Consumer Reports investigates so called 'junk' health insurance

Health reform was supposed to make decent health care coverage available to everyone at a reasonable cost. But the law isn’t fully implemented yet, and many people are unwittingly signing up for insurance that barely protects them. A Consumer Reports investigation calls out “junk” health insurance and how to avoid it.

One type, Consumer Reports says, to avoid is a so-called mini-med plan offered by some employers. Mini-med plans deliver very limited protection, such as a $2000 maximum payout per year for hospitalization. That is nowhere near enough to cover a serious illness. At this point mini-med plans are legal, but they're supposed to be phased out by 2014.

You can spot mini-med plans because they carry the warning “Does not meet the minimum standards required by the Affordable Care Act." Consumer Reports advises you not to sign up for a mini-med plan if you have any other option, including public programs like Medicaid.

Another type of coverage Consumer Reports says you should avoid is something called a fixed-indemnity plan, which is easy to mistake for traditional health insurance. Indemnity plans are sometimes marketed to individuals as if they are major medical insurance, and they can cost as much, but Consumer Reports cautions don’t be deceived. Indemnity plans will only pay out a fixed amount every year, no matter how sick you get. And they often don’t cover important things like drugs, lab tests, or chemotherapy at all.

It is very important to read any policy you're considering thoroughly. And remember, a medical crisis can cost hundreds of thousands of dollars, so pick a plan with enough coverage.

If you can't get traditional major medical insurance through an employer, the federal website Healthcare.gov lists health care plans available in your area. Once you have identified some plans, Consumer Reports advises consulting an independent insurance broker who represents multiple companies to get advice on the best policy for you.