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Dear Everyone!
I pride myself by saying that "I'm often wrong... but never in doubt."
I've never been a big fan of limited-benefit group health plans (as opposed to major-medical plans we are all familiar with.) But given the times and circumstances I've been "warming up" to these plans... mainly because I found one that I like... which is configurable, and which is from a well-known, well-respected company (see the first piece below for link.)
If you want to see what changed my mind you can read this article. (This is targeted to agents so you can get an idea of how the carriers try to "woo" us into selling their plans!) I went to a seminar given by this guy and he convinced me and a whole room full of agents to give mini-meds a second look.
I looked, I checked, I researched, and then I started to propose them to clients where I thought they would be a good fit... and I'm finding a lot more favorable response to them than I had imagined I would.
Times are hard out there. No one would take a mini-med if they could afford a major-med (and I would not sell one.) But as I say below, a limited plan is far, far, far better than no plan at all.
Read the piece below and see if your company might be a fit for these plans.
-Al
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Feeling Better About Mini-Med Plans
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I don't have to tell all you business owners that the cost of health coverage often exceeds $7,000 per employee, per year. By 2010, those costs could reach $12,000 per employee.
So what is happening out there? Simple. These skyrocketing costs are causing employers to give up providing health insurance for their employees such that roughly 46 million people in the U.S. do not have health insurance. Eighty percent of these people have full-time jobs but can no longer get coverage OR afford the premiums if offered.
Lets face it. All employers want to offer health care. Not providing insurance can have a dramatic impact on employee recruiting and retention, as 80% of employees consider benefits important to their decision to join or leave an employer. So how can employers provide these necessary health care benefits while controlling their costs? One answer heard more and more often is to offer a limited-medical-benefit plan, otherwise known as a "mini-med."
Am I saying that you should offer a mini-med over a full major medical plan? NO I AM NOT. No responsible agent would. But there are some limited benefit plans (the technical name for mini-meds) that are far, far, far better than no insurance at all. One plan that I write is from Transamerica Live (those people in the San Francisco "pyramid") and is called TransChoice Plus.
The mini-med has evolved over the years into a viable health insurance option for employers. However, there are still several "myths" from the past associated with these plans that are no longer the case.
The Not-So-Limited Benefit Plan
First introduced in the 1980s, a typical mini-med plan would have $1,000 in medical coverage for the year. Obviously, this amount doesn't go very far in health care today. One trip to the emergency room and you could blow the entire amount. You were also limited to about two doctor visits a year, not even enough for a healthy person.
Those who tried the plans found them weak and lacking substantial coverage. Today, mini-meds cover a wide range of benefits, including out-patient doctor or clinic visits (five to nine per year, depending on customization of the plan), in-patient hospital benefits, surgical, intensive care, anesthesia benefits, emergency-room benefits, private-duty nurses, wellness services, pharmacy benefits, accident medical and AD&D benefits.
Plans are so customizable that you can come close to providing a comprehensive plan for employees at half the premium. I said "close" but let me say again that Mini-meds are not intended to replace comprehensive coverage. They are a great alternative for employees with limited income that have either not had insurance in the past or who are being priced out of their company-sponsored major-medical plans. Many companies are now offering a combination of both major-med and mini-med plans to better meet the health care needs of their workforce.
Not Just for the Part-Time, Hourly Employee
Initially, these plans were most popular with temporary agencies, fast-food and chain-store workers, but have since gained appeal to a wider array of individuals who work full-time but can't afford the rising premiums. Groups less likely to have employer-sponsored insurance include workers in smaller companies, minorities, young adults (ages 19- 24) and near-elderly working women with health problems.
For example, the real median household income, according to the Census Bureau, is $44,389. This income level typically means that families are living pay check to pay check and are watching their spending closely. These individuals need quality coverage to meet their day-to-day medical needs and many are willing to look at a limited-benefit-medical plan with a lower premium than a comprehensive plan but without the additional coverage that is not affordable to them. In years past, all employees from the CEO to the janitor were on the same plan. Today, companies are segmenting employee groups based on income levels and needs to provide them with options.
Typically, the higher the employee contribution is, the less likely employees are to enroll. This can be avoided as employers are making larger contributions to the mini-med plan. Because premiums are lower, employers can afford to contribute a larger percentage of the overall cost.
Physician Assignment of Benefits
Another mini-med myth is that physicians don't accept them. In the past, employees may have been required to pay for services up front and file a claim for reimbursement later, but not anymore. In many cases today, plans have 100% assignment of benefits at the time of service. Combine strong PPO networks with broad physician and hospital choice and mini-meds restore dignity to the health care process for many. Additionally, employees tend to seek medical services earlier, reducing absenteeism at work and their dependence on the emergency room as the primary care provider.
Utilization of Mini-Med Plans Is Limited
These plans are catching on at a rapid rate as employers struggle to restrain the rising costs of health insurance. Insurers estimate that nearly 1 million people have mini-med plans and many of the plans' biggest sellers say business is growing at 20% per year. In fact, two health insurance powerhouses, Aetna and Cigna, acquired mini-med providers in order to enter this growing market.
According to a 2005 survey conducted by the Kaiser Family Foundation and the Health Research and Educational trust, about 20% of employers offer a mini-med plan. Large employers such as Target Corp, Choice Hotels, International Paper and ConAgra Foods have realized the value of such plans. Also, employers are seeing a rise in health care participation by offering a mini-med plan. For example, Ratner Companies, an operator of nearly 1,000 hair-salon chains with 14,000 stylists, had a 13% participation rate in its comprehensive medical plan. Once the mini-med option was provided, participation jumped to 70%.
Debunking the Myths
A regional manufacturing company, struggling with the ever-increasing costs of health care, saw participation decline from 70% to less than 30% in the past few years. By offering this segment of the workforce an affordable mini-med option, the employer was able to contribute 80% of the premium, reduce the overall health care costs and increase participation levels across the board. Participation levels rose to more than 85%. Overall the employees are much more satisfied with their benefits package and the company is now covering a larger percentage of its employees with coverage that fits their needs -- at a cost the company can afford.
Mini-med plans are fast becoming a mainstream health care offering, and over the next three to five years the industry is expected to reach $3 to $4 billion in annual premiums. These plans are a way to bridge the gap of the full-time uninsured and get the U.S. closer to addressing our cost crisis in health care.
Of course, some form of federal health insurance reform could end all of this. However, until that happens, if your small company (two or more enrolled) can't afford a major medical plan, call me and we'll design a min-med for you.
No, you won't get a heart transplant or a free gall bladder removal or expensive drugs out of it, but it will take care of the day to day cuts, scrapes, broken bones, and common illnesses that most people have... for maybe $70 a month. A good mini-med is far better than no insurance at all.
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A Few MORE Words About Disability Insurance
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Disability insurance is actually income protection. What you are insuring is your paycheck.
As I mentioned last time, May is DI Awareness Month (which is far to much excitement than I should be allowed to have!) So let me bring up a few items I didn't cover in the last article.
One of the many challenges to the entrepreneur is deciding on the type and amount of insurance to get for themselves and their families. Many business owners came from an environment where their employer created their benefits package and presented either a "take it or leave it" plan or one with few choices.
Many don't think about creating employee benefit packages for their small business until they have other employees. They come to me and ask me for business (group) health insurance when they hire that first new person. However a good benefits package consists of much more than just health insurance benefits. In America everything costs money and the big things should be insured and/or planned for. Some of the important things to include in your personal benefits package include:
* Disability Insurance
* Life Insurance
* Long Term Care
* Health Insurance
* Dental Insurance
A lack of disability insurance is one of the things that hurts families the most and is a line of coverage that is too often overlooked. The combination of unpaid medical bills and the inability to work that often comes with a medical condition is the leading cause of foreclosure and bankruptcy.
Finding the best disability insurance company for your needs is important as some companies focus on blue collar workers, other on gray or white collar workers. You should be able to find a policy that combines long term and short disability insurance. If a policy that covers you completely isn't available or affordable, a policy that covers part of your need may work.
Bottom line, your chance of being disabled during your working years is much greater than your chance of dying during your working years. However, life insurance is something we think about much more and which we buy more often. Very few people get disability insurance outside work-sponsored plans and often these plans are inadequate. They are often terminated after one leaves their employer.
More houses are foreclosed on due to medical issues than anything else. If we are healthy, most of us will find a way to pay our mortgage and keep food on the table if we are laid off. We may find another job that pays less, and forces us to cut back on certain expenses. However, we'll probably be able to pay our mortgages. But, if we are disabled, we don't have the same options.
Prices for income protection insurance are based on several factors. Prices are to some degree job specific. Disability insurance for a computer programmer will be less expensive than a policy for a truck driver if everything else is the same. Age, health the amount coverage and length of time the benefits are to be paid are all factors.
Disability Insurance and Age
Applying now, verses next year means that you may get a better rate due to the age factor.
Applying when you have a low risk job can also help you get a lower rate. Conversely if you are now in a lower risk job than you were when you purchased your existing disability insurance policy, you may benefit by getting disability insurance quotes again. However, if you are significantly older now, the age factor may overshadow the occupation factor.
No one thinks they are ever going to get disabled and won't buy DI coverage for $40 a month... but everyone thinks they are going to win the lottery and will buy $10 or more a week in tickets. Yeah, that's financial responsibility for you!
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Well, that's a wrap for this issue. I hope you've found some of the info above useful and interesting. If you have questions about life or health coverage, safe-money annuities, or employer group benefits just give me a call or send email.
Sincerely,
Alan N Canton
InsuranceSolutions123 Agency
InsuranceSolutions123.com
916-962-9296
CA License # 0F31110
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Al Canton, Owner
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I'm Al Canton, owner of the Insurance Solutions Agency.
Everyone promises the best service, etc. So I won't bore you with that message.
Bottom line, I know health insurance, work-supplements, medicare, life, and annuities.
Most importantly, I'm honest. I will not put you in a product just for the money. I've been here 25 years and I've built my business reputation on integrity and honor.
It's that simple.
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