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January 05, 2005 at 07:00 PM
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Recent increases in health care costs have led to tremendous growth in the market for “mini meds,” or “limited-benefit medical plans.”
The fast growth of the market and recent investments in “mini meds” by leading insurance companies suggest that these products are here to stay.
The new products offer great opportunities both for brokers and the employers they serve.
But, before rushing in to the limited medical dance, brokers should make sure they know what they are doing.
The first thing that brokers must understand is that limited medical programs are limited.
Limited medical plans are working very well in many companies across the nation. However, some limited medical plans have been implemented poorly or totally misplaced by brokers.
Beware of the situation that will almost definitely cause disappointment and frustration for all involved.
Its best to avoid products and programs that seek to be a lower-cost solution to the major medical inflation problem.
Moving a company from a major medical insurance product to a limited medical program should never be recommended. This sometimes occurs, and the broker who sells the new program is creating a very challenging situation for himself and the employer. No matter how clearly the distinctions between the major medical and limited medical plans were explained, some employees will not understand until its time to file a claim.
On the other hand, one of the best prospects for a limited medical plan is a group with classes of employees that do not have any employer-sponsored health coverage.
The best markets to pursue are those with employees earning $10 to $20 per hour, because those employees make enough money to afford a plan that costs $20 per week, and the employees will find value in the benefits offered.
This market traditionally has been ignored by the major medical providers because of the difficulty of providing a valuable benefit product at a feasible cost.
Employers that successfully have deployed limited medical programs for moderate-income employees include nursing homes, hotels, retail stores, convenience stores and transportation companies.
Recent research reports suggest that major medical premiums are seeing a lower increase than in years past. That is good for the limited medical market because it will keep employers from trying to make a move from major medical to limited medical. The best approach for selling limited medical is to reach out to the enormous number of employers that currently offer nothing.
Employer contribution for a limited medical program can be a crucial factor to the success of the plan, especially when a plan is serving employers with fewer than 500 eligible lives.
By persuading the employer to make contributions, you can count on several things.
First, the employer is committed to the offering and will invest appropriate resources to make the plan work. In other words, the employer will handle plan communication and administration properly.
