Is a Limited benefits Policy a good option to save on health insurance premiums?

Limited Benefit Health Plans have a place in the market. They however are not a good replacement for Major Medical Insurance.  It is thus important to know and understand the product you are purchasing when you first make the purchase so as not to be surprised when you use the coverage, to find out there are limits on how much is paid for specific issues.  The worst thing I see happen to people is that they end up buying a limited benefits policy

What most folks think of as a health insurance/medical insurance policy is known within the industry as a major medical policy. These policies pay for covered services with few limitations. By contrast the limited benefits policies are just that limited in what they cover and the amount covered for each service. Most of these policies have a schedule of payments attached.

Reviewing the schedule of payments is one critical step to take so you will understand what coverage you will get.  Note, one limited benefit plan does not necessarily look like another, each is different and most have different opinions of what and how much coverage is provided. For instance office visits may be paid up to different amounts on different plans and may be limited to a set number of visits per year on some plans and unlimited on others.  These differences are just a couple examples of where the limited benefits policies differ within their category.

Some areas of concern I have with limited benefits policies are that in many cases you do not necessarily get a discount from providers, it is just a cash reimbursement to you for what you pay for the healthcare services you receive. To that end, if you are paying full charges, often the reimbursement does not come close to paying what you had to pay for the services you received.  Why do I point out that the payments may not cover your costs?  First, it is important to know with a limited benefit plan your liability is not limited and could add up very quickly this is one reason that a Major Medical plan is usually better.  Secondly, because when you go get care and only have a limited benefit plan it’s likely you will have to pay deposits to the providers in amounts expected to cover the care costs. Thus, it takes cash to get your care in the first place.

Major Medical coverage has few limits in terms of what level of payment will be made to treat a specific condition. With the new unlimited lifetime maximum coverage, the big overriding limit is now gone as well. To that end when you go for care, the hospital may ask for a deposit but only based on what you are expected to owe based on your deductible and co-insurance limits.  If you use in-network providers you don’t run into the issue of having to pay above what insurance pays for specific procedures. Instead you pay a portion of the bills based on your deductible and co-insurance levels. This allows you to better control your overall healthcare costs each year.

Ultimately, there are some who can only afford to have limited benefits plans, or due to underwriting are able to qualify only for limited benefits plans. In these cases, yes these are the plans you should obtain. Major Medical plans are far better because they provide you far more protection from costs of medical care when something bad happens.