Insurance for getting health insurance

[REWahoo]

Here's a new insurance product: insurance to protect your future insurability.

UnitedHealth is offering UnitedHealth Continuity, insurance for those who currently have health insurance and worry they may lose it and not be able to replace it due to illness or pre-existing conditions.

"People who are already sick will generally not be eligible for the new product. Those who do pass a medical review will pay 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."

New health wrinkle: Buying the right to get insured later

You'll have to pardon me if I appear a bit skeptical...

[ziggy29]

Quote:

People who are already sick will generally not be eligible for the new product. Those who do pass a medical review will pay 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.

That's some pretty expensive insurance.

[Rich_by_the_Bay]

Quote:

Originally Posted by ziggy29 That's some pretty expensive insurance.

Yes it is, and it still doesn't help you if you have the nerve to already be sick with something. You are paying to be underwritten, basically, since many people who are healthy can buy individual policies, and those who are sick can't buy this new "product" anyway.

[FIRE'd@51]

Sounds like a call to buy a put.

Actually, I think Medicare parts B and D actually have something like this built in. For example, I believe you can delay buying part D (the drug part), and then a penalty of something like 1% for each month you didn't have part D is tacked onto the premium if you subsequently buy it. I think something similar is possible with part B, as well. The difference here appears to be that you pay this penalty up front in terms of a monthly premium, whereas you only pay for the Medicare "options" if you "exercise" them.

[FUEGO]

Wonder if they will package this derivatives product with a credit default swap on unitedhealthcare? For that matter, maybe all annuities and insurance could come with a CDS.

[Martha]

The article isn't clear, but I wonder if the guaranty includes a guaranty that if you buy their insurance in the future you will pay the same price as the perfectly healthy, even if you are sick. Otherwise, what's the point.

[FIRE'd@51]

Quote:

Originally Posted by Martha The article isn't clear, but I wonder if the guaranty includes a guaranty that if you buy their insurance in the future you will pay the same price as the perfectly healthy, even if you are sick. Otherwise, what's the point.

Also, what exact policy do you have this option on? Maybe by the time you are ready to exercise the option, the lifetime cap on the foregone policy will be too low. Or maybe the risk pool will have been seriously degraded by adverse selection over the years. My experience has been that you not only can't beat the insurance companies at their own game, but you would be extremely lucky to get a tie.

[ziggy29]

Quote:

Originally Posted by FIRE'd@51 Also, what exact policy do you have this option on? Maybe by the time you are ready to exercise the option, the lifetime cap on the foregone policy will be too low. Or maybe the risk pool will have been seriously degraded by adverse selection over the years. My experience has been that you not only can't beat the insurance companies at their own game, but you would be extremely lucky to get a tie.

Precisely. It's not clear whether you would be guaranteed insurable at the tier where you would be assigned at the time of your medical review, or are you merely guaranteed coverage without exclusions, even if that means the costliest tier?

If someone is very healthy and would qualify for the best rate available and buys this "insurability insurance," and the next year they become diabetic and develop cancer? If they later had to buy an individual policy, would they get the preferred rates or the "history of cancer" rates would basically be "state risk pool" rates in many cases?

[REWahoo]

Quote:

Originally Posted by ziggy29 Precisely. It's not clear whether you would be guaranteed insurable at the tier where you would be assigned at the time of your medical review, or are you merely guaranteed coverage without exclusions, even if that means the costliest tier? If someone is very healthy and would qualify for the best rate available and buys this "insurability insurance," and the next year they become diabetic and develop cancer? If they later had to buy an individual policy, would they get the preferred rates or the "history of cancer" rates would basically be "state risk pool" rates in many cases?

This doesn't answer the question definitively, but it infers you'd get the rates at the tier you qualified for when you initially apply for the "insurability insurance":

"...you can have quality personal health insurance regardless of changes in your health or the health of your covered dependents. You’ll only need to pass underwriting once — when you apply for your personal plan."

UnitedHealth Continuity Insurance Plans

Also note that you can apparently turn the plan on and off if you go from employer coverage to an individual plan back to employer coverage....

[Rustward]

Quote:

Originally Posted by Martha The article isn't clear, but I wonder if the guaranty includes a guaranty that if you buy their insurance in the future you will pay the same price as the perfectly healthy, even if you are sick. Otherwise, what's the point.

Maybe so, but that would make this unpopular with the healthy if it caused their rates to increase. Insurance companies get their money one way or another.

[ziggy29]

Quote:

Originally Posted by Rustward Maybe so, but that would make this unpopular with the healthy if it caused their rates to increase. Insurance companies get their money one way or another.

Good point. I hadn't thought of that angle. An unhealthy person generating high costs for the insurer in the "preferred" tier would seem to put upward pricing pressure on the preferred pool overall. How much would depend on how many sickish people wound up in the preferred tier.

[REWahoo]

Quote:

Originally Posted by ziggy29 Good point. I hadn't thought of that angle. An unhealthy person generating high costs for the insurer in the "preferred" tier would seem to put upward pricing pressure on the preferred pool overall. How much would depend on how many sickish people wound up in the preferred tier.

True. But isn't the insurer betting there will be enough folks paying this additional premium for future insurability who never exercise those rights to cover the added cost impact to the pool? At least that's how I though insurance worked...

[Rich_by_the_Bay]

Health insurers are highly opportunistic in a very unflattering way.

I remember when Medicare was exploring the use of private carriers to administer some of its programs. The premiums were fixed and the companies had to promise not to "cherry-pick" by agreeing to accept everyone who applied.

One company in Wisconsin set up offices across from expensive spas and fitness centers only, and did no broadcast advertising. They could prove that they accepted everyone who applied; of course these were only those seniors who could afford and participate in a fancy fitness facility.

[REWahoo]

Quote:

Originally Posted by Rich_in_Tampa One company in Wisconsin set up offices across from expensive spas and fitness centers only, and did no broadcast advertising. They could prove that they accepted everyone who applied; of course these were only those seniors who could afford and participate in a fancy fitness facility.

C'mon Rich, that's just 'creative marketing'...