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How Today's Mini-Meds Can Serve Even More Clients

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According to the 2008 “Employee Satisfaction and Retention Survey,” 20 percent of workers view health benefits as a reason for remaining in their current job or taking a job offer. Unfortunately, after years of cost-shifting and plan-changing, more and more companies are considering eliminating health benefits because of the rising cost of health insurance.

In fact, health insurance expenses are the fastest growing cost component for employers. Already a dangerous balancing act, these costs may overtake company profits in the near future. An increasing number of companies have already reached the threshold beyond which they cannot pass costs on to their employees.

Research found in the policy journal Health Affairs notes that since 2001, premiums have increased 59 percent and employee contributions have grown by 57 percent for single coverage and 49 percent for family coverage. In addition, the percentage of workers covered by their own employer’s health plan fell from 65 percent in 2001 to 61 percent in 2004.

In the past, limited medical (or mini-med) plans were designed for businesses that traditionally relied on temporary, hourly, part-time, or seasonal employees. Since these consumers seldom qualified for traditional, employer-paid benefits, this type of workforce can save companies plenty of money. In that regard, mini-med beneficiaries have traditionally been employees in the retail, hospitality, food service, and staffing sectors — in other words, those who earn an hourly wage and have no access to employer-paid or subsidized health care.

Now, these plans still represent an important alternative to zero coverage, but they also offer an affordable bridge between first-dollar medical expenses and a high-deductible employer-sponsored plan for a wider selection of workers.

What are mini-meds?
Mini-meds provide basic coverage for employees and their families. They can be employer paid, employer subsidized, or 100 percent voluntary. If offered as a voluntary plan, the employees pay the entire premium (often as little as an hour or two worth of wages per week) and there is no direct cost to the employer.

Much like HMOs when they were first introduced, mini-med plans remain affordable by placing a ceiling on maximum benefit amounts. Today, a wider range of plan designs and higher maximums look anything but “mini” in comparison with earlier plans. The new limited medicals have begun to build a bridge from the old model — which was slowly eroding companies’ bottom lines and potentially putting workers and their families at risk — to a new one that’s flexible and affordable for both the employer and the employee.

In addition to the traditional industries mentioned above, which employers are good targets for limited medical plans?

  • Companies that have abandoned their first-dollar or HMO health plans for a more affordable, high-deductible major medical plan. Most of these employers will have introduced health savings accounts (HSAs) to help employees manage out-of-pocket deductible costs, which can be significant. But research has suggested that HSAs are not very favorably regarded by employers or employees. Limited medical plans offer another alternative to get from $0 to a high deductible.
  • Companies that are considering abandoning medical benefits altogether. These firms risk losing perhaps their most important tool in recruiting and retaining good employees. In these cases, a limited plan is without doubt better than nothing at all — and it’s likely that a limited benefit medical plan will cover most related expenses for most employees.

What else should you know about selling mini-meds?

  • Mini-meds aren’t really a replacement for major medical plans. Employers need to learn — and you need to teach them — how to properly integrate mini-meds into an overall benefits program when their overall business requirements mandate abandoning the traditional employer-paid model.
  • There’s a lingering association of today’s mini-med plans with the old legacy plans, mainly regarding the types of businesses that offered them and the types of workers who bought them. Today’s more flexible plan designs and higher maximums, however, challenge that image and widen the field of opportunity for agents.
  • Beware of a “single-solution” carrier. An insurance company that sells traditional medical and mini-med plans isn’t likely to be expert in servicing both. In fact, the sales process is often the only place where these two types of plans meet. Instead, look for a variety of carriers that give you flexible plan designs and outstanding enrollment and administration support.

Employers eligible for today’s new mini-meds can be white or gray collar. They can be midsized companies, not just large chains. They meet all the same Department of Labor requirements but don’t have the critical mass to withstand the damage from rising insurance premium costs.

Fortunately, the landscape of mini-med plans has grown, as well. They include higher-maximum plans that employers can subsidize for all employees, or only those who elect coverage. There are more plan options open today than ever before, and they are designed to break wide open the market of potential employers based on pressures they are experiencing. It’s time to take advantage of this growing opportunity.

R. William Kramer is assistant vice president of limited benefit medical sales for Reliance Standard Life Insurance Company. He can be reached at [email protected].