Should I buy a low-priced limited benefit health insurance plan just in case something happens?

Q. My former employer went into receivership so my COBRA plan is terminating and I need to buy health insurance on my own. Money is tight, and I've found plans from Assurant and Lands Health that cost much less than the plans from big-name companies like Blue Cross and Aetna. Are these cheaper plans legit? I know they're not major medical but it seems like there's enough coverage to get in the door in case something happens. I'm thinking of buying the Lands Health Silver plan.

A. I think you'd be making a potentially catastrophic mistake to rely on one of these plans for your sole health coverage. They are limited-benefit indemnity plans and both clearly state on their websites that they are "not major medical insurance plans."

Suppose the "something" that happened was breast cancer. The Georgetown University Health Policy Institute published a report a few years ago that broke down the average cost of typical breast cancer treatment—lumpectomy, chemotherapy, and radiation therapy—stretching over two years. If you compare those costs to the coverage you would get from the Lands Health Silver plan, based on information on the company's website, here's what you could expect.

Office visits: 47 visits totaling $3,036. Lands Health would pay for 10 visits in all (five a year at $80 a visit) or $800 in total. You would owe: $2,236.

Hospital: 1 day totaling $3,205. Lands Health would pay $2,300. You would owe: $905.

Surgery: $2,777. Lands Health wouldn't cover it unless you bought a rider. You would owe: $2,777.

Chemotherapy, radiology, laboratory, and radiation therapy: $77,815. For this, Lands Health would pay a $7,500 annual "critical illness lump sum benefit. " I couldn't tell from the information online whether this is a one-time payment for a single "episode of illness" (the cancer) or whether you'd get a second lump sum in the second year of treatment. You would owe: $62,815 or $70,315, depending.

You say money is tight, so imagine having to come up with $70,000 or more out of your own pocket while battling a life-threatening illness.

To find real health insurance, go to Healthcare.gov. I checked out policies available in your Indiana zip code for a non-smoking woman aged 50 (a guess, since you didn't state your age but did mention you have grown children). Assuming you don't have any pre-existing conditions, you can get an Anthem plan with a $1,000 deductible, 50 percent coinsurance, and a $35 copay for doctor visits, for under $400 a month. (This isn't a recommendation for Anthem specifically, just an example of what's available.)

If a medical catastrophe were to hit, once your deductibles and coinsurance together totaled more than $4,500 in a year, the plan would cover 100 percent of everything except for doctor and drug copays.

Remember, too, that in 2014, when health reform will be fully implemented, you will be able to go onto your state's health insurance exchange and buy a comprehensive plan of your choosing. And you may even get a subsidy to help pay for it.

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—Nancy Metcalf