Wednesday, December 03, 2008

Insurance Insurance?

[Welcome Kaiser Network readers!]
VERY COOL UPDATE: Don't know how I missed this, but if you scroll down the story, you'll see our very own Bob Vineyard quoted extensively. WooHoo!
Not really sure what to make of this:
When one buys a disability insurance policy, one oft-included rider is a Guaranteed Purchase Option, which allows one to increase the policy down the road, regardless of health. And there are similar riders available on certain life insurance policies. But I've never seen such a benefit available on a "stand alone" basis like this one.
Like medical discount cards, this plan is not an insurance policy, so it's hard to say what it's value might be. For a fee, one buys the right to purchase some kind of health coverage if one becomes at once uninsured and uninsurable.
While I applaud the innovative thinking that went into this product, I can't help but question its usefulness. There are already all kinds of safeguards built into "the system:" HIPAA and COBRA come to mind, as well as state-mandated programs. It's not clear exactly what one's buying here, other than a vague promise to issue a non-underwritten policy should the need arise (and one qualifies under the terms of the deal).
It appears that, even though this is not insurance, it is still underwritten ("(t)hose who do pass a medical review"), and the price seems a little steep for such a vague promise ("20 percent each month of the current premium on an individual policy to reserve the right to be insured under the plan at some point in the future").
"(S)ome point in the future." Maybe.
The article examines the hypothetical case of a Columbus, OH gentleman who buys into the idea, paying "$32 a month for the right to eventually get that coverage — or 20 percent of a policy that now costs $159 a month." That's about $400 a year (which will most certainly increase) for what is, essentially, a "promise of a promise."
Color me unimpressed.
UPDATE (from Bob): I don't have all the details. UHC has called me a few times on this plan, so I am (and have been) aware of it. So far, it is not available in GA so I did not pay much attention to the nuances.
Here is a broad brush.
Continuity is a rider to an existing portfolio product. All the plans currently available (if approved in your state) come with the continuity rider option. You can pick a Copay plan, Saver plan, Plan 100/80 or HSA.
The product is underwritten like any other plan and works like existing shelf products until you become eligible for an employer group plan.
At that time, the policy goes "dormant" (my phraseology) until you lose employer coverage. At that time you reactivate the coverage at current premium.
The policy has application, but very limited in my opinion.
Also, I think the 20% dormant "premium" is a bit high.
It is a somewhat sophisticated product with (IMO) limited appeal. The product has been 3 yrs in development. It might have gotten more play had it come out a few years ago.
Under current economic conditions and with the threat of Obama-care, I think UHC misjudged the market.
[Hat Tip: Holly Robinson]
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