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Junk health plans are under fire from the Department of Health and Human Services, which pledged this week to protect consumers from such plans, as well as bail out medical bills and overages that lead to medical debt.
According to the Leukemia and Lymphoma Society, patients with pre-existing conditions are often saddled with low-quality policies that are exempt from some consumer protections, such as junk plans.
HHS and the Departments of Labor and the Treasury are attempting to address the issue by issuing proposed rules to distinguish between short-term, limited-term insurance (STLDI) and fixed benefit insurance (plans that pay a predetermined fixed amount for a health-related event, regardless of expenses incurred) from comprehensive coverage.
“STLDI and Fixed Indemnity insurance sometimes include limitations on benefits and are sold using dubious marketing practices, which render such coverage nothing but garbage,” HHS said.
Because these types of plans aren’t subject to many of the consumer protections in the Affordable Care Act, HHS said people could unknowingly end up in plans that don’t cover essential benefits like prescription drugs, exclude coverage for preexisting conditions, or impose annual or lifetime dollar limits on services.
Such incomplete coverage, the agency said, can be especially damaging for people with low incomes and people with significant health care needs, as they face the greatest health and financial consequences of inadequate insurance coverage.
The proposed rule, among other policies, would change the federal definition of STLDI to ensure that these “short-term” plans are truly short-term and used to fill temporary gaps in comprehensive coverage. It would also require STLDI and flat indemnity-free benefit coverage to make it clearer to consumers about the differences between these products and comprehensive coverage, including what is covered and how much is covered.
WHAT IS THE IMPACT
Margaret A. Murray, CEO of the Association for Community Affiliated Plans (ACAP), said her organization expects the administration to put an end to junk plans.
“Short-term and time-limited insurance and other non-ACA compliant plans offer a false sense of security that threatens consumers’ physical and financial health,” Murray said. “They dupe customers with low premiums, only to force them to swallow skimpy or even non-existent coverage. The result is that people pay significantly more money and in return often receive far less coverage than they are led to believe they bought. because we’ve sued to stop the expansion of these plans.”
Murray said the junk plans qualify as neither affordable nor high-quality, routinely leaving basic health care services low while pelting members with bills for high-cost procedures.
“Short-term plans were created to fill short gaps in coverage for workers as they moved from job to job,” he said. “They have never been designed to function as fully as the last few years have shown.”
THE BIGGEST TREND
Just over a year ago, in April 2022, House Democrats called on HHS to end junk plans, imploring Secretary Xavier Becerra to reverse the final rule issued by the Trump administration that expanded short-term and term plans. limited and restore them to their intended purpose as a temporary short-term cover.
The Obama administration had limited the duration of STLDI plans to less than three months. However, the Trump administration issued a final rule in 2018 that allows people to purchase STLDI plans for up to one year, with up to three years of renewable coverage.
An analysis of STLDI plans found that 43% of the plans examined did not cover mental health services, 71% of plans did not cover outpatient prescription drugs, and none of the plans covered maternity care.
In 2020, an appeals court upheld the sale of limited-term short-term insurance plans backed by the Trump administration. The court held that the sale of limited-term short-term insurance plans is neither unlawful nor arbitrary and capricious.
Email the author: Jeff.Lagasse@himssmedia.com
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