Limited Benefit Insurance Plans
You may see limited benefit products that appear to provide the same coverage as comprehensive health insurance. Some examples are short-term limited duration policies, policies that only cover certain diseases, policies that only cover you if you're hurt in an accident or plans that offer you discounts on health services. Don't mistake limited benefit products for comprehensive health insurance.
- Short-Term Limited Duration Plan
In Michigan, short-term limited duration plans are limited to a coverage period of 185 days out of any 365-day period.
These policies are not required to cover pre-existing conditions, cannot be renewed or extended for more than 185 days, and do not satisfy the requirement to have health insurance. They also do not have to comply with Affordable Care Act protections, including prohibitions on annual or lifetime limits, essential health benefits, protections against rescissions, and cost-sharing limitations.
- Limited Benefit Plans
Limited benefit plans provide reduced benefits intended to supplement comprehensive health insurance, not to be an alternative to them. These types of plans limit the amount of coverage the company will pay per episode of injury or illness.
Accident only plans provide a cash payment in the event of injury or death resulting from a covered accident. For example, the policy may pay a $200 benefit for each covered accident.
Hospital indemnity plans pay a cash benefit in the event of hospitalization and/or surgery resulting from a covered illness or injury. For example, the policy may pay a $100 per-day benefit while the insured is hospitalized.
- Specified (Dread) Disease Plan
A specified disease plan provides benefits for specified causes of illness, disease or injury, such as a heart attack, stroke, or cancer diagnosis. For example, the policy may pay a $30,000 benefit for an initial cancer diagnosis while the policy is in force.
- Excepted Benefit Plans
Individual policies for dental and/or vision benefits pay for care not covered by typical comprehensive health insurance and may be available on a limited basis. Stand-alone dental plans can be purchased through the Health Insurance Marketplace during open enrollment and off of the Marketplace directly from an insurer at any time throughout the year.
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