A couple weeks ago I discussed the gray area involving pre-existing conditions (PEC) and health insurance companies. In the comments, I made an allusion to a health care company that I signed up for that sheds some light on the issue.

Assurant Health specializes in offering short-term health insurance options to people that want individual or family policies apart from employer-financed health care. The terms they attach to their policies actually put their coverage between “insufficient” and “utterly useless.”

Assurant specializes in offering “insurance” on the cheap. Their plans are generally high-deductible and even after you meet your deductible you’re still on the hook for 20%. They may offer a permanent plan, but the policies I’m looking at are their “short-term” policies. Those are the policies that are half-useless. But they do fill a market void.

The way it works is this: You sign up for a plan and it can last for up to six months. The last time I used them, they cost $75 a month despite my smoking. The deductible was $2500 and, as mentioned, you were still on the hook for 20% once you passed your deductible. I’m not sure how much they charge now, though their web site says plans start at $60.

The catch is, though, is that after six months you cannot renew. You have to apply again. Therefore, any illness you got in the previous six months becomes a PEC. And if in the interim you get cancer, there is a good chance that they will refuse to cover you altogether. Which may be just as well because they won’t cover PECs in the first year** on their permanent plans (which cost twice as much) and you can’t get a policy for more than six months.

So why would anyone sign up for this plan? Well, if you get a sudden-but-temporary illness, they’ve got you covered until the policy expires. If you have an accident, you’re covered there, too.

But the reason that I signed on was solely to avoid the gaps in coverage I talked about in my previous post. In essence, I was paying them just so that I would be able to tell future insurance companies that I was insured. Which is kind of screwy, when you think about it.

I’m honestly a little surprised that the insurance companies let us get away with this. You would think that they’d lobby congress to only certify plans that meet specific criteria to count. It’s very likely that, if there were a PEC requirement, we will start to see more such lobbying. Not all of Assurant’s plans are allowed in all states and Assurant does not serve a handful of states. With the exception of some western states, the states with limited services are Blue States. So I suspect it’s a question of how tightly states are regulated rather than state legislatures being overly deferential to Big Insurance (not that these things are mutually exclusive).

Nonetheless, it’s a handy thing to have around for people that can’t afford better coverage. Clancy and I may have to re-evaluate our insurance options soon (her COBRA plan is wicked-expensive and not reimbursed by ARRA). We’re in a good enough financial position that we don’t have to accept this sort of half-coverage, fortunately.

** – You have to have a gap in coverage for PECs not to be covered under group (ie employer) plans. The same is not true for individual policies.

Category: Hospital, Statehouse

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4 Responses to Quarter-Coverage

  1. web says:

    For ~2 years after I graduated from SoTech, I had to get Assurant-style plans in Colosse in order to “keep coverage” the same way you are. I never did use them for healthcare, just kept going to the Quack Shack (I had “technically still a student” status so I got the cheap-rate for basic doctor visits on campus).

    The difference, I think, was that being “technically a student” allowed me to buy the Assurant-style plan over and over. I was informed that if I stopped being a student, I had 90 days to find a different plan.

    It is quite bizarre how the situation works, and I’m not going to say it was for the best. I still say the problems have to do with the fact that PECs can be denied coverage at all, making insurance companies look for any way possible to either call something a PEC, or “related to a PEC” in a bid to deny coverage.

  2. trumwill says:

    Assurant itself didn’t particularly care if you were a student or not. They would keep renewing you as long as they thought you were a good bet. You cease being a good bet, of course, as soon as you have to collect.

    I still say the problems have to do with the fact that PECs can be denied coverage at all, making insurance companies look for any way possible to either call something a PEC, or “related to a PEC” in a bid to deny coverage.

    I don’t disagree with you on this point, but forcing coverage of PECs is also very problematic and not in a trivial way. You can’t let people wait until they’re sick to get coverage. You have to find a balance, which I think my proposal (more-or-less) does.

  3. john says:

    “I still say the problems have to do with the fact that PECs can be denied coverage at all, making insurance companies look for any way possible to either call something a PEC, or “related to a PEC” in a bid to deny coverage.”

    I’m confused. If you have a condition that costs, say, 30 grand a year to treat, you think that insurance companies should be forced to pay all your bills in return for, say, a 5 grand premium? Even if you never paid into the system when you were healthy? That’s not insurance, that’s charity. Ideas like these make it harder for healthy people to afford good insurance, which creates a vicious cycle.

  4. trumwill says:

    If someone has paid $5k in premiums and requires $30k worth of treatment, that should be required provided that the policy-holder has been acting in good faith. Insurance is a gamble like that. If you only got paid out what you paid in or less, there’d never be any reason for anyone to get insurance.

    If someone switches carriers but has maintained approximately the same level of insurance, that constitutes “good faith”.

    However, if a patient never paid into any premium until they got sick, there’s an element of bad faith involved. Well, maybe it wasn’t strategic (they were just lazy until it mattered), but even if so the system requires that for every person that takes out more than they pay in that there be others that pay in more than they get out of it. So yeah, you’re absolutely right that you have to have healthy people pay in to avoid insurance premiums spiraling out of control.

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