Benefits Business

Health care for part-time, lower paid workers

Health reform law curtails "mini-meds"; some employers shift to fixed indemnity products

By Len Strazewski

Employers seeking to provide some health insurance for part-time, seasonal or low-paid hourly employees, have fewer options than ever. The "mini-med" that provided low-cost and low-limit co-insurance group medical insurance is mostly dead now, thanks to health reform.

However, there are still some options to meet employer needs to provide some supplemental health benefits for employees.

"There's certainly been a slowdown in the traditional limited medical benefit market," explains John Duczak, benefits producer and vice president of The American Worker, Inc., in South Barrington, Illinois, an employee benefits agency that specializes in high deductible health plans, limited medical plans and voluntary benefits."For many years, the biggest interest in these plans was from the large group marketplace, employers with 5,000 or more lives, with a lot of part-time and seasonal workers. But since health reform began to kick in, they aren't looking anymore."

The mini-meds, also called "co-insurance plans," featured small annual benefit limits of $5,000 to $25,000, but often first dollar coverage for doctor office visits and preventive care. The low limits also meant lower premiums than major medical plans, making them attractive to the low-paid hourly employees. The plans also allowed policyholders access to other insurance benefits, including network discounts and better treatment by providers as "insured" patients.

However, health reform legislation which went into effect in September set loss ratio limitations and eliminated annual limits of coverage for group and individual health plans and other co-insurance features that were standard in the mini-med plans.

McDonald's Corp., one of the largest buyers of mini-meds for its part-time restaurant employees, led the initial fight against the restrictions, citing the success of its inexpensive but limited group health plan. In November 2010, McDonald's and about 100 other food industry employers received a special exemption from the health reform law to continue variations of the low-limit group medical plans for at-risk part-time, seasonal and lower-paid employees. Other exempted employers include Jack in the Box, and Darden Restaurants that operate Red Lobster and Olive Garden restaurants.

The exemption, however, lasts only one year for those employers that applied and does not allow insurers or their producers to sell new coverage of that type.

The new law allows only one alternative—fixed indemnity policies that provide specific cash payments for hospitalization, critical illnesses or specific treatments. Often called "hospital cash" plans, the fixed indemnity products are not covered by health reform because they were never intended to be group or major medical insurance.