer or heart attack, or even the follow up checking of cancer or a heart attack in the last 5 years. Diabetes is another automatic decline. However they will cover most anything new that happens. Here is a link to the company brochure explaining more fully the exclusions and limitations for the plan that I recommend. https://www.uhone.com/FileHandler.ashx?FileName=45062E-G201901.pdf I am suggesting the Plus Elite A on page 4.
The second major limitation of the 90 day stm policy is that you must reapply for this coverage every 90 days and affirm during the application process that you still do not have any preexisting conditions. Upon renewal if you have developed a preexisting condition they may not take you at all or offer you coverage but not cover your new preexisting condition.
Many catastrophic medical issues have a short duration with focused and expensive treatment and modest follow up. A broken bone is set and after a suitable period of healing, a cast removed. For a severely broken bone some surgery may be required. This may involve a short stay in the hospital. Likewise a burst appendix may involve a short several day hospital stay. If any such medical emergency would happen in the first 85ish days of your 90 day policy you most likely will be financially covered for the major portion of your medical emergency bill. However it is possible that you would be admitted on day 89 of your stm policy and upon attempted renewal have your new “preexisting” condition not covered upon renewal of the policy. If the new medical condition is severe enough, you may not eligible for the policy anymore. This is the main reason that I believe a 12 month stm policy timed to renew at the same time the ACA open enrollment period is open is a better scenario however that is not currently an option. For a little more about 12 month stm policies and their removal from the available options for PA residents please read this letter I wrote to the PA state government representatives and our insurance commissioner. http://www.lancastercountyfinancialgroup.com/files/82013/Letter%20to%20Governor%20&%20Representatives.pdf
Back to the rolling 90 day policy considerations. If a hospital stay is 4 days long and it occurs in the first 86 days of your 90 day policy, you would be covered. Dividing 86 days into 90 days means that for a 4 day hospital stay you would have a 4 day episode covered 95.5% of the time. Is this an acceptable risk for you given the likely hood of a medical emergency that will cost more than what is covered by your indemnity policy, compared to what you may save in your insurance premiums? This is up to each individual consumer to make their choice if they find this risk acceptable for their circumstances or not.
In order for me to provide you policy pricing so you may evaluate this strategy I simply need your zip code, date of birth, sex, and smoking status for each individual that you would want coverage for. I can tell you what the price will be and help you evaluate if these health insurance policies will be useful for you or not.
Chris Hasircoglu
Registered Principal