Mini-med health plans have garnered attention recently because their benefit levels don’t conform to new requirements being phased-in that all health plans provide coverage up to certain levels.
How limited are the benefits in these health plans? The most popular plan offered by McDonalds has an annual limit of just $2,000. The overall financial protection offered by this plan, as measured by its actuarial value, is just 16 percent. By comparison, a “typical” employer plan has an actuarial value of 84 percent – meaning it covers 84% of the costs for a standard employee population. Looked at another way, it a plan covered just 16% of employee costs, but was designed to cover more of the major illnesses than the minor illnesses, it would feature an $85,000 deductible!
In this brief, we argue that these plans shouldn’t be called insurance. As it stands, the offer of a mini-med plan would disqualify a young adult from being able to enroll in his or her parent’s coverage, even though it could be better and more comprehensive. Recent attention paid to mini-med policies drives home the need for the comprehensive reforms that come online in January 1, 2014, when these workers will have better choices. In the meantime, consumers need better clarity on the limits of these plans and policymakers need to explore better alternatives.