Individual Health Insurance Contracts

The individual health insurance products closely mirror the group market products. Because most of these policies are very close to the structure of the group health, we provide here examples of individual health policies available to twenty-two-year-old male and female college students in Richmond, Virginia. Table 22.3 "Individual Health Insurance Option for a Full-Time Male Student, Age Twenty-Two, Residing in Richmond, Virginia, Starting April 1, 2009" shows examples of the plans available to the male student from some insurers using the Web site eHealthInsurance; the plans were retrieved for a start date in April 2009. Table 22.4 "Individual Health Insurance Option for a Full-Time Female Student, Age Twenty-Two, Residing in Richmond, Virginia, Starting April 1, 2009" shows the equivalent information for the female student.

As you can see, one of the offers includes an HSA. Despite the high deductible of Saver 80, the plan is not HSA-compatible. While the above figures provide merely an overview, eHealthInsurance allows detailed comparisons among all available plans, and the reader is invited to take advantage of this feature. It is important to compare the policies based on the benefit package; cost sharing (such as copays, coinsurance, and deductibles); and other factors, including gender. Most of all, the comparison should include what the student assumes his or her needs may be.

In Case 2 of Chapter 23 "Cases in Holistic Risk Management", the most noticeable difference between the individual plan and the group plan regards maternity benefits. Maternity benefits are available as a rider, or optional coverage, in the individual policy, but they cannot be optional in group insurance because of the Civil Rights Act described in Chapter 20 "Employment-Based Risk Management (General)". The act requires employers to treat pregnancies as any other medical condition.

Cancer and Critical Illness Policies

Some health policies reimburse only for specific illnesses (such as cancer), pay only a per diem amount for medical expenses, or are otherwise very limited in coverage. The consumer needs to read individual policies carefully. These policies are not for reimbursement of medical services.

“Critical illness insurance is one of those product areas that is almost guaranteed to spark a spirited debate when insurance folks get together and talk about sales,” said National Underwriter reporter Linda Koco in “Critical Illness Insurance: Real or Gimmick?”Linda Koco, “Critical Illness Insurance: Real or Gimmick?” National Underwriter, Life & Health/Financial Services Edition, January 1, 2002. “Some producers call it a brand-new kind of policy—the fourth leg of the living benefits stool (life, health, and disability insurance being the other three). But others aren’t so kind. They sniff at it and walk away baffled about why it’s even here. Some dismiss it outright, as a gimmick or some sort of warmed-over cancer insurance.” A cancer or critical illness policyPays for the extra expenses incurred during the period of medical treatment for a covered illness; used to supplement medical coverage. is designed to pay for the extra expenses incurred during the period of medical treatment. It does not pay the doctors or any of the medical bills that are paid by health insurance. It is not a disability income policy for lost time at work (discussed later in this chapter) or accelerated benefits available in a life insurance policy. It is meant to cover the travel expenses associated with the illness, such as parents staying at a hotel next to the hospital of the child if the hospital is far away from home. It will also pay for adaptive equipment expenses such as reconfiguration of a bathroom. One of the attributes that makes this coverage interesting to buyers is the critical illness policy’s lump-sum payment upon diagnosis of a dread or critical illness. Insureds believe that the coverage helps them cope with the health crisis and recovery.Patrick D. Lusk, “Critical Illness Insurance Ideal for Worksite,” National Underwriter, Life & Health/Financial Services Edition, August 31, 1998. But, like all coverages, a detailed need analysis should accompany the decision to buy such coverage.

Critical illness policies were introduced in the United States in the mid-1990s. Numerous insurance companies offer the product. One that you may be familiar with is AFLAC. The products are vastly different across the states because of varying regulations, but typically the policy pays a lump sum when the insured is diagnosed with a qualified illness. Individual contracts usually require insurability evidence. Several important questions should be asked when evaluating a critical illness policy, including how many illnesses it covers and whether the definitions of illness are precise. The American Cancer Society regards these policies as supplementing medical coverage. The coinsurance and deductibles of a major medical policy are a major source of financial burden to families inflicted with a critical illness because such policies have no limits on out-of-pocket expenses.IEEE Financial Advantage Program, insurance articles of interest at http://www.ieeeinsurance.com (accessed April 22, 2009). The supplemental expense policies are available to ease this hardship. They are not to replace the health insurance but rather to help with catastrophic out-of-pocket costs. The policy also provides an initial sum of money to help cope with a critical illness. The reader is advised not to use such a policy in lieu of health insurance because a critical illness policy does not provide medical insurance, and the debate about the real need for such policies has never subsided.

Dental Insurance