Date: August 31, 2009
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Commissioner Cautions Consumers on Limited-Benefit Health Plans
Madison, WIYou have probably seen the ads on television touting that for only a "few dollars a day" or for "less than a pack of cigarettes per day" you too can have the health insurance coverage you and your family need. Insurance Commissioner Sean Dilweg today urged Wisconsin residents to exercise care before purchasing one of these plans.
"Limited-benefit means exactly that," said Dilweg. "The premium savings that these plans can offer can be very tempting to a consumer in today's economic climate. However, because of the limited nature of these insurance products, just one catastrophic health episode could leave a person or a family with little coverage and a large medical bill."
Limited-benefit health plans are insurance products that offer reduced benefits for consumers, often in the range of $1,500 to $5,000 per episode of illness plus co-insurance and deductibles. Combined with a bad economy and aggressive marketing, these plans have come to the attention of workers who are recently laid off or otherwise have lost more comprehensive employer-based coverage. Their low premium rates make them very attractive to cost-conscious consumers.
Dilweg reminds consumers to be cautious if you are considering one of these plans. With limited surgical, preventative care, testing, and emergency benefits, a policyholder can quickly hit their benefit maximum. Once the maximum is reached, the consumer is responsible for the balance of the bill.
"The complaints I see on these products concern me," said Dilweg. "We have complaints about a $1,000 benefit for a hysterectomy that cost $23,000. Another consumer received only 10% coverage for $50,000 in medical costs. Colonoscopies that cost a total of $3,000 received only a $200 benefit. Consumers are not aware of the policy limitations on these products."
Limited-benefit health plans should not be confused with discount health plans, which are not insurance products but membership groups that have discount arrangements with local providers to provide services at a reduced (discounted) cost. Limited-benefit health plans are insurance plans that are subject to Wisconsin insurance laws and regulations.
OCI has a number of resources for consumers on its Web site at http://oci.wi.gov. Consumers who are considering purchasing insurance should contact OCI to find out if the company and its agent are licensed in Wisconsin. Dilweg also encourages consumers to file complaints with OCI if they experience problems with their insurance policies.
Created by the Legislature in 1871, Wisconsin's Office of the Commissioner of Insurance (OCI) was vested with broad powers to ensure that the insurance industry responsibly and adequately met the insurance needs of Wisconsin citizens. Today, OCI's mission is to lead the way in informing and protecting the public and responding to its insurance needs.