Mini-Meds Offer Some Relief

Six years ago, only 13 percent of employees at Ratner Cos., an operator of 1,000 salons under such names as Hair Cuttery and Salon Cielo, took advantage of the company's medical plan. Today, 78 percent have coverage, under a limited benefit plan from Century Healthcare.

Driving that nearly eightfold increase was a switch to a so-called mini-med policy, or limited medical-benefits plan. Think of mini-meds as the flip side of catastrophic coverage: instead of forcing employees to pay out-of-pocket for smaller expenses while guarding them against huge outlays in the event of serious illness or accident, mini-meds instead pick up the tab for low-cost, routine forms of health care such as doctors' visits, immunizations, X-rays, and emergency-room charges, but impose strict annual caps on payouts.

One rationale for this kind of coverage: many analyses show that most participants in health-care plans use less than $2,000 annually in health-care benefits. But the growing popularity of mini-meds is primarily driven by the desire to keep health-insurance premiums low while extending some form of coverage to hourly or part-time workers, who often go unprotected. Monthly premiums for single coverage range from about $50 to $200 per month, says Derek Peterman, CEO and founder of Century Healthcare, an administrator of limited-benefit plans. As one sign of the growing popularity of such plans, insurance giants Aetna and Cigna have recently entered the market.

Employers considering a limited-benefit plan should check that it complies with the Health Insurance Portability and Accountability Act (HIPAA), covers state-mandated benefits, and offers discounts of 30 to 60 percent off the prices charged by network providers, say Rich Williams, vice president of operations with SRC, an Aetna company and provider of employeebenefits programs. Explaining to employees just what services are and aren't covered is crucial; many may be new to health coverage and not realize that benefits are limited. Employee participation rises dramatically when the employer picks up at least half the cost of premiums, says Williams.