Limited Benefit Health Insurance Plans, Do They Make Sense For Today?

By: David W Ranck, ARS Solutions, Inc.

 

It seems this is the question of the year for many employees and employers alike. Let’s take a closer look at these medical plans called “Limited Medical Plans” (LMP). First, as the name implies it has limits, unlike a full blown Major Medical Plan (MMP), a Limited Medical Plan (LMP) can come in many different variations as far as benefits covered, but so can Major Medical Plans (MMP). For a single person in good health, and yes that is an important consideration good health, a LMP could cost as little as $60.00 a month and an MMP could cost $100 and up depending on deductibles and co-insurance options. A study done by Mark W. Stanton, M.A. and Margaret Rutherford, Agency for Healthcare Research and Quality Publication no. 06-0060 found that “50% of the U.S. population spends less that $644 per person for medical expenses each year. This accounts for just 3% of overall U.S. medical spending. Conversely, just 5% of the population accounts for 49% of the overall U.S. medical spending with annual medial expenses of $11,487 or more per person.” Based on these findings it may make sense for many employees and employers to go with a LMP to provide adequate coverage for most of their medical needs, or at least investigate it.

Another benefit to an LMP is the fact that a person without insurance is less likely to see a doctor when symptoms first pop up; instead they will try self medication possibly making the issue worst. Employees with LMP will more likely seek medical attention since their LMP covers some or all cost for that office visit. The advantage to this is simple; it may prevent the symptom from developing into a serious condition adding more financial strain on the family budget.

There has been a lot of discussion regard the pros and cons to LMPs as well as there should be. There is no “one size fits all” in the health insurance arena. The most important thing we all need to learn is to be good consumers with regard to health insurance and benefits. As a nation we got comfortable with “flash a card and everything is covered”. Times have changed and we need to change as well. I find it amazing how we hear people talking about how this gas station or that gas station is selling gas a penny or two less that the other. We never hear how this Dr. or that Dr. has lower office costs, or that Rx brand is less that the other. Why? Why are we as a nation so lax regarding these issues? Simple we never had to be until now. So, is a LMP better for you or the cost of a MMP? None of us have a crystal ball to predict when we are going to have a major medical event, however when we look at the definition of insurance it is the “transferring of risk” and that is why we buy insurance. If you are a person who does not like risk, then you should pay the insurance company the premium, and they take the risk for you. If you are a person who can handle risk and likes to keep your money in your pocket, then an LMP might be just right for you. You should seek the advice of an Insurance Counselor to weight all the options. Just remember, the cost related to a LMP is in direct proportion to the benefits to be paid out. As my father told me “you get what you pay for”.

I trust this has been helpful when considering moving towards a Limited Medical Plan for you or your employees. Many major companies like Wal-Mart, McDonald’s and Lowe’s offer LMPs to their employees. For the more than 47 million uninsured people in the U.S. today, having LMP coverage may be better than having no coverage at all. LMPs have their place in the marker place today, but it’s important that we as consumers know exactly what we are getting up front, no one likes surprises.