CT Advocacy Group Sues Aetna Over Limited Benefit Plans

October 27, 2006 (PLANSPONSOR.com) - A federal lawsuit filed Wednesday by a consumer advocacy group accuses health insurer Aetna Inc. of trying to sell plans to employers that are designed to mislead workers into believing they have adequate coverage.

Citizens for Economic Opportunity filed the suit against the insurance giant, one of its subsidiaries and the state Department of Insurance in an effort to stanch the sale of these limited benefit plans that it claims offer coverage that could be easily exhausted by a single emergency room visit, according to the Associated Press.   

The state insurance department agreed in September 2005 to allow Aetna to sell the plans through Strategic Resources Co., a South Carolina firm acquired by Aetna in 2004, the AP reported. The consumer advocacy group said it was tipped off by an anonymous state employee.

Attorney General Richard Blumenthal said he is concerned these plans violate minimum coverage standards in Connecticut, but the state insurance department said Connecticut law does not prohibit the sale of limited benefit plans. The department said seven such plans have been sold so far, mostly to temporary staffing firms.

The department required Aetna to clearly disclose in each policy that the consumer was not purchasing comprehensive medical coverage, according to a written statement issued by the agency, the AP said. The department also said it is requiring quarterly reports from Aetna to make sure traditional plans are not being swapped for limited benefit plans

Aetna spokeswoman Cynthia Michener said the plans are meant for part-time and seasonal workers who do not have access to more traditional forms of insurance, according to the wire service, and the plans were designed to be a bridge for employees until they could obtain comprehensive coverage. “We’re frankly perplexed that this group would prefer people go without health coverage altogether. If not for a product like this, these people would have no health insurance,” she said, according to the AP.

Such plans seem to be gaining support among insurers like Aetna and UnitedHealth Group. The limited benefit plans help cover the cost of basic health care, but strictly limit coverage of major medical expenses. Similar to high-deductible plans, they have been appetizing to employers finding it difficult to offer traditional health insurance because of high costs (See Special Report: HEALTH CARE: Mini-Meds).