Comparing supplemental medical insurance plans

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June 11, 2014 by Tony Novak

This blog post is meant to be a compilation of unedited notes comparing three popular supplemental insurance plans underwritten by United States Fire Insurance Company and administered by SASID. This is not meant as a consumer disclosure or sales article and nothing here is approved by any other companies mentioned. I use this type of blog post primarily to help answer consumer questions and as a basis for other published articles.

Consumer Information

Consumers should rely directly on the official approved information about these plans listed in the Members Insurance Exchange at https://quote.sasid.com/insurancemarketplace2/launch.aspx?refnumber=000000161-117-161

Background

The Affordable Care Act triggered health plans to increase deductibles and co-payments to the point where many if not most U.S. households would face significant financial burden paying a single common medical procedure. Additionally, the annual basis of medical insurance means that these expenses could pile up year after year for a chronic condition. The risk is often in the range of $5,000 to $10,000 per year per household. Today the America’s Health Insurance Plans (AHIP) issued a new proposal to further increase out-of-pocket limits for some policyholders in order to reduce primary insurance premiums.

Taxation

Supplemental insurance is an exempted benefit under ACA so few reform provisions apply. (I can’t think of any “front end” consumer aspects of the reform provisions that apply but perhaps others outside the scope of this article will apply). The premiums are deductible by an employer, benefits are tax free to the employee. Tax treatment is not changed when insurance is purchased through an individual insurance exchange rather than a group insurance plan.

Suitability

It is important to notice that none of these plans are specifically designed to cover – dollar-for-dollar – the expenses not covered by a major medical insurance plan as mandated under the Affordable Care Act of 2010. Unlike a Medicare Supplement policy, for example, these policies do not rely on the same definition of a covered item as the primary medical plan.

In fact the only thing that makes them suitable as a supplement is that: a) the benefits are paid in addition to other insurance and b) the estimated amount of benefit for a typical member ill resemble the out-of-pocket cost of the primary qualified health plan.

What they have in common:

The 3 supplemental insurance plans have many features in common. These notes are meant to emphasize the differences.

Waiting period

All three plans have a 30 day waiting period for illnesses (but not accidents) to prevent member from enrolling after they know that they need immediate care. A 12-month Pre-Existing Condition Limitations applies to Hospital Confinement, ICU/CCU, Surgery and Anesthesia Benefits. Maternity is not covered.

Unlike primary coverage that does not have any pre-existing condition exclusions, continuity of supplemental coverage is important to maintain maximum benefits.

Marketing

Each plan will have a separate page at FreedomBenefits.net and will be listed separately on the Members Insurance Exchange.

1. Core Health Insurance

The most complete and most expensive of the three supplemental plans. Has been among the most popular individual insurance plans since long before health reform.

A full description is available at http://www.corehealthinsurance.net and is not reproduced here.

2. QHP Supplement

Mid-range coverage. Includes a small amount of coverage for doctors visits. There are 3 levels of plans. The chart below is based on the middle level plan called the “5000 Plan”.

The 5000 Plan includes:

  • Hospital and ICU Benefit
  • Surgery Benefit
  • Doctor Office Visit Benefit
  • Diagnostic, X-Ray, Laboratory Benefit
  • Emergency Room Benefit
  • Ambulance Benefit
  • Single or Family coverage
  • Freedom to choose any provider (Doctor, Hospital)
  • Visit a Multiplan (PPO) provider and save on healthcare
  • Next day coverage is available

The sample premium rate is $149 per month (based on single coverage for a 53 year old male in my area).

 

3. Deductible supplement

The least expensive and lowest level of coverage. Covers hospitalization but not doctors office visits.

The 6000 Plan includes:

  • Hospital and ICU Benefit
  • Emergency Room Benefit
  • Ambulance Benefit
  • Single or Family coverage
  • Freedom to choose any provider (Doctor, Hospital)
  • Next day coverage is available

Same policy form as above but without doctor visit coverage.

The sample premium rate is $75 per month for  (based on single coverage for a 53 year old male in my area).

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