Plan activates increased coverage on demand

In tune with this evolution, American Community Mutual Insurance Company is offering a new suite of health plans that can be upgraded at any time by paying an activation premium, which allows members to purchase the coverage they need when they need it.

Targeted to healthy individuals ages 19 to 34, plans also offer low or no deductibles with low monthly premiums, combined with relatively high cost sharing should a major health event occur. There is a limited initial benefit and a certain amount of preventive care that is not subject to the deductible.

"The insured can increase the benefit at any time, including after a health event occurs, by paying a lump-sum activation premium. Increases in coverage are on an annual basis and available in three levels," she explains. "The third level makes the full $5 million of lifetime benefits available to the insured. The activation premiums represent cost sharing, but unlike other insurance this cost sharing is not at the front end of the annual claims cycle."

The managed care market is focused on providing low cost sharing, comprehensive care through employer and government plans, Sawhney says.

"Every year, however, fewer people are covered by group and government plans. What works in the employer and government markets, when third parties are making the purchase decisions and paying the bills, does not work in the individual market," she says. "Most individuals are not willing or able to pay the price for low cost sharing, comprehensive, integrated care via a high monthly premium, so they go uninsured. Costs for the uninsured then get passed back to employer markets."

Anyone who does not have government- or employer-based insurance should have individual health insurance, but less than 25% do, says Sawhney. "Among young adults, most of whom are at their peak health, the percentage is even lower. The individual health insurance market is not delivering the value that people want at a price that they want to pay," she adds.

The on-demand coverage upgrade provides consumers with the peace of mind to make decisions about the level of healthcare they want to receive at a known premium, without worrying about how they might protect themselves against a future catastrophic event or serious illness, according to John Bigalke, vice chairman, U.S. health sciences & government leader, Deloitte & Touche LLP.

"With plans like this, consumers have the option to purchase additional catastrophic coverage, should they need it," he says. "Consumers are seeking more low-cost alternatives with the level of coverage they believe they need. Some still worry about a future catastrophic event. Having a full menu of options that appeal to individual consumer preferences in a time when employer sponsored coverage is decreasing is just good marketing. Health plans are stepping up to meet this demand and are customizing new products and approaches to serve a diverse population."

These types of catastrophic plans have actually been in existence in some form or another for quite some time, and may be excellent choices for healthy adults with higher incomes who desire lower premiums and are able to easily cover day-to-day medical expenses, but would like to limit risk in the event of a catastrophic medical event, according to Judi A Grupp, CEO and founder of ActiveCare Network, a nationally integrated service network for managing chronic infusible and injectable medications. "In addition, high-deductible plans are an integral part of the new consumer-directed plans, and provide extra coverage for consumers who elect this type of benefit coverage," Grupp says.