If traditional health insurance plan costs have skyrocketed out of sight but you still want to help your workers, mini-med plans may be the answer. Here’s what you need to know about them.
Perhaps you’ve seen the TV ad where the actor on-screen says, “I’m thinking of a number. Can you guess what it is?”
Well, if he wasn’t talking about credit rating reports, that number might well be “47 million.” That’s the number on the mind of America these days. It’s the number of Americans estimated to have no health insurance coverage of any kind.
There’s pretty strong agreement that the reason isn’t the unwillingness of employers to provide it. After all, employers started the idea of insuring their workers, back in the 1960s, when it was cheaper to serve up this shiny new benefit than another raise in pay.
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To say that’s no longer the case is an understatement. Health plan costs are estimated to skyrocket another 14 percent this year, against a background of under 3 percent inflation for prices in general.
One slightly positive note has been that the dilemma has generated a number of solutions. One is a new class of limited-benefit healthcare cost assistance plans, known generically as “mini-meds,” (Note that there’s also a specific-type plan known as a mini-med.) If you can’t offer full medical coverage to your employees or parts of your workforce, such as low-paid workers, contractors, or part-timers, a mini-med plan may fit the bill.
Several types are available:
–Discount Plan. These plans are not insurance, as they neither offer full coverage nor reimburse expenses. They are simply negotiated agreements with healthcare providers, often including drug retailers, to offer a discounted price. Show the plan card and your prescription might cost $75 instead of $100, or a participating doctor may do an office exam for 35 percent off. The key here is careful shopping to get the best deal with providers your workers are most likely to use. It does no good to get discounts at a drugstore chain in California when you’re in Ohio.
–Mini-Med Plans. These are insurance plans to the extent that they pay the medical care providers directly or reimburse employees’ out-of-pocket expenses. Like traditional plans, they require copays, but coverage is severely limited at the high end. You can use any provider you like, but if you use Preferred Provider Organizations (PPOs) that many plans are linked to, a discount price will make the most of the coverage you’ve got.
–Gap Plans. If you are able to offer catastrophic coverage to handle high-end costs, a gap plan will help cover more mundane medical expenses. It’s different from a mini-med in that it doesn’t duplicate coverages, such as hospitalization, offered in the catastrophic plan. That makes it cheaper.
Big insurers offer mini-meds, but watch out for “smoke and mirrors”
Once limited to small insurers, mini-meds are now offered by some of the largest, including United and Aetna, sometimes through subsidiary companies. But it’s essential that employees understand the plans’ limitations and differences from traditional employer-provided medical. And it’s not unusual to have limited participation in your organization.
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“This group of workers takes a lot of handholding,” says a report on mini-meds in Managed Care magazine. “One-on-one sessions are needed to carefully explain the limits of the plans. At best, only about 20 percent of the employees offered a mini-med plan take it.” Among those who don’t, says Managed Care, are young men and workers with access to better insurance through spouses or a second job.
Another reason the plans must be carefully explained: Some are deceptively advertised. “There are a lot of smoke–and-mirror plans,” says Merrill Matthews of the Council for Affordable Healthcare, “designed to prey upon the unsophisticated employee. It’s the wild west out there.”
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