The new mini-med plan

[Greenbeard]

Mini-med plans, health plans with low premiums but very low annual benefit limits, have been getting lots of attention lately, mostly due to the temporary waivers from the ACA's annual limit phaseout some have gotten.

But there was a fascinating article in the Houston Chronicle yesterday on a different kind of mini-med insurance. Unlike real mini-med plans, it's not meant to be one's primary health plan; instead, it's insurance to help defray some of the costs of deductibles in high-deductible plans.

As employees face higher co-pays, deductibles and health care premiums, a relatively new insurance product has become increasingly popular.

It's known as "gap" or "bridge" insurance, and it covers some of the out-of-pocket health care costs that are becoming more difficult for employees to shoulder, such as annual deductibles that are rising to $1,000, $2,500 or even $5,000.

Families that live paycheck to paycheck can't absorb the increase in costs, said Brad Peak, vice president of products and marketing with the insurance carrier Assurant Employee Benefits in Kansas City, Mo.

Many of the products are sold through the workplace with employees paying the full cost. Other times employers pick up the tab, most often coupling lower-priced, high-deductible health care plans with the supplemental gap coverage to ease the sting of higher out-of-pocket costs.

The trend is moving toward the $2,500 deductible, Peak said. Assurant views that as the "sweet spot" that makes gap insurance attractive to employees on a budget.

Some companies have also found that it can be cheaper to switch to a high-deductible health care plan and pay for gap coverage than to pay for a lower deductible, he added.

This defeats some of the economic purpose of high-deductible plans which, in part, is to use cost barriers (i.e. high out-of-pocket spending) to decrease utilization. Mind you, that's not necessarily a good thing if you're considering health; high-deductible plans are causing people to defer necessary care (people of all incomes, though the further down the income ladder you go, the more care is deferred) with an apparent negative impact on health.

But buying insurance to help pay the deductible on your insurance is a bit ridiculous.