Today’s “Buyer Beware” moment concerns cheaper, short-term health insurance policies. The Trump administration recently OKed these new plans so those struggling or unable to purchase health insurance have more options. And indeed, prices for these plans are often low – sometimes less than $100 a month per person.
But as the old adage warns, “If it sounds too good to be true, it probably is.”
Why? Let us count the “be causes”:
- Because they tend not to cover many routine medical services. Examples found in a recent Kaiser Foundation survey: on average, just 38 percent cover substance abuse treatment, only 57 percent cover mental health care and none – ZERO! – cover maternity care.
- Because they limit coverage for many common injuries, ailments and immunizations. Details vary by plan, but examples Kaiser found include hernia repairs; joint replacements; treatments for chronic pain, chronic fatigue, moles or cataracts; and injuries resulting from organized sports, recreation like skiing – and getting hurt while intoxicated.
- Because they may not cover prescriptions. The same Kaiser survey found just 29 percent of short-term plans cover them and some have $3,000 annual limits on prescriptions.
- Because whatever is covered, there can be caps on what will be paid. Examples: $50 per outpatient visit and $100,000 “lifetime” maximum reimbursements (compared to no limits annually under Affordable Care Act plans).
- Because they won’t cover actual costs. Examples: maximums of $1,000 per day for hospital stays or $250 for ambulance service.
- Because if you have a pre-existing medical condition such as cancer or stroke-related disabilities, you may not be covered for that condition – or even be disqualified from purchasing a plan.
- Because a short-term plan does not trigger a special enrollment period in the individual market, so if you develop health conditions while covered under a short-term plan (and therefore aren’t eligible to buy another short-term plan) you might find yourself uninsured and having to wait until the next open enrollment period to sign up for coverage.
- Because some have waiting periods for coverage. Example: cancer treatment in some plans aren’t covered during the first month and no ailment is covered for the first five days.
- Because some have … let’s call them “odd” loopholes. Example: one Illinois plan covers hospitalizations that begin on weekdays (Monday-Friday), but not on weekends (except in rare circumstances).
Beware of the fine print, which is much longer in short-term policies than you see in Affordable Care Act policies or employer insurance plans.
Interestingly, there are states that require these short-term plans to follow nearly all the same rules as ACA policies. Texas isn’t one of them.