Health Question of the Week:Will the healthcare overhaul protect me from low annual limits on coverage?
Question: Last year, for the first time, I was able to afford health insurance. When I ended up in the hospital, I thought that my health plan would cover all of the care I needed. But, it turned out that I still had huge bills from my stay because my plan has an “annual limit.” Will health reform do anything to stop plans from putting low annual caps on coverage?
Answer: Unfortunately, many consumers have been in this situation: They purchase a health plan that sounds like it offers high-quality coverage, only to learn that the plan doesn’t pay many of their medical bills because it has an “annual limit.” This means that each year the plan will only pay for an enrollee’s health care services until her medical costs reach a set cap. Once an enrollee reaches that cap, she’s on her own to pay her medical bills.
Insurance plans with low annual limits are often known as “mini-med” plans. Some mini-med plans, while not providing comprehensive insurance, might cover $200,000 or $250,000 worth of health services in a year. However, other mini-med plans provide little—or almost no—value to consumers: Some cover as little as $2,000 worth of medical care in a year, while charging hundreds of dollars in annual premiums. To put that cap in perspective, government data shows that, in 2007, prescription drug costs alone for a person with diabetes were $1,049, on average; outpatient visit costs for a person with kidney disease were $3,982, on average; and hospital stay costs for cancer patients were $26,419 for the year, on average. For people with these and other medical needs, $2,000 worth of coverage barely makes a dent in the medical bills they’ll face.
The good news is that things won’t always be this way. Under the Affordable Care Act, annual limits in health insurance coverage will be prohibited outright in 2014. Until then, health plans’ coverage limits will gradually improve. Already this year, most plans have gotten rid of low-dollar caps and will cover at least $750,000 worth of care. And, due to the Affordable Care Act, those mini-med plans that still have lower limits can no longer dupe Americans into thinking that they’re getting high-quality, comprehensive coverage when they enroll. Such mini-med plans now have to provide a notice to consumers, warning them that the plan has an annual limit and may not cover many of their medical costs. This level of disclosure is unprecedented in a health insurance marketplace that, for years, has used tricky jargon and fine print to mislead consumers.
Tips for Consumers:
If you get a notice that your plan has a low annual limit, see if there are other health coverage options that you can afford. If you buy insurance on your own, you can see what other options are available in your state online at www.healthcare.gov. If you get your health plan through your job, talk to your employer to see if your company might be able to offer better employee health benefits next year.
Claire McAndrew is a Health Policy Analyst at Families USA, a nonprofit, nonpartisan organization striving to achieve quality, affordable health coverage for all Americans. For more information, visitwww.familiesusa.org.