As we reported this morning in the Star Tribune, Blue Cross and Blue Shield of Minnesota is paying a $90,000 fine and offering reimbursements to about 300 consumers to settle allegations related to "non-embedded deductibles" in certain family health plans.
What is a non-embedded deductible, and who can we hold responsible for this cryptic term?
Health insurance policies often have deductibles that consumers must pay before full coverage starts for most services. In a one-person policy, the deductible might be $5,200, so the consumer pays out-of-pocket for most care until the threshold is met.
Family plans typically have a higher deductible -- say $10,400. In some cases, the family policy might also have an "embedded" deductible for each individual in the household, which means coverage for that person starts once the individual hits a lower embedded threshold.
A family might have a deductible of $10,400, but an individual in that family may get covered after passing the $4,000 mark, for instance.
Other family policies feature deductibles that are "non-embedded." That means even if just one individual in the houshold generates claims, that person's bills won't be covered until the higher family threshold is met. These deductibles sometimes are called "aggregate" or "shared" or "stacked" -- terms that are slightly more helpful.
There's helpful background on the concept at the Center for Health Insurance Reform at Georgetown Univeristy.
If you find this all annoying and confusing, it sounds like new federal regulations don't allow non-embedded deductibles in many cases.
In the case of Blue Cross, a couple in Burnsville complained to Commerce that they bought a plan with a higher non-embedded deductible, without realizing they could have purchsed separate policies with smaller deductibles.
Blue Cross did not admit wrongdoing as part of the settlement.
But can't we all agree -- without assigning blame -- that there's one clear error here? The term "non-embedded deductible" is just awful.