What In The World Is A “MINI-MED”?

The Obama administration on Monday loosened rules for bare bones health insurance plans known as “Mini-Meds”. Essentially, a mini-med is an insurance policy that pays for small, routine health care expenses but does not provide for catastrophic events. For example, a mini-med might pay $90 of a $100 doctor visit. If the doctor put you in the hospital, it probably would not pay more than a flat daily amount. Actuarially, the mini-med uses a different model than standard health insurers.

The mini-med concept has great appeal to the foot loose and fancy free younger generation that is seldom sick. This group typically only goes to the doctor once or twice a year. For employers with significant workers that fall in this class, this product is very valuable.

So when the Obamacare program came out, it required health insurance companies to spend between 80 and 85% of its premium dollars on actual medical care (a topic for another day). Mini-meds were included in the initial legislation.

The problem, as previously stated, is that the mini-med model requires a lower payout to premium percentage than the standard policy. The only way to make the mini-med work was to significantly raise the premium. Enter now the employer of America’s youth, McDonalds. McDonalds said “not so fast my little friend.” Mickey D’s has approximately 30,000 hourly workers on the mini-med program. To change to a standard program would require a significant cost. Or, put another way, old Number 2 and a Dr. Pepper would have to go up in price.

Monday, the President and his posse loosened the rules giving the mini-med an extension. That is good news for companies with a number of young hourly workers. Mini-meds are a good program for that category of individuals. The product offers a low cost employee benefit for employers.

If you need more information on mini-meds, give our office a call 210-495-4424.