HEALTH INSURANCE Outside the Box
In response, carriers are percolating
change targeted at specific people and
employer groups. From hourly wage earners and government employees, to seniors
and the insurance-dodging “young invincibles,” what’s happening in health insurance is Free Market Economics 101: The
combination of unflagging demand with
rising costs is promoting innovation.
The young invincibles
Take Tonik, for example, a streamlined
health plan designed for the young, the
hip and the so not into shopping for insurance. Offered by WellPoint and un-
(“Play hard. Play safe. You mix it up a
bit”); and “Calculated Risk Taker” (“A
well thought-out walk on the wild side is
just your style”).
Another key feature is that Tonik is
a purely online sale with a limited number of decisions each potential buyer has
to make, as well as the ability for each
prospect to make an immediate underwriting decision. Obviously, this meets
young invincibles where they live, but it
also benefits advisors who can use web-only transactions to quickly build their
business. “It’s a whole different way of
marketing, of communicating with that
What’s happening in health insurance is Free
Market Economics 101. The combination of
unflagging demand with rising costs is promoting
innovation.
derwritten by Anthem Blue Cross, Tonik
targets the “young invincibles”—19-to
34-year-olds, a fast-growing demographic of the medically uninsured. These people need health coverage that’s lean, mean
and affordable. And they want it as easy
to understand as it is to buy.
WellPoint’s research showed that the
young invincibles didn’t differentiate between types of health-care coverage, says
Mary Floyd, Wellpoint’s vice president
for sales, individual business: “They expected health insurance that covered everything, and we tried to design plans
that delivered the value they expected by
having everything in one package.”
It’s hard to imagine a website that is
more Millennial-friendly than the Tonik
site: The Lenny Kravitz-esque silhouette
and ironic observation flashing across
the homepage (“You can’t outrun an injury. Even in a car. Darn, Newton was
right.”) is designed to telegraph a specific
message: “This is not your parents’ health
insurance.” The hip theme continues inside the site, listing individual health
plans with cascading coverage limits and
copays under the headings “Thrill Seeker” (“You live life on the edge and happily go over it”); “Part-Time Daredevil”
demographic,” Floyd says.
For many advisors, Tonik and other
similar products with youth appeal can
build a bridge to a group that’s notoriously difficult to reach. Initially, WellPoint
did not offer life insurance coverage with
Tonik.
“But we did find that agents were interested in making life insurance easy to
purchase for this group,” Floyd says. Even
a low-level term sale is a coup when sold
to the young and may be a foot in the
door to developing a full-service insurance client down the line.
“It’s important to have a carrier that
will be flexible and will target the audience
carefully,” Nicolai says. “Plans should be
tailored to the average hourly rate these
workers are being paid.” They should also
feature down-to-earth shoe-leather benefits rather than high-blown perks, which,
in reality, won’t mean much to a sick person. Some carriers, for instance, dress up
plans with an attractive-sounding coverage limit (say, $10,000 for inpatient care),
but partition that amount by creating an
“inner limit,” such as a $100-a-day maximum daily limit for inpatient care. “So
you don’t really get to that $10,000 benefit
unless you’re in the hospital for an unreasonable amount of time,” Nicolai adds.
For hourly workers, the most useful benefits are for outpatient services,
such as payments for a doctor’s office or
a pharmacy’s copay. “A lot of plans just
have a discount, but require the patient
to pay for prescriptions up front and then
file for a reimbursement,” she says. “A lot
of times, people living from paycheck to
paycheck may not have money out-of-pocket for an $80 prescription.”
Not being able to get their medicine
doesn’t help them get well more quickly,
which doesn’t help them get back to work
more quickly. That means the plan is failing the client.
Working with employers
As important as it is to negotiate a user-friendly plan, Nicolai believes it is also
crucial to bring the plan administrator to the table when working with an
employer. That’s because the dynamics
of wage employment are that even the
most well-thought-out health plan can
quickly become a colossal headache for
the employer.
“Some companies put the burden on
the employer to maintain employee eligibility, but the problem is
that turnover in this segment
of the workforce is high,” Nicolai says. “If a person works
a week and doesn’t work a
week, he or she won’t have a
paycheck from which to deduct
premiums.”
Making the most of limited
benefits
As is the case with the young invincibles,
hourly workers need low-cost health plans
that are flexible enough to meet the needs
of a group that is often part-time and
itinerant. An advisor needs to work
with a carrier that will think outside the cookie cutter, says
Susan Nicolai, director of
marketing for Planned
Administrators Inc., a
national administrator for limited-ben-efit plans.
