Mini-med health insurance plans were the subject of much controversy in 2010. These health insurance plans were, and still are, the only health insurance plan that many of the largest corporations were offering to their employees. The plans come with caps that are unreasonably low, and the plans do not meet the 80% requirement that health insurance companies are now expected to meet. So, why are these horrible mini-med insurance plans still around?
Mini-med insurance plans have been referred to as “junk health insurance”. These plans cover very little of a person’s health care needs, because the of the incredibly low caps that the plans come with. Many stop paying for all of a person’s health and medical care costs after a cap as low as $2,000 has been reached. This total amount could be used up in a single trip to an ER. These plans usually cover only the employee, and will not cover the medical bills for the employee’s spouse or children. Large corporations seem to want to offer these plans to their employees because the employer gets a good deal from the insurance company it works with.
The government has declared most, if not all, of these mini-med plans as “substandard”. This is because the health insurance companies they come from are not following the 80% requirement that is now the law. 80% of the money that comes to the insurance company from premiums must be used on things that actually improve the health of their customers. They are not allowed to push things like employee’s salaries, tax costs, or administrative costs into that 80%.
Since it is obvious that mini-med health insurance plans are bad, then why are they still in existence? The answer to that question is somewhat complicated. One reason is because many corporations threatened to drop all health insurance coverage for their employees, entirely, if they had to meet the 80% requirement. Many claimed it would be too expensive for them to continue to offer their employees health insurance, and they asked to be granted a waiver for that requirement. Several of them were approved for those waivers, mostly to prevent thousands of Americans from suddenly having no form of health insurance.
The waivers that were granted were designed to last for a year. This means that many of them are still within the terms of that waiver. There is potential that these corporations will attempt to get the waiver extended after it ends. The sheer number of mini-med plans that have “come out of the woodwork” after the laws were passed was much more than expected.
The question now becomes, is having something that is substandard really better than having nothing at all, when it comes to health insurance? In 2011, most mini-med plans will be required to raise their caps to at least $750,000. By 2014, the mini-med plans are expected to be gone completely. It will be interesting to see what happens to them between now and then.
Image by Taber Andrew Bain on Flickr