Employee Benefits | FJG/FYI Articles
Limited Medical: Deciding on the Right Plan
The limited medical market continues to grow as more and more employers address the need to provide basic medical benefits for employees as they wait to become eligible for a major medical program. These products offer the dual benefit of controlling group medical costs and providing first dollar benefits to entice employees to stay on.
While there is often little question as to
whether these plans can help round out an
employer’s benefit offering, finding the right
plan design isn’t always as simple. Limited
medical products come in two basic forms:
copay and indemnity. Each design has
subjective advantages and disadvantages.
Many people are comfortable with copay plans, in which they pay a percentage of a network discount price or for “usual customary charges” that have been incurred. The provider will submit a claim, and the member pays the appropriate deductible/ copayment. However, copay plans can be confusing because, if communicated improperly, they can be interpreted as offering all of the benefits of a full medical plan.
Indemnity plans pay the provider a fixed rate for medical services, and members pay the difference. Indemnity plans are straightforward; there’s generally nothing being paid up front by the members or submitted for reimbursement. However, if an expense isn’t specifically cited on the covered list of services, an indemnity plan might not cover it at all.
The need for non-catastrophic first dollar medical coverage has inspired the development of countless products, by widely-recognized underwriters to boutique vendors. The most important thing to do is to insist on very clear descriptions of what these programs cover and, more importantly, what they do not.
The reality is that healthcare costs will undoubtedly continue to rise, and the number of uninsured may increase accordingly. So, while specific individual expectations and preferences may vary from case to case, there is no question that the need for limited medical products is significant and will continue to grow.