A limited benefit plan is medical coverage that does not necessarily offer the coverage as a state-mandated plan. They usually don't cover catastrophic care, including hospitalization. However, they also don't have the same restrictions that a more expensive and comprehensive plan might have, either. Even high-risk consumers and those with a pre-existing condition can sign up for this plan.
There are many reasons why workers sign up for a limited benefit plan. The most obvious is the cost. Weekly individual premiums are as little as $10 ($20/week family coverage), and deductibles begin at $50. Employees often consider the fact that they have options for coverage beyond the emergency room as the biggest advantage to a bare-bones plan, even though the plan will only pay $1,000 in medical costs a year.
The $1,000 cap on coverage has been a topic of great debate. However, most low-income workers will say that having some coverage is better than none at all. And, for the purposes of maintaining health and handling typical family illnesses, $1,000 can go quite far.
Hospital indemnity policies and disease/cancer policies are versions of the limited benefit plan. Indemnity plans usually pay a fixed payment per day of confinement, while cancer policies only pay for care associated with the diagnosis and treatment of the disease.
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