Arizona Consumers: Watch out for Short Term Limited Duration Health Plans
This firm investigates short term health insurers and denied claims across the country. This article focuses on Arizona law – many of the statements apply to short term health insurance in other states, as well.
Since 2014, when Obamacare went into effect, short term health insurance policies have become common in the health insurance market. Unlike Obamacare policies, these policies do not provide for minimum essential healthcare coverage. They avoid falling under the Obamacare requirements, because they fall into a loophole which was typically reserved for temporary policies marketed to people who were in-between jobs. However, now they are often sold for longer periods of time. In Arizona, the law defines these types of policies as short term limited duration insurance. Arizona law allows them to be written up for any period (less than 12 months) and renewed for a total duration of up to 36 months.
Unlike other types of health insurance policies in Arizona, short term policies do not have to contain certain mandatory health care coverages, and can exclude preexisting conditions. These types of policies can contain very limited coverage, are often marketed very deceptively, and can leave consumers owing hundreds of thousands of dollars in medical bills that they thought insurance would cover. In addition, short term health insurers do a very bad job of paying claims – often paying claims late or not at all.
Arizona law requires that health insurers generally pay claims within 30 days, unless they have specifically requested additional information. If health insurers have requested that specific information, then they must pay the claim within 30 days of receiving the information. However, short term health insurers often do not timely pay claims. We have seen many instances in which the claims process has extended for over a year with the insurance company, claiming that it still needs additional information that has already been sent multiple times. Furthermore, short term health insurance companies look for preexisting conditions any time a major claim is filed and can be very creative in what they say is a “preexisting condition”. We have even seen instances where short term insurers have claimed that broken arms and legs that occurred during the policy’s coverage period were preexisting conditions.
Policyholders in Arizona and other states should be very careful when purchasing these type of policies – which are sold by companies like American Financial Security Life Insurance Company, Everest Insurance Company, and Lifeshield among others. They pay so few claims, these types of policies can be very profitable for insurance companies.
If you have purchased one of these short term policies and have had claims denied, make sure to read the language of your policy and pay attention to any deadlines and instructions for appealing your claim. Many states, including Arizona, have laws requiring that insurers provide an appeals process for your claims. If the short term health insurance company has wrongfully denied your claim, you may also have a legal claim for breach of contract and bad faith.