Call it "doughnut" insurance.

It's a new type of health plan that is becoming increasingly popular in this state, as small companies look to claw back spiraling health-care costs.

A typical doughnut plan works like this:

In a calendar year, your first four doctor visits are covered, except for a $15 co-pay. Also covered are your first $500 worth of X-rays, blood tests or other diagnostic work. The insurance company throws in some preventive-care costs, too.

Then comes the hole in the doughnut.

You must pay for the next $500 worth of care.

After that, the coverage kicks in again, with the insurance company paying 80 percent of the costs for further care. If your personal costs top $2,500 in a year, the insurance company will cover anything additional.

Insurance companies are offering a range of such plans, with different-sized deductibles, or doughnut holes, depending on the cost of the coverage. Typically, deductibles range from $200 to $1,000 for an individual, more for a family.

The theory behind doughnut plans is that a person is covered for a couple of minor aches and pains each year as well as a really big problem such as a heart attack or stroke. Insurance companies are betting that members will go in for routine checkups but become judicious after that — because the cost will be coming out of their own pockets.

But Sean Corry, a patient advocate and insurance broker, said doughnut insurance tends to be a "mixed bag."

"It does mute complaints from employees who are healthy," Corry said. "But it doesn't provide very good protection for people with chronic illnesses who incur a lot of expenses."

Corry added that some costs are not obvious. For instance, a person who visits a doctor and gets a wart removed may be covered for the doctor's visit — but, in some cases, may have to pay for the medical procedure.

"It can give a false sense of security," Corry said.

Since late 2002, when Regence BlueShield offered the state's first doughnut plan — called FourFront — interest has quickly grown.

More than 100,000 people have signed up for FourFront, which now accounts for about half of Regence's small-business plans and 10 percent of all its health plans, said Jonathan Hensley, vice president of sales for Regence.

"Employer groups and members are ultimately looking for value," Hensley said. "We are trying to be sensitive to them saying, 'We only go to the doctor two or three times a year, so what does that mean for me?' "

FourFront rates tend to be about 10 to 15 percent lower than traditional plans, a Regence spokesman said.

The state's other two big insurers, Premera Blue Cross and Group Health Cooperative, have each rolled out their own versions of this insurance.

Premera began its Envoy plan last July. It covers the first six doctor visits plus the first $400 in lab work or X-rays before out-of-pocket costs kick in. The plan has enabled more small businesses to afford health coverage, said Premera spokesman Scott Forslund.

Group Health's Welcome plan began in January 2004. Like FourFront, the Welcome plan covers the first four doctor visits plus $500 in lab work or X-rays. It has proved "highly popular," said Group Health spokeswoman Laura Query.

Nancy Geiger, vice president of finance for the nonprofit Jewish Federation of Greater Seattle, said her organization — which provides health insurance to about 40 of its employees — switched to FourFront last year.

Sticking with a traditional plan would have meant cost increases of 25 percent, she said, but the doughnut plan kept cost increases to 11 percent.

"I believe people like it quite well, because I haven't heard any complaints," Geiger said.

Nick Perry: 206-515-5639 or nperry@seattletimes.com