As millions of Americans confront rising health insurance costs, plans promoted by officials from the Trump administration have gained attention. While these options are cheaper, they often come with substantial limitations in coverage. For example, individuals like Robert Hays, an industrial electronics salesman from Arkansas, and Essie Nath, a retired cafeteria worker from Wyoming, both believed they had secured reliable health insurance. However, their experiences reveal a stark reality: the plans they chose left them with overwhelming medical bills after requiring surgery.
Hays is now facing a staggering $116,000 in medical expenses for neck surgery needed after an injury at the gym. Similarly, Nath incurred $82,000 in bills following a heart failure episode. Martin Liz, a chef from Key West, has found himself with bills exceeding $100,000 for a knee replacement. Legal experts, such as Arkansas attorney Ken Swindle, have cautioned that many consumers mistakenly believe these plans provide comprehensive coverage until it is too late.
The appeal of these “short-term” health plans has increased as enhanced government subsidies for Affordable Care Act (ACA) plans are set to expire this year. With many Americans facing skyrocketing insurance prices, insurance agents predict a surge in interest for these options. These short-term plans often lack essential coverage for preexisting conditions and basic health needs, such as maternity care and mental health services. According to the Kaiser Family Foundation (KFF), five states have banned their sale due to these coverage gaps.
Despite the potential pitfalls, some consumers, driven by financial concerns, are drawn to the lower premiums associated with these plans. For instance, in Florida, a typical ACA plan may cost around $500 per month for a 40-year-old nonsmoker, while a short-term plan could be available for approximately $320. Kelly Loussedes, vice president of the National Association of Benefits and Insurance Professionals (NABIP), emphasized the importance of understanding that these plans are not comprehensive.
Insurance agents have reported an influx of inquiries from individuals seeking more affordable alternatives to ACA plans. Andy Mided, a national health insurance agent based in Chicago, expressed concern about the risks associated with these short-term options. He stated, “I couldn’t sleep at night if I sold that to somebody.” Currently, while five states have prohibited short-term plans, nine others have such stringent regulations that no plans are offered, leaving 36 states where they remain available.
A significant portion of these short-term plans do not cover outpatient prescription drugs, and 40% do not include mental health services, as highlighted by KFF. In contrast, all ACA-compliant plans must cover these essential services. Some insurance agents maintain that short-term plans can be suitable for healthy individuals who need temporary coverage, such as those transitioning between jobs or waiting to qualify for Medicare.
The Trump administration expanded the availability of short-term plans in 2018, allowing policies to last up to three years instead of four months. Health Secretary Alex Azar at the time claimed that these plans would provide more affordable options for millions. However, many insurance executives raised concerns about consumer confusion over the nature of the coverage, fearing that individuals might inadvertently opt for plans that did not meet their needs.
Following a reversal of the Trump-era rules by the Biden administration, short-term plans once again face scrutiny. Critics argue that the experiences of consumers like Hays, Nath, and Liz should serve as cautionary tales. Hays, after enrolling in a short-term policy from UnitedHealth’s Golden Rule Insurance, found himself denied coverage for a neck surgery deemed a preexisting condition. Despite receiving prior authorization for the procedure, he was informed that his claims were not covered, leading him to pursue legal action against the insurer.
Nath faced a similar situation when transitioning between short-term policies. After being denied coverage due to a preexisting condition, she sought an indemnity policy, which also failed to cover her heart failure, resulting in a settlement after legal proceedings. Liz’s experience mirrored this, as he was denied reimbursement for knee surgery despite assurances from his insurance agent that the procedure would be covered.
As consumers navigate the complexities of health insurance options, the pitfalls of short-term plans remain a pressing concern. The Centers for Medicare and Medicaid Services acknowledged the role these plans can play in providing temporary coverage but reiterated the risks involved. In a statement, the agency noted that while short-term plans can be significantly cheaper than ACA options, they are not suitable for everyone.
As the landscape of health insurance continues to evolve, individuals must carefully evaluate their options. With many drawn to the allure of lower premiums, the lessons learned from the experiences of Hays, Nath, and Liz highlight the critical need for informed decision-making in an increasingly complicated health insurance market.