Limited-Benefit Plans

The Health Insurance Consumer Choice Act of 2001allowed health insurers and HMOs to offer health insurance plan options to consumers that include all, some, or none of the Arkansas coverage mandates; and requires certain disclosures to be made to consumers so they may make a fully informed choice of offerings. In addition, the legislation authorizes the Insurance Commissioner to issue rules or regulations to help reduce the cost of insurance and decrease the number of uninsured Arkansans.

In 2003, the Colorado legislature passed HB 1164, which requires carriers in the small group market to offer one of three basic health benefit plans: Basic Health Benefit Plan without specified mandates; Basic High Deductible Health Benefit Plan; or Basic High Deductible Plan without specified mandates. 

In 2002, the Florida legislature passed SB46E, which allowed a Health Flex Plan to be sold by insurers, HMOs, provider-sponsored organizations, and public or private community-based organizations as a pilot in areas of the state with high uninsured rates. In 2004, legislation was approved allowing Health Flex plans throughout the state. 

In 2005, Georgia enacted the Georgia Consumer Choice Benefits Health Insurance Plan Act which allows health plans to offer products without all of the state mandated benefit requirements. The act allows small businesses the opportunity to choose which type of health care coverage best suits their individual needs and level of affordability.

In 2005, the Kentucky legislature passed HB278, the Small Business Insurance Relief Act, which creates a state-established basic health benefit plan to make insurance more affordable by tailoring benefitsto specific needs, creates a uniform system for physicians to receive credentials with insurers or hospitals, and establishes an advisory committee to help Kentucky provide patients with quality and cost information about their health care. The basic health benefit plan is available to individuals and employers with fewer than 50 employees.

The Minimum Benefit Legislation (SB 570), enacted in 2004, requires carriers who insure >10 percent of the covered lives in the small group market to offer a limited-benefit plan. Other carriers may offer if they choose. The actuarial value of the limited plan cannot exceed 70 percent of the actuarial value of the comprehensive standard health benefit plan. The limited-benefit plan is only open to small employers with an average employee wage of less than 75 percent of the state average annual wage and who have not offered health benefits within the last 12 months. Limited-benefit plans became available to qualified small employers beginning July 1, 2005.

In 1992, the Minnesota legislature enacted a law (62L.05) mandating that each health carrier in the small employer market must make available to qualifying small employers both a deductible-type and a co-payment-type small employer plan.  In addition, the legislation requires that these plans include limited coverage for certain benefits (e.g., mental health, chemical dependency and prescription drugs).   

In 1999, the Minnesota legislature passed SF 84 which allowed for benefit plans that may alter or eliminate coverage that is required by law, other than the requirement that care provided for covered services such as osteopaths, optometrists, and chiropractors be reimbursed on a nondiscriminatory basis.  No carriers ever sold the plans and the law was allowed to expire in 2003.

In 2005, the Minnesota legislature enacted a new law that allows health plans to sell “small employer flexible benefit plans” that do not include any of the benefit mandates. However, all plans must comply with federal health mandates (maternity for employers with 15 or more employees, mastectomy-women’s health & cancer rights act, newborns 48/96 hours, HIPAA, COBRA, ERISA, etc.)

In 2003, the Montana legislature passed HB 384 which allows for limited-benefit plans to be available to those who purchase health insurance in the individual market as long as they are notified which services are not covered and have been uninsured for 90 days or more. Inpatient services are not covered in these plans. Insurers may also limit coverage for newborns, severe mental illness, emergency services, certain basic health services, and services provided by a certain category of licensed health care practitioners. Limited-benefit plans may be renewed for additional 12-month periods for up to five years, effective until 2009.

In 2002, the New Jersey legislature passed legislation which required individual market carriers to offer a limited-benefit plan, called Basic and Essential Health Care Services Plan (B&E).  The B&E plan provides for 90 days of hospitalizations, limited wellness and practitioner visit benefits, and some other limited benefits.  The plan does not include some benefits typically covered by commercial plans such as chemotherapy, outpatient drugs, prenatal care, speech and occupational therapy, home health, or hospice services. Carriers may offer riders that increase the benefits of B&E plans, for example, covering additional services.

Carriers are able to use modified community rating for B&E plans; however, all other products in New Jersey are pure community rated.   As of 2007, there were over 26,700 members enrolled in the B&E plan.

In 2001, the North Dakota legislature passed HB 1226, The Individual and Small Employer Health Insurance Act, which allows an insurance company to offer a basic health insurance policy to individuals and small businesses with 50 or fewer employees.

Beginning in 2004, Texas required all small employer insurance carriers to offer at least one plan offering all the mandated benefits by law, and at least one Consumer Choice Plan that may exclude or limit coverage of certain mandated benefits. Insurers are required to disseminate written disclosures listing the mandated benefits absent from the health plan.  Some of the benefits which may be excluded or reduced include treatment for acquired brain injury; coverage for AIDS, HIV or related illnesses; chemical dependency treatment, or telemedicine/telehealth services. In addition, carriers may also charge higher deductible and coinsurance requirements than are allowed under traditional plans.  In 2006, approximately 130,000 Texans were covered under the new Consumer Choice plans, including 14,429 people who were previously uninsured.

In 2002, the legislature passed HB 122, which permitted insurance carriers to offer coverage that is similar to what is covered under Utah’s 1115 Medicaid waiver (Utah’s Primary Care Network).

In 2004, Washington passed legislation redefining the small group market, changing group size to 2 to 50, from 1 to 50. The legislation also streamlines some administrative costs, protects portability of policies, and implements new rating factors for health insurance plans. Carriers are permitted to offer a limited- benefit package (replacing the previous requirement to offer a prescribed limited-benefit package that mirrored the Basic Health package.)