By Julie Appleby June
3, 2015
Worried about
going without health coverage, musician Tom Miller bought a nine-month
insurance policy in January to tide himself over while he rebuilt his business
after a divorce and moved from Maryland to North Carolina.
At $90 a month,
it fit his budget, even though it does not offer the broad benefits required by
the federal health care law.
Long seen as a
stopgap for people between jobs, short-term policies that focus on catastrophic
coverage can fill a niche for people like Miller looking for protection against
unforeseen accidents, say some insurance brokers. In exchange for their
lower premiums, the plans come with sharp limits, including no coverage for
pre-existing medical conditions. Many consumer advocates hoped interest in such
plans would decline after the Affordable Care Act made broader coverage widely
available, but short-term policies appear to be enjoying a resurgence, brokers
say.
“We’re writing
more short-term now than before the ACA,” although not as much as in the boom
years of the early 1990s, said Lynda Sussman, owner of C.O.B. brokerage, which
sells insurance policies through its office in Pikesville, a suburb of
Baltimore.
The plans
attract not only those between jobs, but also people who missed the deadline to
sign up for an ACA policy and those who say they can’t afford a more
comprehensive plan, she said.
One of the
nation’s biggest online brokers — eHealth — has also seen a surge in
consumer demand. The website reports that applications for the policies on its
website rose 130 percent, to more than 140,000, between 2013 and last year,
when the ACA’s requirement that most Americans carry insurance went into
effect. The eHealth website may not necessarily reflect national trends,
but little data exists from government or industry sources on the sales of
short-term policies.
This KHN story can be republished for free (details).
When he bought
his plan online from eHealth, Miller said he didn’t know that it would not
protect him from a tax penalty of at least $325 imposed by the federal health
law for failing to have coverage that meets the law’s minimum standards.
“That bothers
me,” said Miller, 36, a self-employed sound engineer and drummer in Raleigh,
who formerly had coverage through his wife and now may face at least a $325
penalty for not having coverage this year. “I should still qualify.”
On the eHealth
website, consumers can see disclaimers for the short-term plans, warning, “even
if you enroll in and maintain short-term coverage, you may still be subject to
the tax penalty.” Short-term policies, which can be bought in increments of 30
days to 12 months, generally have lower premiums than other health insurance.
While that is attractive to many consumers, the premium price reflects their
limits: They are exempt from most provisions of the health law.
Applicants, for
example, can be rejected for coverage if they take prescription medications or
have a health condition, which the federal law prohibits for other types of
insurance. EHealth reports that insurers turned down 18,000 short-term
policy applicants using its website last year, up from 5,500 in 2013. The
plans usually ask applicants a few simple questions about their health, but
could seek more information from a policyholder’s medical records.
In addition,
short-term policies rarely cover maternity care, some cap the dollar amount of
care they will cover, they can’t be renewed and any medical conditions
policyholders develop during the course of the policy can be excluded from
coverage if they do re-apply.
“People are
really taking a chance,” said Karen Pollitz, who studies the insurance market
as a senior fellow at the Kaiser Family Foundation. “They have to hope they
stay healthy until the next open enrollment.” (KHN is an editorially
independent program of the foundation.)
For Miller and
others, the draw is the price. He could have stayed on his wife’s policy
for a time while going through his divorce, but it would have cost $300 a
month.
“That’s a car payment,” he said. “I didn’t want to put myself in a financial situation with more stress.”
“That’s a car payment,” he said. “I didn’t want to put myself in a financial situation with more stress.”
EHealth reports
the average premium nationally for a short-term policy is about $110 a month
for an individual, and carries an average annual deductible of $3,589.
They’re less expensive for younger people, averaging $89 a month for those
between the ages of 25 and 34, the biggest group applying for coverage through
eHealth. No subsidies are available to help people purchase them because they
don’t qualify as ACA plans.
Premiums are
generally higher for coverage that meets the requirements of the federal health
law. A Kaiser Heath News analysis of 2015 rates found the average
monthly premium for a 40-year-old buying the lowest cost silver-level coverage
through the federal online market nationally was $273, before
subsidies. Still, federal data show that 87 percent of those enrolling
through the federal website received subsidies of varying amounts to help
offset the premium cost.
Brokers say that
some of those purchasing coverage are doing so because they fall into the
“coverage gap,” earning too much to qualify for Medicaid coverage in states
that did not expand eligibility, but too little to get a subsidy.
Ruth Dunlap, a
36-year-old office assistant in Ann Arbor, Mich., said she bought a policy this
spring, hoping it would protect her until she can get a full-time job with
benefits. She works temporary jobs, earning between $10,000 and $20,000 a
year. She signed up for the short-term policy after she was told she
earned too little to qualify for a subsidy in her state, and her state did not
expand Medicaid eligibility under the health law until April.
Not long after
getting her policy, Dunlap went to the emergency room with a gall bladder
attack. The hospital sent a bill for $1,500 — marked down from
$2,000 because she had insurance – but she hasn’t yet submitted the paperwork
to the insurer to see how much of the bill will be covered by her $75-a-month
plan. She’s likely to have to pay a deductible first, but isn’t sure of the
amount. She may also face questions from the insurer about whether she had any
past gall bladder problems and might get no help if she did.
Last week,
Dunlap learned she may now qualify for Medicaid since the state
expanded eligibility to those earning up to 133 percent of the federal poverty
level, about $16,000 for a single person. She applied and is waiting to
hear if she’s been accepted, but will hang on to her short-term policy in the
meantime.
Many people
won’t qualify for a short-term policy, particularly if they have had a recent
illness or are taking certain medications. Broker Sussman said she does not
recommend short-term plans for older customers, or those with health
conditions. Still, for some clients, particularly younger adults being pushed
to have coverage or those who missed the open enrollment deadline for the ACA
and just want something in place until the next enrollment period in the fall,
“it’s better than going without and it’s a helluva lot cheaper” than other
types of insurance, she said.
Not every broker
agrees the policies are worth having.
“I refuse to
sell it to someone in lieu of Obamacare,” said Susan Lundy of Benefits by
Design, a brokerage in Larkspur, California. She said the main reason
customers ask about the plans is their price, but she warns them that the
policies won’t cover any existing medical conditions. And if something happens
during their term, “if you break your leg and you get a new policy six months
later, they have an exclusion on the break,” she said.
Lundy said even
people who fear they’ve missed the ACA signup enrollment period, which this
year ran from mid-November until the end of April, may not be out of luck.
Many people can
qualify to buy a plan now through a number of exceptions, which include losing
other ACA-qualified coverage, moving, getting married or having a baby.
Because he
recently moved and lost his coverage when he divorced, Miller might qualify.
For now, though, he’s hanging onto his short-term policy while looking around
do see what else is available.
“I know I need
health insurance,” Miller said. “I travel a lot. I’m active. The policy is good
while I go through a transition. I just needed something until I get my feet
back on the ground.”
http://khn.org/news/consumers-drawn-to-low-prices-of-temporary-health-plans-despite-risks/
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