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'Consumer Reports' Investigates Mini-Med US Health Plans

PhotoAlto/Frederic Cirou/Thinkstock(YONKERS, N.Y.) -- Consumer Reports is warning against so-called "mini-med" health plans that offer limited protection, usually at lower cost, but with sky-high deductibles that can leave the insured paying thousands out of pocket.

Mini-med health plans tend to appeal to industries such as retail, temporary staffing agencies and food service, according to the consumer group.  The employers want to offer an added benefit to staff, but, in reality the plans offer little to no coverage, said Nancy Metcalf, senior program editor at Consumer Reports.

"There is this persistent dream of consumers that if they only look hard enough, they'll find really good insurance that costs a lot less," said Metcalf.  "It's not going to happen.  There's no such thing as a bargain on health insurance.  If it's cheap, it's cheap for a reason."

Mini-meds offer a limited benefit health plan with extensive restrictions to those under the age of 65.  Most plans cap benefits at a few thousand dollars per year. While many of these companies maintain that these plans are better than no insurance at all, Metcalf argues that some people may be better off without any insurance rather than making monthly payments to a plan that will probably not give adequate coverage when needed.

"In my view, people are better off putting whatever you would have paid to that mini-med in the bank in case something happens in the future," said Metcalf.

Of course, Metcalf said that this is a last resort.

"This is an excellent report," said Jonathan Weiner, professor of health policy and management at Johns Hopkins Bloomberg School of Public Health. "It's great to see a clear discussion about these type of plans. They are not well-understood or widely publicized."

While Metcalf maintains that people should never purchase such plans, Weiner disagrees saying some may benefit despite the limited benefits.

"In almost all instances, consumers would be far better off if they are able to get coverage from other types of more conventional health plans," said Weiner. "But if there are no other options, and consumers understand what is and is not covered by these mini-meds, then the extra coverage would be helpful to those lucky enough to have only modest healthcare expenses during the year." 

Copyright 2012 ABC News Radio

ABC News Radio