Some health insurance may not cover enough

February 7, 2012 4:03:46 PM PST
Health reform was supposed to make decent health care coverage available to everyone at a reasonable cost. But the law isn't fully implemented yet, and many people are unwittingly signing up for insurance that barely protects them.

Consumer Reports looked at something called mini-med plans. Their investigation calls out what the group says is "junk" health insurance and how to avoid it.

Judith Goss was stunned that the health insurance she'd paid for through her retail sales job wouldn't begin to cover her breast cancer treatment. It's expected to cost some $40,000..

"I cried," she recalled. "My mom was with me. And my uncles offered to pay for a lot of my, you know, my bills and things."

Judith had a so-called mini-med plan from Cigna, which had low premiums but would only pay up to $2,000 toward her surgery and hospitalization.

Nancy Metcalf with Consumer Reports explained, "These mini-med plans are offered through jobs. If you are offered one, our advice is not to take it if you have any other option, including public programs like Medicaid."

At this point, mini-med plans like Judith's are legal, but they're supposed to be phased out by 2014. You can spot them because they carry the warning "does not meet the minimum standards required by the Affordable Care Act."

"Another type of coverage you should avoid is something called a fixed indemnity plan, which is easy to mistake for traditional health insurance," Metcalf advised.

Indemnity plans are sometimes marketed to individuals as if they are major medical insurance, and they can cost as much -- but don't be deceived.

Metcalf said, "Indemnity plans will only pay out a fixed amount every year, no matter how sick you get. And they often don't cover important things like drugs, lab tests, or chemotherapy at all."

Consumer Reports says it's very important to thoroughly read any policy you're considering, as Judith found out the hard way. Remember, a medical crisis can cost hundreds of thousands of dollars, so pick a plan with enough coverage.

If you can't get traditional major medical insurance through an employer, the federal website lists health care plans available in our area. Then Consumer Reports advises consulting with an independent insurance broker who represents multiple companies to get advice on the best policy for you.