Buying your own health insurance? Avoid these pitfalls

Brand name insurance companies are selling health coverage as skimpy as a hospital gown. The leading examples of so-called "junk health plans," according to Consumer Reports, are known as mini-meds, which CR describes as "legal but inadequate."

Because the federal government has granted waivers -- a total of 1,231, covering 3.9 million people as of January 2012 -- to several large, well-known companies, mini-med plans continue to operate.

These plans represent the type of misleading and extremely limited health coverage that the Affordable Care Act was designed to eliminate. The waivers will expire in 2014, when health reform goes into effect.

Fifty health insurance companies have federal waivers to offer "mini-med" policies until 2014. These well-known brands have the highest enrollment: Cigna Starbridge (265,000 enrollees), Aetna SRC (209,423), BCS Insurance (115,000, including McDonald's hourly employees) and American Heritage Life Insurance Co. (Allstate; 69,945).

Other misleading products include fixed benefit indemnity plans and medical discount cards. Fixed benefit indemnity plans will reimburse a set sum, generally low, for medical services, after which a consumer is on his or her own, most likely with a lot of medical debt.

The medical discount cards promise discounts on services and other products in exchange for a monthly fee. But they could leave someone who becomes seriously ill on the hook for tens of thousands of dollars in medical debt.

CR offers these tips for avoiding pitfalls when buying insurance on your own:

-- Don't shop from a search engine. Google "affordable health insurance" and you will see sites that promise instant quotes. Avoid this option at all costs. Brand-name major medical insurers rarely market to consumers directly, and it's hard to tell who is legit. Instead, consult a reputable independent health insurance broker who handles products from multiple companies.

-- Don't respond to flyers on telephone poles, faxes, robo-calls or late-night infomercials.

-- Look up real plans at HealthCare.gov. On this federal website, consumers can search for all legitimate licensed health plans sold to individuals in their given state.

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