Don't Be Fooled By "Limited Benefit" Insurance Plans

If you’re a freelancer, temp worker, or hourly worker, you may have already been exposed to the “limited benefit plan,” a rotten insurance scheme which is designed to rake in more profits for insurance companies by offering low cost plans that provide almost no worthwhile coverage for the consumer.

These plans often cap out at amounts far lower than the market cost of any procedure, or have complicated rules on pay outs—Aetna’s new offering, for example, pays up to $7,500 a year for inpatient care, but limits the daily amount of a hospital stay to $250.

As our reader Laurel puts it,

They market themselves as a way for temp firms and other places with hourly employees to increase the perception that their employees are ‘valued.’ The employer pays little – sometimes nothing – for the ‘benefits.’ Payment is deducted automatically from employee payrolls.

My fear is that, with the push toward universal insurance, scam-scum like this will qualify as ‘being insured,’ leaving workers in the lurch if they become ill.

“Health Policies Stripped Down – Cheaper Insurance Plans Attract Some Workers, But Benefits Are Limited” [California Nurses Association]

RELATED
“More Kansas Insurers Offering Limited-Benefit Plans For Employer-Sponsored Health Care” [Medical News Today]
“Wal-Mart has a limited benefit plan, called Starbridge.” [old WSJ article, found through Google ]
(Photo: Getty)

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  1. Unfortunately these plans are being marketed to more than just part time and temp employees. At my work, all hourly employees below the level of supervisor are on an Aetna SRC plan. Everyone on salary or that is at least a supervisor are on a real insurance plan. HR ignores inquiries into the SRC plan (except for telling them its good health insurance backed by Aetna and that it “should” cover everything they need) and refers all questions to Aetna. When employees sign-up for this plan, they have no idea what limited coverage they are getting.

  2. Skeptic says:

    These plans are especially bad when companies have them.

    If your employer does not offer health insurance you can deduct your private insurance. If they offer one of these crap plans (as Addeco used to) you can’t deduct a private plane

  3. Hambriq says:

    Okay, this isn’t going to be one of those “blame the customer” posts, so don’t take it that way. It’s more of a precautionary statement. The best way to protect yourself against insurance practices like this is to read the fine print and know what your coverage entails. Every day, I get people who come in and have no idea what their benefits are, why they’re getting charged X, Y, and Z, and why certain things are paid for and certain things aren’t.

    If you are armed with knowledge, it makes the battle infinitely easier. Read your plan, make sure you understand it, and if you don’t, call them and get clarification. Since it’s your health we’re talking about, you can’t exactly plan, “Okay, I’ll be needing a gallbladder surgery in a couple months, so how can I accomodate for that?” But what you can do is look and say, “Will my insurance cover for me if I get in a catastrophic accident or I need an expensive surgery?” and if not, look at your savings and say, “Do I have enough money to cover for myself if I get into a catastrophic accident or I need an expensive surgery?”

    If the answer to both of those is no, one of them needs to change, post haste. Too many people adopt the “It could never happen to me,” attitude, and when it does, they’re left completely clueless and end up blaming the insurance companies and the government for the problem. Whether or not you think we should have socialized health care is irrelevant. It doesn’t matter if you think big pharma, big business, or big government is to blame. The fact is, right now, we don’t have socialized health care, and right now, health care is expensive. If you live your life pretending that neither of these two things are facts, chances are sooner or later, you’re gonna get bit in the ass.

  4. BowlingForDollars says:

    I’m a freelancer currently covered under COBRA. I shudder at the thought of having to purchase health insurance. Anyone have advice on how to find a policy similar to what I have now, which is pretty good even though it’s with Aetna.

  5. cypherpunks says:

    Personally, in times of no insurance, I’d pay good money just to have insurance, no matter how bad. Even if the insurance provides 0% coverage (I pay everything), I’d still dish out a decent sum for it. Insurance companies negotiate pay rates with hospitals and insurance companies. If an uninsured person comes into a hospital for emergency care and an x-ray, they’re typically out $1k for the ambulance and $1k for the hospital. An insurance company, in contrast, would pay about $500 for the hospital and $200 for the ambulance. Insurance with 0 percent coverage? I still get insurance company rates, which, in my area, are less than half of uninsured person rates.

  6. Charles Duffy says:

    @cypherpunks: There are other approaches to getting reduced rates. My current company’s founder is an ER doctor; before the company got to the point where we could afford health insurance, he would call the hospital and negotiate our bills on our behalf.

    That negotiation did quite a bit of good when I wrecked my motorcycle (and my ankle) on the way in to work one morning.

  7. allstarecho says:

    I had this at my former employer. Called Starbridge which is now owned by Cigna. Paid like $40 every 2 weeks only to find out it had an annual limit of $2000. Yes, that’s Two Thousand Dollars – for the whole year.

  8. adrock75 says:

    What about HSA’s? Anyone have any insight into those?