Aggressive sales and marketing of short-term limited duration insurance plans has created a buyer-beware situation for consumers, according to an assessment by researchers at the Georgetown University Center on Health Insurance Reforms.
A consumer alert on the website of the Kentucky Department of Insurance includes a Q&A on various aspects of these insurance plans. The information includes whether it’s possible to cancel the plans and ways to confirm a company’s license status.
The state Q&A also informs consumers that insurers can sell short-term plans that charge higher premiums based on health status and the plans may not include maternity benefits or cover things like substance use disorder treatment and prescription drugs.
Last year, a federal rule was put in place to allow these short-term plans to be sold as substitutes for traditional insurance. Previously, they had been aimed at people who needed insurance for a couple of months, such as when transitioning between school and a job or during a waiting period for an employer-sponsored plan.
Now, instead of providing less than three months of coverage, the length of these policies can be just shy of 12 months, or with extensions and renewals, no longer than 36 months, according to the U.S. Department of Health and Human Services.
The Trump administration has touted the short-term plans as a way “to help Americans struggling to afford health coverage find new, affordable options.”
However, Georgetown researchers highlight some tricky practices involving these plans, which their report notes are exempt from Affordable Care Act standards that “prohibit eligibility and price discrimination against people with pre-existing conditions, as well as requirements to cover a minimum set of essential health benefits and cap enrollees’ out-of-pocket costs.”
Researchers found that when searching online, using terms like “cheap health insurance” and “Obamacare plans,” it was common to be directed to sites and brokers offering the short-term plans instead of more comprehensive ones.
“Many brokers conducting phone sales use aggressive sales tactics, encouraging consumers to purchase coverage over the phone with minimal plan information; most refuse to provide written plan materials or discontinue the call when asked for such materials,” according to the report.
The researchers also interviewed regulators in several states, such as Colorado, Florida and Virginia, finding that some were concerned that many consumers would not understand what they were purchasing and that some might think they are buying plans that are compliant with the Affordable Care Act.
“Regulators agreed that several common industry practices pose risks to consumers seeking or enrolled in short-term health plans, including coverage denials because of health status, refusal to cover services because of a preexisting condition, the rescission of coverage for enrollees with certain medical claims, and surprise balance billing because of a lack of in-network providers,” the researchers wrote.
The report also notes that state officials may not have comprehensive data about which insurers are selling these short-term plans and that standards tend to be enforced in a retroactive fashion, meaning after insurance regulators have received complaints. And there’s sometimes little that can done to achieve a resolution.
“Without state oversight of STLDI and insurers’ and brokers’ marketing tactics, consumers are at risk of being underinsured, and both consumers and providers face significant financial liability if a high-cost medical event occurs,” the researchers note.