Human Capital & Careers

Mini-Meds Offer Some Relief

Why limited benefits plans are gaining popularity.
Karen M. KrollAugust 17, 2007

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.