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Health

Health Care And The Election: What To Know About Short-Term Coverage

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If you’re going shopping for health care coverage, you could get a case of sticker shock. The biggest complaint about shopping on Obamacare exchanges is the cost. Those who make too much to qualify for subsidies — because they earn more than 400% of the federal poverty level or $51,040 — can find it hard to afford Affordable Care Act policies.

Both President Trump and former Vice President Biden want to make health insurance less expensive. Biden would like to increase the subsidies so no one would pay more than 8.5% of their income. The Trump administration has expanded the availability of lower-cost, short-term health care plans.

Short-term plans have been around for years. They were designed to provide stop-gap coverage for people between jobs and coverage, and the Obama administration restricted their duration to three months. But in 2018, the Trump administration said the plans could last up to a year and could be renewed for up to three years.

There is no hard data on the number of people with short-term policies, but an investigation by the U.S. House Energy and Commerce Committee found enrollment in the plans offered by nine large insurers grew by 27% between 2018 and 2019. Three million Americans had short-term coverage, the Committee reports, even though 24 states moved to limit their availability.

The premiums for short -term policies are a lot cheaper than ACA plans if you’re young and healthy. For example, a non-smoking 27-year-old Charlotte woman can sign up for one popular plan for only $73 a month. The cheapest ACA plan will cost her $244 a month, so she can save $2,052 on premiums every year if she buys a short-term plan.

But she might get surprised to find the plan won’t pay her doctors directly. She’d have to pay the bill and file for reimbursement. And if she gets seriously ill or has a baby, she’ll probably end up spending much more than she saves on premiums. So those who don’t read the fine print can end up with a nasty surprise.

“I don’t think they should be surprised because this is not the same as being in a group plan” said North Carolina Commissioner of Insurance Mike Causey. “It’s not the same as being under the ACA or individual health insurance. So you know that old saying, you get what you pay for...

"But you see what’s happening. The claims are being denied. There are just all sorts of issues.”

The short-term plans don’t have to cover any of the ACA plans’ 10 “minimal essential” health benefits like prescription drugs, mental health problems, substance abuse and maternity care. And if short-term plans do cover these things, the Energy and Commerce Committee found, they frequently include strict limits on coverage.

And they don’t have to cover pre-existing conditions. If you have a serious illness like cancer, diabetes or heart disease, you probably can’t get short-term care in the first place. And if you get seriously ill while you’re covered, short-term plans can engage in a practice called post-claims underwriting to deny coverage for big medical bills.

“The post claims underwriting looks through their history of their medical records to see if there’s any reason they could deny the claim or take coverage away,” said Georgetown University health law professor Dania Palanker.

For example, one insurance company refused to pay the bills of a man who had a heart attack, Palanker said, because they found he’d once been diagnosed with bronchitis —even though he didn’t know about the earlier diagnosis.

Sometimes it’s hard to see the fine print before you sign up. Plan brochures are frequently available if you’re shopping online, but Energy and Commerce Committee investigators found some marketing materials include incomplete or misleading information.

Some websites ask you to enter your phone number before you can search for the plans. If you do, be prepared for a barrage of calls from marketers, some of who can be pretty aggressive. Investigators for a congressional watchdog, the Government Accountability Office, found that most marketers were honest. But 25% percent gave misleading or incomplete information.

Sales representatives may have a big incentive to sell short-term plans instead of ACA-compliant coverage. They can earn up to 10 times as much when they sell the short-term plans, the Energy and Commerce Committee found. And some of those marketers work for multi-state associations — which aren’t regulated by state laws — instead of insurance companies or insurance brokers.

“There seem to be some complicated schemes that aren’t fully understood where the plans are contracting with the associations and some of these associations perhaps not all seem to be using nefarious practices with the brokers but there are so many intermediaries between the broker and that plan you don’t necessarily know,” said Palanker, the Georgetown professor.

If you are going to purchase a short-term plan make, sure you go to a licensed insurance agent, Causey said. But he also said that people should realize that a short-term plan doesn’t have all the protections of an ACA plan:

“If you have no coverage of any kind you go to the doctor, you pay for it. If you have this (short-term coverage) they may pay for some of it, but they’re probably not going to pay for all of it."