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What is a Mini-Med Plan?

One of the early insurance market changes in the Affordable Care Act (ACA) phases out caps that some insurance plans impose on the annual dollar amount of benefits they will cover. Plans issued or renewed after September 23, 2010 cannot have annual limits of less than $750,000, and the threshold goes up to $1.25 million in 2011. Annual dollar limits of any kind are prohibited starting in 2014.

The federal government has issued waivers from these rules for a number of plans — so-called “mini-med” plans — that would face big premium increases if they had to raise their annual limits to comply with the rules, potentially leading some employers to drop coverage altogether. The Office of Consumer Information and Insurance Oversight recently announced that no new waivers will be granted after this year, and that the waivers will only apply until 2014 when the major elements of the ACA take effect.

The federal government has identified the employers, unions, and insurers that have been granted waivers, but has not publicly released the details of the coverage people have under these plans. A little Googling, though, reveals what the coverage looks like for some of these mini-med plans that have been granted waivers.

For example, McDonald’s”McCrew Care” benefits (here’s an example in Montana) requires employees to pay $56 per month for basic coverage that provides up to $2,000 in benefits in a year and $97 per months for a Mid 5 plan that provides up to $5,000 in benefits. Ruby Tuesday charges workers $18.43 per week (going down to $7 after six months of service) for coverage that provides up to $1,250 in outpatient care per year and $3,000 in inpatient hospital care. Denny’s basic plan for hourly employees in 2010 provided no coverage for inpatient hospital care and capped coverage for doctor office visits at $300 per year. (The restaurant offered more comprehensive coverage to salaried employees.)

Annual dollar limits on benefits will not be allowed at all beginning in 2014, so mini-med plans as we know them will probably cease to exist. What this means for low-wage workers in the larger firms that offer these plans now, however, is more of a question. The health reform law calls for an essential health benefits package (with details expected to be provided later this year by the Department of Health and Human Services) to be required in plans for people purchasing on their own or through small employers, but what larger employers must offer their workers is not as clearly laid out. It may be that the tight dollar limits in the mini-med plans with waivers today could be replaced by equally-limited coverage with tight limits on the number of physician visits, prescriptions or hospital days that they will pay for. How these low-wage workers will fare under health reform is one of the many open questions that will be informed by the final regulatory scheme and the decisions of employers and their workers.