For young applicants who can get through the underwriting process, supplemental health insurance products can be much cheaper than major medical coverage.
A Web broker, eHealth (Nasdaq:EHTH), used its own sales database to analyze the cost of four types of supplemental health products — short-term medical insurance, fixed indemnity insurance, accident insurance and critical illness insurance — in 23 U.S. cities.
The company found that the average monthly premium for a healthy 29-year-old would be about $111 for the 1,262 short-term medical plans available; $113 for the 48 fixed indemnity plans; $26 for the 202 accident insurance plans; and $23 for the 203 critical illness plans.
The average monthly premium for the individual major medical coverage eHealth sells is about $275.
The drafters of the Patient Protection and Affordable Care Act (PPACA) exempted supplemental health products from the underwriting, pricing and benefits rules that now apply to major medical coverage.
Insured individual major medical plans now must cover a package of 10 “essential health benefits” (EHB) without imposing any annual or lifetime limits on EHB coverage.
The issuers must sell major medical on a guaranteed-issue basis during an annual open enrollment period and when consumers are eligible for special enrollment periods (SEPs). The issuers cannot use health status information other than age when setting prices.
See also: Special’ health sales a mystery.
The issuers of the supplemental health products eHealth analyzed set benefits limits, use medical underwriting, and cover only certain types of products and services, not the EHB package.
But the open enrollment period for PPACA-compliant major medical plans has ended. Consumers who want to buy major medical coverage must qualify for SEPs.
Consumers can still buy the supplemental health products through insurers, eHealth, other Web brokers and traditional agents and brokers without qualifying for a SEP.