End of the road for minimeds?

I am not a deadhead per se, but Jerry Garcia’s lyrics in the Grateful Dead tune “Truckin” come to mind when I think about the limited medical/mini-med industry. Twenty years is a long ride for a niche product, and I’m sure at least one reader has an “I remember when” limited medical case memory running through their head right now.

At this writing, things are as strange and tumultuous in our industry as they’ve ever been. By the time you read this, it’s very likely the Department of Health and Human Services will have offered some clarity when it issues its interim final rules on grandfathering after the Aug. 27 conclusion of the comment period. The Patient Protection and Affordable Care Act theoretically dealt a blow to much of the limited medical industry when it stipulated that beginning Sept. 23, 2010, group health plans written before March 23, 2010, are eligible to be grandfathered, but must meet specific provisions outlined in the law.

Several of these provisions impact limited medical (sometimes referred to as limited benefit or mini-med) plans with co-insurance based features, especially the “no annual or lifetime limits” language.
After vigorous lobbying by various industry groups and corporations, however, HHS announced it might grant an exception to this legislation.

The major piece concerning limited medical plans centers on the waiver process that may be established for co-insurance based limited medical plans. We know very little about this process and how it will work (or not work) but this eventual ruling will provide enough structure for brokers and employers to begin setting the limited medical course for their clients/companies from today until Jan. 1, 2014.

Looking back

So let’s take a brief trip back and look at the naissance of the limited medical industry and the impact it’s had on group health insurance. There are essentially two paths in the limited medical world, and I’ve spent the majority of my time on the lesser-traveled side. Co-insurance based limited medical plans (also referred to as expense-incurred plans) got their start in the late 1980s.

The plans were invented as our economy began to experience the impact of a more service-based work force, price increases in health care and the inability of some employers to meet participation requirements in contributory plans. As I recall, the limited medical industry was born when an enterprising HR director of a large convenience store operation, a carrier ahead of its time and a willing administrator teamed up to find a solution.

The resulting product was a low-cost insurance program that operated with co-pays, deductibles and co-insurance sold on a voluntary basis to employers with more than 500 eligible lives. The product served a group of people who were not going to purchase an expensive major medical program, created a way for an employer to meet participation on its major medical programs by creating eligibility classes for the different benefit offerings, and introduced people to the health insurance system versus pushing them entirely to government-based programs.

Undoubtedly there were detractors then – just as there are today. How can you sell a program with such low limits to the employees? What if they think they are buying higher levels of coverage? What will you do when something serious happens? Those questions have never really gone away and have required most of us to reason that something is better than nothing.

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