Indemnity Health Insurance Plan

[SALTedOut]

I'm coming off of COBRA at the end of November and trying to decide what insurance plan me and DW will be under going forward. Both age 52, will not qualify for any ACA subsidies, and both reasonably healthy.

I've pretty much ruled out any ACA policy as none of our current DRs are on any of the plans. I do have access to retiree health insurance from OldCo that will cover me until Medicare. I can sign up for this during any open enrollment period even if I don't take it right after COBRA. It would probably be about $400 more per month than the option discussed below.

I contacted an insurance broker and they presented an "indemnity benefit" plan. From what I can tell the plan includes fixed payments/reimbursements for various types of DR visit. For example, for a regular DR visit it pays me $160/visit no matter what the DR charges me with a cap of 20 visits/year. Then it covers $200 for a “specialist” visit, with a max of 2 visits per year and after two visits a specialist visit reverts to a regular DR visit payment at $160 and counts as part of the 20/year max.

It has other coverage amounts for various types and fixed amounts of inpatient and outpatient hospital visits, lab work, generic and non-generic meds, etc. It has max/year ($1,000,000) and max/lifetime ($5,000,000) amounts. Its non-ACA compliant (but the tax penalties don’t apply at least not right now).

It also comes with some life insurance and some other random accident coverages which I probably don't need. It also has a one year preexisting condition limitation so anything that we have been “diagnosed” with over the past 12 months, such as my wife's migraines would not be covered for the first 12 months of the policy.

I’ve just never heard of anything like this and it seems very confusing and I can’t tell if its a decent plan or if its a really bad idea to even consider. Have you ever encounter something like this?

[pb4uski]

Not familiar with these plans, but from reading about them it sounds like you would be responsible for balance billing... differences between what the provider charges and what the insurer deems the usual and customary rate for such services... so you would not get the benefit of negotiated rates like you would get with an ACA plan.

I'd be skeptical and chalk the extra $4,800 a year as to part of the price of freedom from work.

[SALTedOut]

Thanks, I did budget for retiree plan cost plus full out of pocket max/year. So from a FI standpoint I'm covered. Just always on the lookout for ways to save.

The broker did say they had negotiated rates but I don't know what they are. I need to learn more about that.

Thanks for your thoughts.

[Sarah S]

Looking at the amounts for the doctor visits I think there is a strong likelihood of having to pay more for each visit. Not knowing the numbers for other things this may be the case for everything. You would not get the insurance adjusted price automatically. It is certainly possible to negotiate charges of course.

The risk of course is mostly that some catastrophic illness leaves you with a big oop if the charges exceed the allowed amounts. I think you also might run into a situation where you are asked to pay upfront for services if the model is as you say- the insurance company pays you and you pay the medical provider.

I would also find out how far that migraine diagnosis exclusion stretches. It may well also exclude other neurologic events particularly stroke. I know a high cholesterol or blood pressure exclusion usually ends up being any cardiovascular illness.

I would ask a ton of questions and I would look at numbers to see what they pay for major things like heart attacks or cancer.

[athena53]

You also need to find out if it is creditable coverage for Medicare purposes. Sorry-not sure how you’d find out and you’d want to get it in writing- but if your plan is not creditable you can get hit with permanent surcharges when you do go in Medicare.

[ivinsfan]

You didn't actually say what this would cost. How much of this is going into your brokers pocket?

Is it actually HI or some weird hybrid of stuff. Is it guaranteed renewable? Honestly if you don't want to pay the freight for ACA coverage either keep working or poke your nose into one of these health sharing ministry options. Not recommending the sharing ministry options but wouldn't recommend the one you are talking about either.

Have you noticed the thread running that talks about the massive cost of chemo a million bucks a year might not cover you.

[pjm-7]

Who is the company and their rating (S&P, AM Best)? What is the company's standing with your state's insurance department? For a short term gap this type of policy might be okay, but you are looking at thirteen years until Medicare eligible. If the pre-existing conditions protections under the ACA goes away you could find yourself uninsurable.

[SALTedOut]

Thanks all for the comments.

I've done some more research and decided the indemnity policy is not for me. When I read more about this everything warned that this is not a "major medical" but more of a "minimum essential coverage" plan. The plan seems geared towards those that are healthy and will never get a major illness, which I don't know how anyone can guarantee that.

For example, I think if one ends up with cancer or another major issue with this indemnity plan you could be on the hook for $500K or more easily. For example they pay $2,200/day for radiation/chemo but I think each treatment can cost much more than that. For the cancer meds they would be covered at $60 but cancer meds are much more than that and there can be lots of them.

Since my annual FIRE budget includes my retiree health care costs plus full out of pocket costs I'm going to stick to that. Its the insurance I have had for 30 years and I don't see an affordable option that has the same coverage (or even close). Basically the $400+/month savings could end up costing me a $500K+ in the future. Since my view is that insurance is to protect against major disasters this indemnity policy does not do that.

For those interested in learning more I've attached the brochure I was given. I had to break it into 4 PDFs to meet the attachment size limits.

[Chuckanut]

Quote:

Originally Posted by athena53 You also need to find out if it is creditable coverage for Medicare purposes.

+1

Changes to the laws allow certain medical insurance plans that are not much good for a serious (read expensive) illness. The best advice I got when I retired was to "buy the best medical insurance you can afford". I did, and though I was very healthy overall, I don't regret it for one minute.

I would chose a higher deductible, over one with a big cap on total benefits and/or limitations on coverage.

Or you could consider getting medical treatments in other countries. The cost savings are impressive.