Guidance on Deductible Amounts

The amount of a policy’s deductible is probably the first or second most discussed consideration in designing health insurance coverage.  The Deductible amount will have the most direct bearing on premium cost.  As the deductible is lowered the premium will increase.  As the deductible is increased the premium will lower. 

In the recent past, individuals typically requested $1,000 or $1,500 deductible policies.  However, these policies were more expensive because the risk was shifted to a greater degree to the insurance carrier with the lower deductible threshold.  As individuals became more interested in managing premium cost the need to increase deductible in order to lower premium became more sensible. 

Also consumers started to understand that the need to insure for smaller claims was not cost effective.  In fact a Texas health insurance carrier reported to Stateside that 87% of their insured members do not exceed $2,000 in claims in any given year.  Or another way to state the results would be you have almost a 9 in 10 chance of not reaching $2,000 in health insurance claims in any given year. 

It becomes very cost prohibitive to insure for claims expense between $1 and $1,999; many times the premium difference comes close or exceeds the benefit difference between the lower deductible and next higher deductible available.  In other words you may spend $600 to $800 more each year in premium to reduce your exposure from a $2,500 deductible to a $1,500 deductible, while the benefit may only be needed 1 year out of 10.

Couple Policy or Two Individual Texas Health Policies

A common question asked by couples is should they get one policy that covers both or two separate policies?  Stateside recommends splitting the coverage for several reasons. 

First reason – women use insurance coverage very differently than men.  Women tend to use benefits related to office visit copays and can justify the paying a higher premium for plans that provide these benefits.  Men on the other hand tend not to use office visit copay benefits and would thereby be wasting premium dollar paying for a benefit that they have a low probability of using. 

Second reason to split coverage is related to underwriting.  One individual may be approved quicker and can access the coverage while the other member may be delayed due to health history.  In fact one member of a couple may require multiple applications depending on health history as compared to the other individual who can secure health insurance with one application.  Frequently Stateside has a couple insured by two different carriers because one carrier may have a higher risk tolerance for a specific condition as compared to another carrier. 

Another reason to split coverage for a couple is a significant change to the Texas individual health coverage is easier to administer than a change to a joint policy.  If a member secures coverage through an employer, the individual coverage is easily terminated as compared to removing one member of a couple policy, which requires a much higher level of documentation. 

The most important reason to split coverage for a couple is because there is no price penalty for a couple to be insured individually under the same type of coverage.  The premium is the same whether it is based on each of them individually or combined as a couple.

Accidental Rider Options for Texas health market

Accident Riders, in addition to a health insurance policy, are a very cost-effective way to manage risk; especially in situations where higher deductible plans are selected in order to reduce cost. 

Accident Riders are insurance policies that pay up to a predetermined amount for medical expenses related to an accident.  The Accident Rider does not pay a benefit for medical expenses incurred to treat an illness or a disease.  The Accident Rider will pay depending on the plan selected - $2,500, $5,000 or $10,000 per accident.  The benefit paid is not an annual amount but will be paid for each accident.  The Accident rider benefit is paid in addition to your current health insurance coverage and is not subject to your plan deductible. 

Carriers such as Humana offer the Accident Rider as part of their product platform; no different than adding dental or vision to a policy.  For those carriers that do not offer an Accident Rider, Stateside offers an Accident Rider policy that can be added independently of the Texas health insurance policy.  Accident Rider coverage and premium information are available at the Stateside website home page www.texasplans.com.

Child Only Insurance Coverage

Health care reform mandated that children, under the age of 19, be covered without underwriting (guaranteed issue) and without a waiting period for any preexisting condition.  The government mandate had unintended consequences. 

Without any rules to administer rates or a defined enrollment period carriers in Texas withdrew from the market.  Today, there is no long-term policy available for a child unless it is from the Texas Health Insurance Pool. 

What parents are doing to provide coverage for their children is to secure up to six months of short-term coverage and re-enroll at the end of the six month coverage period.  This strategy provides immediate coverage at a very competitive premium.  The potential risk is that a significant health event will occur that will be considered a condition not covered by the subsequent short-term policy or result in a decline of the follow-up short-term application.  Short-term coverage for children can be declined because the Federal mandates to not apply.