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