Wednesday, December 10, 2008

Pay As You Go© Insurance, Update: Good, Bad, Unsightly

As promised, this morning I attended a webinar on American Community Mutual's new product. In general, it was well done, and I have a much better handle on both the product and where it might fit into an agent's portfolio. First, though, I do need to apologize to our readers regarding one very important aspect of this plan: it is, indeed, a major medical plan, not an accident-only one. This is crucial, and although it was not obvious originally, the webinar made it clear that this is the case.
Second, I appreciated the moderator's introduction of the plan: he suggested that agents ask the insured "What's important to you? Premium cost? Co-pays? Carrier ratings?" He then suggested that folks often purchase benefits that they really don't need or use much, but pay for anyway. I was immediately reminded of Bob's admonition that "people tend to buy too much insurance."
There were exactly three benefits that I felt were worthwhile, of which only one really broke new ground. But that one is a doozy: regular readers may recall our ground-breaking investigative piece on how non-covered expenses aren't eligible for in-network discounts. This is especially critical when dealing with maternity: since almost all individual plans exclude coverage for normal childbirth, those expenses aren't discounted. As one might imagine, this can get pretty expensive. ACM gets around this with a unique and creative "hook:" normal childbirth expenses are covered at no additional premium, but subject to a separate $12,000 deductible.
Now you may ask: a $12,000 deductible?! That's way more than the actual cost; what's the point in having it at all?
While it's unlikely that the carrier would actually have to pay a childbirth claim, by extending the umbrella of "covered charge" over maternity, those expenses reap the benefit of in-network discounts.
I liked that the plan can be designed to include a 2 year rate guarantee, which could certainly help with budgets. And I like that it excluded entirely non-emergency ER expenses. This should go a long way toward discouraging folks from using the ER for primary care and the like.
But there are some major pitfalls in this plan, as well:
The base plan has no coverage for prescription drugs. While this may seem to be a minor quibble, it is, in fact, a significant flaw: what happens if one becomes diabetic, or develops MS or some other dread disease, which is treated almost entirely by medication? While it's true that one can add an (expensive) rider to provide this coverage, how many agents sell (and folks will buy) on price alone, leaving a gaping hole in the coverage?
I'm also concerned at the lengthy list of routine expenses that are automatically excluded during the first policy year, including tonsils, hemorrhoids and carpal tunnel (to name just a few). Even if one has no prior history of any of these issues, the plan excludes them from coverage for the initial 12 months.
And notwithstanding the recent Wellstone legislation, the plan specifically excludes "treatment for mental or nervous disorders, or emotional conditions." It's that last part that truly worries me: who defines an "emotional condition?" Way too subjective, and too easy to deny that claim.
I've not changed my mind about ACM: this is not a carrier with which I choose to do business, and this new plan does nothing to change my stance. On the other hand, it's not the worst idea I've ever seen, and contains at least one very good idea (the maternity non-benefit).
blog comments powered by Disqus