Bare Bones Health Plans are Expected to Stay

Some call it the junk health insurance or skeleton policies, which is why an expert from the American Cancer Society feels health care reform is very essential. Some critics say that the bare bones health plans can leave people who become seriously ill – down by tens of thousands of dollars in medical costs.

The Affordable Care Act was supposed to do away with these bare bones policies which excluded hospitalization benefits. For Large employers, “the feds imposed no minimum standard on how skimpy that coverage can be other than to say in essence, it’s got to be more robust than a dental plan or a vision plan,” said Ed Fensholt, a senior vice president at insurance broker Lockton Companies.” We had customers looking at offering some relatively skimpy plan designs to satisfy the individual mandate at a modest cost.

These plans with limited benefits may continue to be offered by large businesses to low paid workers in restaurant chains and retail outlets – according to consumer advocates, employers and insurers. “There is a lot of interest” from retailers and others that have offered limited-benefit plans in the past, said Joan Smyth, a partner with benefits consultant Mercer. She’s gotten so many inquiries since the Wall Street Journal reported on the issue in late May that limited benefit plans are “my favorite topic,” she joked.

Such plans were basically offered as some insurance was always better than none — and the premium costs for both employers and workers were far lower than for traditional coverage “Some of the pressure was taken off because of the announcement” to delay the employer mandate, said Neil Trautwein, employee benefits policy counsel at the National Retail Federation, a trade group. “But I think you will continue to see employers in many industries … carefully calculate their strategy for compliance,” in part by considering skinny plans. “As always, the interest is to limit cost increases.”

“Individuals who are not already offered quality, affordable health care can enter into the marketplaces and choose a health insurance option that works for them,” said Sabrina Siddiqui, spokeswoman for the Treasury Department. Today 2 million Americans are under the limited insurance policies issued by Aetna and Cigna. When contacted, a Cigna spokesman said, "We are currently evaluating the types of plan designs that will meet the needs of employers and employees." Aetna spokesman Matt Wiggin said the insurer is "still assessing" customer needs.

Under the Health Care Act – 10 broad categories need to be covered such as hospitalization and mental health services – this applies to plans sold to small businesses and individuals. Large firms and self insured employers are exempt. Advocates are still pressing employers to offer more comprehensive policies.

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“People need to be covered for hospitalizations,” said Mitts of Families USA. “It’s important for employers to do the right thing and they should not just look at the minimum requirements of the law.”

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Hannah Punitha (IRDA Licence Number: 2710062)

Jay Hancock and Julie Appleby August 2013

Source-Medindia