Cheap health insurance plans providing minimal coverage are staying alive in the market thanks to an Affordable Care Act loophole that lets employers offer meager coverage as long as they offer one plan complying with ACA requirements, the Wall Street Journal reported.
Driven by affordability concerns, employees with low incomes are flocking to these no-frills plans regardless of possible tax penalties. And employers offering cut-rate insurance alongside an ACA compliant plan reduce their healthcare costs while avoiding ACA penalties applicable to business employing 50 or more workers. Overall, this isn't the kind of double win healthcare reformers envisioned.
"Fixed-indemnity" or "mini-med" plans exemplify the trend. They usually pay a defined amount for routine services while limiting total payments or covered care available annually. These plans also may exclude coverage for services considered essential health benefits under the ACA, including mental health services.
While supporters of fixed indemnity plans say they provide affordable access to routine medical care, critics say the plans pay far less per dollar of premium on average than standard insurance, the WSJ noted. And customers must foot most of the bills when catastrophic injury or illness occurs. Therefore, fixed indemnity coverage "violates the spirit of the law," former Missouri Insurance Commissioner Jay Angoff told the WSJ. "There's a strong argument that it is inherently misleading, and it provides so little coverage that it shouldn't be sold at all."
Nevertheless, the Center for Consumer Information & Insurance Oversight this week said the U.S. Department of Health & Human Services will write regulations that will keep many fixed indemnity insurance products from having to comply with the new major medical insurance rules under healthcare reform, as FierceHealthPayer previously noted.
Though the ACA allows workers dissatisfied with employer plan offerings to shop for coverage on the exchanges, many aren't doing so, since they're unaware of available subsidies or disappointed with plan choices available there.
- read the WSJ article