Short Term Medical (STM) insurance is kind of an interesting product: written for a short, specific length of time (as opposed to year-to-year for "regular" major medical plans), they provide quick, simple and relatively inexpensive coverage for folks between jobs, or in their new job's probationary period, or for recent grads (although that market will probably take a hit due to ObamaCare©). Typical STM's couldn't be simpler: the plan's in effect from Date A to Date B, there's a deductible (which is the real point of this post), and some co-insurance. Doctor's visits, prescriptions, MRI's (and so on) accumulate towards that deductible and co-insurance; once the out-of-pocket maximum is reached, the plan pays 100% up to a specified amount (which may also change due to ObamaCare©).
All of that is by way of background for what I really want to talk about: the nature of the STM deductible. There are really three different iterations:
■ Policy Term
■ Per Cause
■ Per Day
"Policy Term" means that the deductible accumulates over the life of the plan (e.g. 3 months, or 62 days, etc). Per Cause means that there's a separate deductible for each claim (one for the broken arm, one for the stitches, another for the MRI). And Per Day means that each day that there's an expense, the deductible applies.
Now, I've always used plans with the Per Term deductible. This seemed (and seems) to me the easiest to understand and fairest to apply. But I received an email today from a marketer pushing the Per Day configuration, including some pretty compelling evidence that this may be a better way. They made their case with a simple FAQ:
A daily deductible means more out-of-pocket for [the insured].
False. [A Per Day deductible plan] actually minimizes out-of-pocket exposure with a low daily deductible instead of a larger, calendar-year deductible plus coinsurance out-of-pocket. The daily deductible, coupled with the added protection of a manageable out-of-pocket maximum, gives clients comprehensive benefits at an economical price.
And:
A daily deductible will be confusing for [the insured].
False. Once the daily deductible has been met, additional same-day covered charges are paid at 100 percent. The client will be able to clearly understand that his or her total out-of-pocket for a given day is the selected deductible amount.
That makes some sense to me, but I'm curious if any of our readers have had any experience with these types of plans, good or bad, which they'd like to share, as well as any conclusions about whether they're better or worse than Per Term plans.
All of that is by way of background for what I really want to talk about: the nature of the STM deductible. There are really three different iterations:
■ Policy Term
■ Per Cause
■ Per Day
"Policy Term" means that the deductible accumulates over the life of the plan (e.g. 3 months, or 62 days, etc). Per Cause means that there's a separate deductible for each claim (one for the broken arm, one for the stitches, another for the MRI). And Per Day means that each day that there's an expense, the deductible applies.
Now, I've always used plans with the Per Term deductible. This seemed (and seems) to me the easiest to understand and fairest to apply. But I received an email today from a marketer pushing the Per Day configuration, including some pretty compelling evidence that this may be a better way. They made their case with a simple FAQ:
A daily deductible means more out-of-pocket for [the insured].
False. [A Per Day deductible plan] actually minimizes out-of-pocket exposure with a low daily deductible instead of a larger, calendar-year deductible plus coinsurance out-of-pocket. The daily deductible, coupled with the added protection of a manageable out-of-pocket maximum, gives clients comprehensive benefits at an economical price.
And:
A daily deductible will be confusing for [the insured].
False. Once the daily deductible has been met, additional same-day covered charges are paid at 100 percent. The client will be able to clearly understand that his or her total out-of-pocket for a given day is the selected deductible amount.
That makes some sense to me, but I'm curious if any of our readers have had any experience with these types of plans, good or bad, which they'd like to share, as well as any conclusions about whether they're better or worse than Per Term plans.
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