Recent healthcare cost shifting trends have enabled employers to reduce the impact of rising healthcare premiums. Unfortunately, employees bear the weight of those incremental product innovations, such as with high deductible major medical plans. According to Christopher Lang, President & CEO of AgelessCare, the concept of high deductible health insurance makes sense where consumers are healthy and don’t need access to healthcare services except in the event of accidents or major illnesses such as cancer. A look at average healthcare spending would support such group health plan offerings.

According to a 2006 report by the Agency for Healthcare Research and Quality (No. 06-0060), 50% of the U.S. population spends less than $664 per person for medical expenses each year. This accounts for just 3% of overall U.S. medical spending. Conversely, just 5% of the population account for 49% of overall annual US medical costs of $11,487 per person. While a large share of healthcare spending per person is low, personal debt has never been higher in US history.

CardWeb.com reported that average-outstanding credit card balances rose 310% between 1990 and 2003 (from $2,966 to $9,205 per household). Such household debt impacts discretionary income that could otherwise be used to fund out-of-pocket plan deductibles and non-covered healthcare expenses.

“Due to high levels of personal debt, many employees need help with out-of-pocket healthcare expenses so they can afford to get the primary care they need, such as doctor visits or lab testing,” said Lang. Short of setting up and funding employee-spending accounts, employers have had few options until recently. Limited medical insurance plans now offer employers affordable alternatives.

Limited medical insurance, sometimes referred to as mini-med plans or limited benefits insurance, provides a fixed fee to help employees fund the cost of their out-of-pocket healthcare expenses. While limited medical plans are not comprehensive major medical insurance, they are designed to fund expenses of most basic healthcare costs. Businesses can integrate plan designs in different ways:

a. Small Employers: In the absence of major medical plans, limited medical plans should include benefits for hospitalizations, ER visits, and certain primary care services. Another important plan feature is an accident medical expense benefit. Business owners should also be careful to avoid any mini-med plan with a hospitalization benefit lower than $500 per day. “Some hospitals still accept per diem payments via PPO networks of between $900 and $1,100 per day; so anything less than $500 really isn’t credible at all,” says Lang.

b. Large Employers: Primary care could be carved out from self-funded health plans which could then be restructured to provide benefits for hospitalizations and high-cost procedures only. Limited medical plans could provide first-dollar coverage for doctor visits and other primary care needs.

About AgelessCare
AgelessCare, LLC is a licensed general insurance agency serving more than 40 states and based in Orlando, FL. Product offerings include life insurance, group limited medical plans and major medical insurance for both groups and individuals. Other services include healthcare discount programs and nurse hotline services. For more information, visit www.agelesscare.com.