Health Insurance on A Budget

There is a new type of "Budget" health plan, or low-cost health insurance that is becoming increasingly popular with employers and small group insurers. These budget plans or so called "mini-medical or "limited benefit" health plans are gaining popularity as employers struggle to restrain the rising cost of health insurance.  According to a recent article in the Wall Street Journal, by the industry’s own estimate nearly one million people have limited medical plans, and some of the plans' biggest sellers say business is growing 20% a year. While certainly affordable, the drawback to mini or budget health insurance is its limitations: these plans do not cover major medical expenses like hospitalization or catastrophic illness. Annual payouts are often capped at $10,000 or less, so policyholders are largely on their own if catastrophic illness or a major injury occurs. Still these plans continue to become increasingly attractive to consumers, employers and insurers.

Budget health insurance in the way of a reduced benefit plan is not a new idea. Such plans have been around for over 20 years, however they are gaining in popularity as businesses need to save money by cutting back on full benefits or hiring more part time and "1099" employees. Budget Health Insurance plans are also starting to appeal to the growing population of Americans who otherwise cannot afford medical coverage. Freelance workers in particular are turning towards these plans as they find them available through professional or trade associations they may be affiliated with.; Some very well known names on both side of the equation are getting involved in budget health insurance. Avon Products, International Business Machines, General Electric and Sears Holdings, all are making an effort to offer their contract or other employees not eligible for full company benefits, more low cost heath insurance options, including limited-benefit plans. That represents almost 1 Million employees and their dependants. These budget health plans are being offered from insurers UnitedHealth Group Inc., Cigna Corp. and Humana Inc. And a lot of the other "big boys" in the industry are taking notice of the increased market for limited or budget policies. Aetna Inc. now offers such plans after acquiring Strategic Resource Co. of Columbia, one of the market's major players other well-known companies are also expanding into budget health insurance and limited benefit plans.

While supporters of the budget plans say the are a good alternative to traditional full benefits and provide coverage for the most essential "out-of - pocket" medical expenses, like routine doctor visits, the limited health plans are not without some controversy. Some brokers say that customers may not fully grasp the plans' limitations, especially individuals who are buying policies on their own without some objective advice like and HR professional. Some "aggressive" brokers can make these plans seem more attractive by glossing over their limitations and promoting their "upfront" benefits, say consumer advocates and some state regulators. Still many insurance professionals say that for individuals without insurance, these plans - when coupled with a low-cost, high deductible plan for catastrophic coverage that will allow opening of a Health Saving Account (HSA) - provide an avenue to may for complete coverage at rates that would still be much lower than a full-benefit policy purchased by that individual.