Upfront: Mini-Med Plans Proliferate

Few observers would dispute the claim that the nation's employer-based health insurance system is terminally ill. Liberal big-labor leaders and some conservatives in Congress are calling for a new paradigm as the cost of insurance continues to rise. According to research from Mercer Human Resource Consulting, employers' cost of providing comprehensive health benefits has risen 57 percent in five years, and the number of Americans who receive coverage through their jobs continues to fall. Still, more than 174 million American workers and their families receive health insurance through their job. And while many large organizations have shifted some of the costs of delivering health insurance to their workers, most companies continue to offer major medical policies, primarily to salaried employees.

Part-time and contract workers historically have been less well-served. However, over the last two decades, some businesses, particularly in the retail sector, have offered limited-benefit or "mini-med" plans to these employees. Today these policies are among the fastest-growing employer-provided health insurance plans, covering an estimated three-quarters of a million workers and their family members at companies such as Wal-Mart Stores, McDonald's Corp. and Lowe's. A growing number of major insurance companies are selling these plans; recently CIGNA HealthCare entered the market by purchasing Star HRG, one of the biggest providers of mini-med coverage.

According to a Wall Street Journal article, these plans typically cost as little as $40 a month but usually have annual coverage caps of $10,000 or less (some plans offer a basic annual benefit of only $1,000 per insured person), which make them inadequate for most hospitalizations and other serious medical events. The premiums, which are paid in full by the employee, can be less than $10 a week for an individual.

Last year, Star HRG started offering a more generous limited-benefit plan that provides a maximum annual benefit of $35,000 or $50,000 with no limit on an employee's share of potential medical costs. This plan costs substantially less than a traditional health plan.