Final (for now) Thoughts on STM...

Each time a new plan is written, both a new deductible and new pre-ex exclusion begins. Let’s take an example:

Jane bought a 6 month STM plan, which became effective on January 1st, and which had a $1,000 deductible. In March, she injured her knee. She sought and received treatment, and submitted the claim. The total amount of the claim, $875, was applied to her deductible. So far, so good.

Then, in May, she developed a kidney stone. Again, she sought and received treatment, this time to the tune of $3,500. Of course, the first $125 went to satisfy the deductible. That left a balance of $3,375, which was covered at 80%: the policy paid $2,700, and she paid the rest. Again, no problem.

In June, her policy expired, but she still needed coverage. By that time, both her knee and her kidneys seemed fine. She bought another 6 month STM, and hoped that she’d soon find a job with group benefits. But here’s the thing: she may have believed that she was simply renewing the (previous) STM plan but she was, in fact, buying a new plan.

In September, she reinjured her knee, again to the tune of $875. Pop Quiz:

The plan paid:

a) At 80%, since she’d already satisfied the deductible back in May

b) The $875 went toward her new deductible

c) Nothing

If you guessed "c)" you win; since she’d already been treated for the knee injury under the first plan, it was considered a pre-existing condition, and so it was excluded.

That’s why I really urge clients to avoid using STM plans for extended periods of time. A better way would be to buy a 3 month STM, and shop for an individual major medical plan to start when the STM expires.

Oh, one more thing: if you’re planning to travel while you’re covered under an STM, read your policy CAREFULLY. Most plans exclude foreign travel, so if you’re out of the country, you’re out of luck. Your agent should be able to help you find a plan that will cover international travel.