Major medical insurance - Value-added health coverage
Cedric Stephens Insurance HELPLINE
QUESTION: I read an advertisement a few weeks ago in this newspaper about a major medical plan for persons aged 50 to 90 years old who were members of a certain organisation. What is a major medical plan? What benefits does it provide? What does it exclude? Does it offer value for money? Is it something that you would recommend?
- B.S., Kingston 8
INSURANCE HELPLINE: The mission of this column is to provide independent information and advice about the management of risks and insurance. It is not in the business of providing product endorsements.
Additionally, the code of ethics of the professional organisation to which I belong imposes a duty on me to deal with "actual or perceived conflicts" of interest "appropriately".
I am therefore obliged to disclose that after I read the same ad and made enquiries - some of which were answered - my wife and I signed up for the plan.
Fellow columnist, entrepreneur, trainer and friend, Yaneek Page, in her article 'Chik-V lessons for small businesses' wrote that the impact of epidemics and natural disasters to small businesses "can be devastating".
Owners of these businesses lost "weeks of revenue ... customers and credibility", she said.
At the macro level, according to president of the World Bank, Jim Yong King, "when it comes to health emergencies, (the bank's) toolbox is empty" for dealing with pandemics like Ebola.
Illnesses, physical and mental, have the capacity, at the level of the individual, to deplete savings and wreck lives at the blink of an eye.
According to CNBC, "Bank-ruptcies resulting from unpaid medical bills will affect nearly two million Americans - making health care the No. 1 cause of such filings, and outpacing bankruptcies due to credit-card bills or unpaid mortgages, according to new data. And, even having health insurance doesn't buffer consumers against financial hardship."
The same report also said that: "If you think only Americans without health insurance face financial troubles, think again. NerdWallet estimates nearly 10 million adults with year-round health-insurance coverage will still accumulate medical bills that they can't pay off."
Medical bills incurred locally, though a fraction of those in the US, can be very frightening.
The 4th edition of Barron's Dictionary of Insurance Terms defines major medical insurance, or MMI, as "coverage in excess of that provided by a basic hospital medical or group health insurance plan. After the limits of the coverage have been exhausted under a basic plan, major medical then covers medical expenses relating to room and board, physician's fees, operating room expenses, drugs, x-rays .... There may be a lifetime limit. For example, if the lifetime limit is $500,000 and an insured uses $100,000 in a given year, the lifetime limit would then be reduced to $400,000."
LovetoKnow Insurance - insurance.lovetoknow.com - says that because medical insurance policies differ, "there is no absolute answer to the question: 'What is the definition of major medical insurance' that is suitable for all policies. Instead, this term generally refers to policies that provide coverage for most health-related expenses that can be incurred" and also that "major medical insurance may not cover everything". I agree wholeheartedly.
The plan benefits were summarised in a Microsoft Word file (see inset).
Regular readers of this column will know that buying insurance without focusing on the details - like not examining a specimen contract - is akin to buying 'puss in a bag'.
The sponsoring organisation referred me to the sales agent, Clive Ebanks, who I contacted by email on September 30. I am still waiting for his response.
I subsequently learned that he decided that I was not entitled to receive the information even though the company that he represents requested that I supply a great deal of personal information in order to get the coverage.
This experience has left me with a very bad taste. It exemplifies the state of the market for health insurance for which there are only two players.
If prospective participants in the plan are not entitled to get anything else but sales literature, what can they expect in the event of a big claim for major medical expenses?
It is very disappointing that an otherwise progressive enterprise - and whose management I have long admired - appear to be adopting such a backward policy in relation to the dissemination of information about one of its contracts.
The coverage, which becomes effective after a six-month waiting period, will only be triggered after the participant has borne $100,000 in medical expenses.
Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: firstname.lastname@example.org