Limited medical plans have been a key part of the health insurance industry for nearly two decades. They have provided working class Americans with valuable benefits at an affordable price. But, as a result of health care reform and the Patient Protection and Affordable Care Act (PPACA), some “experts” are predicting the death of the limited medical industry. Case in point: Some carriers are already pulling these products from their lineup and planning to terminate new business after September 2010. The landscape has definitely changed, and the future of limited medical plans is uncertain.

The reality is that we really don’t know what’s going to happen, and it will likely take months (if not years) for a clearer picture to develop. And while it’s critically important for agents to communicate their opinions on health care reform to their elected officials, it’s also important for them to keep in mind that there is a great deal of time to assist clients by recommending and implementing limited medical plans between now and Dec. 31, 2013, after which point group health plans will be forbidden from having restricted annual limits on essential health benefits.

In advance of the impending legislation, agents can make themselves look like heroes by placing their clients in a limited medical product with stable rates and administrative requirements that allows HR staff and company executives to focus on the myriad changes they will be forced to make in the face of reform. As employers and brokers learn new rules and try to figure out where the employee benefits market is headed, offering a limited medical solution that will make this transition easier on them will be crucial to your success as an agent.

What are your limited medical options?
While limited medical plans are marketed with different bells and whistles and in various forms and styles, there are two basic styles of plans.

  1. The expense-incurred model, where benefits are paid on a co-insurance basis with copays and deductibles
  2. Fixed indemnity plans, which pay a fixed sum on a per occurrence basis

Brokers and employers typically prefer one plan over the other — and it may be difficult to change their minds. But the new legislation regarding these plans may make it easier to sell fixed indemnity plans over the expense-incurred ones because early signs indicate that there’s a greater chance that some version of fixed indemnity plans will survive.

It’s still too early to predict what will happen with limited medical and health care reform. Some people believe these plans will be rendered obsolete in 2014 and the market will disappear. Some are hoping that two future national elections will result in a paradigm shift in the area of health care reform. Still others think that there will be a market for part-time workers who want an affordable, payroll-deducted solution that costs less than the mandated government coverage. As insurance advisors, we need to sit back and see what happens, but in the meantime, recognize that there is still an opportunity to serve satisfied customers with a fixed indemnity limited medical plan.

John Conkling is vice president of national accounts for Fringe Benefit Group. He can be reached at jconkling@frameworkhealthplan.com or 512-233-1868.