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Mini-Medical Plans - What they are and what they cover

Will Mini-Medical Plans Work under Health Care Reform?

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Mini-medical plans became popular with small business owners when offering health insurance for employees started to become so expensive. Small business owners decided, with good reason, that offering mini-medical plans were better than offering nothing, so many went with this option. The question now is whether or not they will work for small businesses now that we have health care reform.

What are Mini-Medical Plans?

Many small businesses want to offer at least some kind of health care coverage, but they can't afford it, particularly as health insurance premiums have gotten increasingly more expensive. Those small businesses in industries that have high employee turnover or a lot of part-time or hourly workers look toward offering a basic health insurance policy to their workers. Examples of small businesses in these industries are restaurants, retail, and light industrial. Part-time or hourly workers are usually not eligible for major medical plans.

Mini-medical plans are for those without any other form of insurance. They are basic plans that may pay for portions of doctor's visits or prescription drugs but they are not for catastrophic health events although they may pay a portion of basic hospitalization.

There are two types of mini-med insurance -- co-pay and indemnity plans. Co-pay plans resemble major medical plans but they are not. Human resource managers should understand this before they set up this type of plan for their organization. Indemnity plans pay out certain benefits. There is no co-pay and no deductible. It is stated what the benefit is for doctor's visits, prescriptions, and hospital visits.

Mini-Med and Health Care Reform

Mini-medical plans may not pass the test of health care reform. According to the health care reform legislation, employers can be penalized for offering employees sub-standard coverage. Sub-standard coverage is defined as less than 60% of the employee's medical expenses.

Here's the loophole. Small businesses with existing mini-medical plans are grandfathered in by the health care reform legislation. The only way they will incur a penalty for substandard coverage is if an employee drops their coverage and goes into one of the insurance exchange pools.

Small businesses that opt into medical plans for their employees now that insurance reform has been passed will not be able, chances are, to offer mini-medical plans because most won't cover 60% of their employees medical costs.

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