By Christina L. Goe, J.D.

The Covid-19 crisis and associated economic disruption have triggered mass unemployment. Millions losing jobs are also losing their job-related health insurance coverage. The Urban Institute estimates that 10 million people may lose their employer health benefits by year’s end. Individuals who lose employer coverage are eligible for a 60-day open enrollment period for marketplace coverage, but the Trump administration has not widely advertised this option. The administration has also rejected calls for a special enrollment period in the federally facilitated marketplace (FFM) to allow all currently uninsured people to get coverage during the pandemic. Instead, some state officials are recommending that individuals seek coverage in short-term health plans (STPs). Some consumers are drawn to STPs because of lower prices, but consumers should educate themselves about the true cost of those plans and the significant variability between different STPs.

STPs are not subject to any of the Affordable Care Act’s (ACA) requirements and are difficult to compare. Even if two STPs appear to have the same benefits and cost-sharing, the coverage may not be comparable for other reasons, such as additional dollar limits or cost-sharing for certain benefits, exclusions, or the lack of a network that protects consumers from additional medical bills. Consumers should be warned about significant variability in contract terms among STPs, even those offered by the same insurer. Choosing an STP harkens back to the “old days” of shopping for individual coverage, before the ACA required that out-of-pocket costs of each plan fit within specified parameters (platinum, gold, silver, or bronze) and contain 10 essential health benefits and other protections. If you are healthy enough to be accepted for STP coverage and have no preexisting conditions, you will still need to navigate through a maze of different plan designs and complicated lists of benefits and exclusions, which often contain obscure limitations on coverage and hidden additional costs. The differences in STPs are not easy to identify, and many consumers do not understand the true cost of lower premiums.

A review of policy language from five different insurers filed in four different states revealed some significant differences between available STPs.* The variations are almost impossible to count. The plans vary widely, not only in cost-sharing options, but also in benefits, exclusions and other terms that affect coverage.

DOLLAR LIMITS ON BENEFITS PER POLICY PERIOD: Maximum dollar limits range between $25,000 to $2,000,000, but many policies have additional dollar limits on specific types of services, such as a “maximum benefit” on outpatient services [$1,000 to $10,000] and other dollar limits on items such as hospital rooms, anesthesiologists, assistant surgeons and ambulance services. These limits often are well below the actual cost of these services.

COMPLEX COST SHARING DESIGNS:  In addition to the overall deductible [$2000 – $25,000] and coinsurance [30 percent to 50 percent], all plans reviewed have additional deductibles or copayments [$250 to $500] that are applied to specific services, such as: inpatient hospital, emergency room, outpatient surgery, and more. Consumers would find it very difficult, if not impossible, to compare their maximum out-of-pocket costs across these plans because they do not provide a uniform definition, and in some cases deductibles and other out-of-pocket costs are excluded.

NETWORKS: Only two of the five insurers assert that their plans have networks. Depending on the state, these networks may not be subject to network adequacy standards. The other plans do not have networks, meaning that enrollees could be subject to surprise balance billing by providers if the plan doesn’t pay their charges in full.

COMMON EXCLUSIONS: Most STPs exclude coverage for prescription drugs, mental health/substance use disorders, preventive services, and maternity services, unless a state has a specific coverage requirement that applies to STPs. Other common exclusions: coverage for AIDS, cancer diagnosed in the first 30 days after enrollment in the plan, habilitative services (i.e. autism treatments), contraception, kidney disease, claims resulting from hazardous occupations/ activities, diabetic management, and cancer screenings.

PREMIUM VARIATION: If a consumer selects an STP with richer benefits, the premium can increase to the point where it is higher than a bronze plan purchased on the ACA marketplaces. For example, the premium for a 60-year old woman purchasing a STP with a $2,000 deductible and a $12,000 maximum out-of-pocket cap is $810/ month. The same woman could purchase an ACA-compliant bronze plan for $582/month ($4,400 annual deductible and $8,150 maximum out-of-pocket). If she qualifies for premium tax credits, this premium would be even lower, and the benefits and protections are significantly richer.±

CONCLUSION

Many short-term plans are rife with benefit caps, policy exclusions, and network gaps hidden in the fine print. Even the most conscientious, informed consumers will have difficulty assessing the benefits and risks of different STP policies. At the same time, STP sellers are aggressively marketing their products to people seeking health coverage during the COVID-19 health crisis, often with misleading claims about the coverage they offer. Furthermore, a recent investigation by the House Energy & Commerce Committee found that brokers often sell STP plans to consumers even when the consumer is seeking an ACA-compliant plan.

Many of these individuals will be eligible for premium tax credits and lower cost-sharing plans through the ACA marketplaces. Before the current economic crisis, as many as 4.7 million people were eligible for a $0 premium bronze plan on the exchange but did not sign up. Undoubtedly, those numbers will increase substantially in the coming months. Although the current federal government is unlikely to help consumers navigate this complex coverage landscape, state insurance departments and state-run marketplaces can help protect consumers from deceptive or misleading marketing claims and educate them about coverage options that may better meet their health and financial needs.

* Policies reviewed were from the following states: Georgia, Ohio, Louisiana, and Montana. Most of the insurers reviewed offer STPs in many states. The policy language for the purpose of this research was obtained through the System for Electronic Rate and Form Filing (SERFF), which most state insurance departments use. However, a single policy contract filed there is just the basic structure for many different plan designs, so all of the cost sharing, policy limits and many of the benefits are variable or can be deleted depending on the plan design that the insurer decides to market.

± The dollar amounts stated are examples, and do not represent the full range of variability.

This CHIRBlog post is based on the author’s ongoing research, which is supported by the Commonwealth Fund.