What is a limited-benefit plan?

Limited-benefit plans are medical plans with much lower and more restricted benefits than major medical insurance, but with lower premiums. Limited-benefit plans include critical illness plans, indemnity plans (policies that only pay a pre-determined amount, regardless of total charges), and hospital cash policies. These plans are not regulated by the Affordable Care Act and are not suitable to serve as a persons only medical coverage. But in some cases, they can be a good supplement to a high-deductible major medical plan.

These plans are designed to offer low cost medical benefits for non-catastrophic needs.

Limited Benefits Insurance or Mini Med Insurance is a bare bone health insurance plan that covers basic everyday health care needs such as doctor visits, prescription drugs and basic hospitalization. Mini Med insurance is significantly cheaper than regular health insurance, but also comes with more restrictions and less coverage. Aimed primarily at those who are without health insurance and cant afford other types of coverage. Limited Benefits health insurance or mini med plans as they have been popularly referred to is a relatively new form of individual and group health insurance aimed primarily at people who would otherwise not have any health insurance coverage. Limited benefits insurance was originally introduced as a solution to self-employed individuals and others outside the usual employee health insurance plans such as students and part time workers who buy their own insurance but have now become quite popular nationwide.

Mini Med health insurance is a bare bones health insurance plan that covers basic everyday medical treatment such as doctor visits, prescription drugs and basic hospitalization for you and your family. It is more like a scheduled health policy plan and not the type of full insurance that most people are familiar with, as there will usually be a cap on the maximum annual payout. If you exceed this amount during the year, you will have to pay the fee yourself.

The main difference between limited benefits plans and regular insurance plans though, is that limited benefits insurance only provides basic health insurance. Mini Med plans do not offer any coverage for serious illness, hospitalization and surgery. Some limited benefit plans may offer daily rates for hospitalization, but they do not cover any major surgery or other expensive treatment that would otherwise be covered under a more traditional health insurance plan. So called catastrophic events such as hearth surgery or cancer treatment as well as transplants is most certainly not covered.

If you are considering buying limited benefits insurance or you have been offered it by your employer, it is important to understand what you are getting. Limited benefits plans are not aimed at families and individuals who would otherwise purchase traditional health insurance, but at young and healthy people such as students and part-time employees who cant afford regular health insurance and is not in a risk group for serious illness. Take a look at the Pros and Cons of Mini Med plans to decide if this is the right type of insurance for you:

Pros: Cheap Basic Health Insurance Limited benefits health insurance is significantly cheaper than regular health insurance and may be the only type of insurance that is realistically available to many people. If you are in college or otherwise outside of full employment and in good health, then this may very well be the best choice for you. Flexible Terms Mini Med plans come in many shapes and sizes, which may be one of the main selling points.

Cons: Low Annual Coverage Caps Caps on Specific Services such as Outpatient Care or Hospitalization Limits on Coverage For Services Such as Mental Health and Rehabilitation Exclusions on Serious Illness such as Cancer Treatment or Major Surgery

Mini Med plans are worth to consider if you are currently without insurance and cant afford regular insurance or if your employer does not offer you such. The two main factors to consider, if you are contemplating a limited benefit plan, are age and budget. If you are young and healthy, chances are you will hopefully not need extensive hospitalization or expensive treatment. In this case you will probably be relieved by being able to go to the doctor without having to pay yourself. On the other hand, if you are at an age where you have to consider your health more, then limited benefits insurance may not be the best choice.