Innovations are coming to the individual market.  A new plan by American Community Mutual Insurance Company called Coverage on Demand is a mini-medical plan targeted at young adults that allows individuals to trade up to a comprehensive plan when they get sick or have an accident.  Now available in Texas, the company plans to expand to more than 13 states in 2008. This plan was recently highlighted in WSJ article .

“Here's how it works: A consumer buys one of three limited-benefit plans -- called Tempo, Rhythm or Groove -- with annual benefit caps of $1,000, $2,500 or $5,000, respectively. Deductibles range from nothing to $500. The cost of the plan for a healthy 25-year-old man in Dallas, for example, would be $88 to $95 a month, the company says.

The twist comes when a person gets seriously ill or hurt and exceeds the modest benefit cap. Under Coverage on Demand, policyholders can pay a lump-sum annual "activation" premium of $9,000 to $10,000 -- on top of the basic premium -- to receive a guaranteed $5 million of catastrophic coverage for that year. American Community offers to finance that amount through an outside company over three years, with interest.”

Searching on ehealthinsurance.com , I found 91 plans available to this fictional 25-year-old man in Dallas.  A $5,000 deductible HSA-compatible plan cost $65 a month.  Other plans were available for as little as $33 a month.  A $0 deductible Blue Cross PPO (50% coinsurance) was available for $84 a month, with a $10,000 out of pocket max and $5 million lifetime max. 

The Coverage on Demand plan is really no different than the Blue Cross $0 deductible PPO – similar premiums initially and same out of pocket maximum ($10,000 in premium under the Coverage on Demand versus $10,000 in coinsurance in the PPO) if hit with a catastrophic claim, accident or illness.

It will be interesting to see if Coverage on Demand is an attractive presentation and value to the average young immortal.