I’ve noted in the past that there are a number of companies out there that are starting to directly market themselves and the products and services they offer as an option for people who can’t afford or don’t want to be part of Obamacare or bureaucratic medicine in general. These companies are offering alternatives that self-pay patients should strongly consider.
One such company is Parachute Health, a benefits company located in Georgia. Their focus is on what they term ‘supplemental’ policies, basically the critical-illness and accident insurance policies that I’ve written about before.
The web site for Parachute Health includes some background on the company:
Having worked with thousands of clients since 1994, Harry P. Cain III realized that simple cost-saving techniques were not widely known about or understood. The supplement products that can help reduce the costs of insurance and provide an alternative option for the uninsured were ignored by most agents and insurers because they didn’t generate enough revenue or commissions.
The rising cost of health insurance and the growing number of uninsured “young invincibles” should have awakened the industry to more heavily promote these great little policies that can help so much. It didn’t. The passing of the PPACA (Obamacare) increased access to health insurance but it unfortunately has resulted in higher prices and bigger deductibles. In other words, more financial liability for individual consumers.
Parachute Health was created to be a online platform to provide the best supplement solutions available, to both reduce the cost of health insurance and give an affordable safety net to the uninsured…
Parachute Health’s site does a pretty good job of explaining what accident and critical illness insurance policies are, and also explains why they favor what are called ‘lump sum’ accident policies instead of ‘scheduled benefit’ policies:
Accidental Injury Plans
There are two types of accident plans: Lump-Sum and Scheduled Benefit plans. We only recommend the lump-sum policies.
Lump-Sum Policies… are simple to understand. You buy a benefit amount and that’s how much you are reimbursed for any losses or claims due to a covered accidental injury.
As an example, if you buy a $10,000 benefit and you go to the ER with a torn ACL in your knee you might have the following charges:
ER Visit – $2200
MRI – $1200
ACL Surgery – $5600
Pain medication – $235
Follow-up visit – $185
Total costs – $9420
A $10,000 lump-sum accident policy will send you a check for $9420 since the policy limit exceeds the actual costs incurred.
Reimbursement is subject to usual, customary & reasonable costs so if your hospital tried to charge you $8000 for the MRI, the accident policy won’t agree to that. In most claims we’ve helped people file, reimbursement has been equal to or higher than the amount the health insurance company did not cover.
Scheduled Benefit Policies … ([w]e don’t like these when used with high deductible health plans or when there is no health insurance)… have a predetermined amount they will pay for each service you receive. Unlike a usual and customary amount (UCR), which is designed to cover the entire cost, the scheduled benefit amounts are designed to just help with the cost. These plans assume you will not be responsible for as much after your health insurance pays first.
These plans… often work just fine with big company health benefits but not so well when you might have many thousands of dollars in deductibles to meet.
If you only get $100 for the ER visit as a popular scheduled benefit plan pays, it won’t help very much with that $5000 deductible you now have.
Critical illness plans
Heart attacks, cancer and strokes are considered the “big 3″… Critical illness policies provide a lump sum of cash (tax-free) to help pay what health insurance doesn’t as well as any other financial needs you might have.
It’s like a life insurance policy that you don’t have to die to collect on. If you buy a $10,000 policy and have a heart attack, stroke or get an internal cancer, you get a check for $10,000. It can be used to pay what your health insurance doesn’t or anything else you need.
Critical illness policies are so cheap that many people buy more coverage than they need to cover their health insurance deductibles so they can use the funds for living expenses as well.
They also explain one of the little known ways to get partial coverage against a major medical expense, increasing your medical benefit on your auto insurance:
When you don’t carry health insurance, there is an inexpensive adjustment to car insurance that could help you. ‘Medpay’ or ‘Medical Payments’ is a component of nearly all auto policies. Most policies have $1000 to $5000 in coverage built in. Many policies also allow you to raise that amount to $50,000 or even $100,000. The cost for this varies but it usually costs $10 to$20 per month to raise it to about $50,000…
This coverage is only for injuries that happen as a result of an automobile accident, but it follows you around. You’re covered in your car, in anybody’s else’s car and even if you’re walking around and some other car hits you. The point is that the most expensive healthcare for injuries generally comes as the result of an auto accident. This is a really inexpensive way to limit your liability.
We recommend that our clients, that do not have health insurance, carry a good supplemental injury and critical illness policy and also adjust their auto insurance. The total cost of these moves will still cost a small fraction of what health insurance does and they provide a reasonable amount of coverage for emergencies.
The site offers four examples of how individuals might benefit from pursuing the solutions that Parachute Health offers (it’s not clear whether these are real or fictional persons). Here’s one:
- California – Male 31
- He doesn’t qualify for tax credits under Obamacare.
- Cheapest Obamacare plan for him – $257/month.
- Cheapest plan without a huge deductible – $343/month.
- Purchased $7,500 accidental injury plan – cost $40/month (NACD Accident Medical Expense – Basic Protection Plan)
- He doesn’t get sick, but he does get hurt from time to time. This plan gives him $7,500 coverage per injury.
- He’ll buy Obamacare if something big happens.
- He’ll save $3000 to $4000 a year in premium costs in the meantime.
As you can see, the savings over an Obamacare plan are pretty substantial. And the supplemental policies offered by Parachute Health are also suitable in many cases for people who have high-deductible plans or otherwise might face big out-of –pocket costs.
For anyone who is without any sort of coverage and either can’t afford or doesn’t like what is available on the Obamacare exchanges, or if you have a high-deductible health insurance plan, the supplemental policies offered by Parachute Health and others can provide important protections against a major medical expense at a fraction of the cost of conventional health insurance.