The Association of U S West Retirees



Insurance With Limits
By M. P. McQueen
The Wall Street Journal
Sunday, December 17, 2006

A growing number of employers are offering limited medical insurance to part-time and temporary workers, but the plans may be a mixed blessing.

These so-called mini-medical or limited-benefit plans often cover routine and preventive services, such as doctor visits and flu shots, with no or low copayments for covered services.  But many have maximum benefit levels that are too low to cover the bills from a serious accident or a heart attack.

That means that even with this insurance, patients could face calamitously high medical bills.

Mini-medical coverage may be partially subsidized by employers, or completely paid for by employees on a voluntary basis, often through payroll deductions.  Some companies offer the plans to new employees during the waiting period for group-plan eligibility.

Premiums tend to be much cheaper than for comprehensive coverage, and are sometimes tied to hourly wages.  At Cigna, for example, monthly premiums for an individual range from about $50 to $225, depending on the plan and any employer contribution.  Family coverage might be $200 to $800.

Check the Limitations

Many such plans limit covered doctor visits to four or five per year, cap payments per service, and limit overall benefits to as little as $2,000 annually -- although at least one plan has a limit as high as $100,000 annually with a lifetime limit of $200,000.  Some plans include a network of physicians, laboratories and pharmacies that provide discounted care.

Most insurers say they are marketing limited-benefit plans only to cover workers not eligible for a company's regular group plan.  And some say their approvals from state regulators specifically prohibit them from marketing the plans as a substitute for comprehensive coverage.  Nevertheless, insurers say some smaller employers have replaced comprehensive plans with mini-medicals.

Insurers say the plans cover most of the common medical expenses an average person or family would need in a given year.  Of the roughly 40% of the population that incurs any medical expenses, the average annual expenditure is about $1,000, according to a 2002 government survey.

But for the 5% of the population that becomes seriously or chronically ill each year, bills average $11,500 and can run into hundreds of thousands of dollars.  The average hospital stay in the U.S. cost $1,450 a day in 2004, according to the American Hospital Association.

Not Really Insurance?

Critics of the mini-med plans, including Gary Claxton, vice president of Henry J. Kaiser Family Foundation, a nonprofit health research group, contend that many of these plan are nothing more than prepaid discount programs.

"My overall view is that this isn't real health-insurance coverage," because it doesn't protect against large, unexpected charges, Mr. Claxton says.  "If you knew going into a year what was going to happen to you, you wouldn't need insurance.  But you don't."

Benefits consultants and insurers say the plans are better than nothing for the 46 million Americans who currently have no health-care coverage.  Many of the plans are "guaranteed issue," meaning you can't be turned down for pre-existing medical problems.

If your employer offers a limited-benefit medical plan, consider it only if you don't have access to comprehensive insurance.

Don't assume that you can't afford individual comprehensive coverage, because insurance can be affordable in some states, especially for young and healthy workers.  The average annual premium for single coverage was $192 a month in 2004, according to America's Health Insurance Plans, a trade group.

Consider supplementing a limited-benefit plan with an individual "catastrophic" or "major medical" policy, if available, to cover bills that would result from a serious accident or illness.  These high-deductible plans usually exclude pregnancy care and pre-existing medical conditions.