What are short term health insurance policies?
Short term health insurance policies are limited benefit health insurance plans that can only be written for up to 364 days. Public officials, including President Trump and the Secretary of Health and Human Services Alex Azar have promoted these plans as offering greater choices to consumers.
In addition, insurers advertise these plans as affordable alternatives to Obamacare or Affordable Care Act (“ACA”) policies. Health insurance companies and online insurance websites often market these policies to people who are looking for ACA policies.
Unfortunately, there are critical difference between these policies and standard group health insurance policies or ACA policies. For instance, these policies have dollar limitations on care provided, do not provide reimbursement for critical services such as maternity care, and are subject to exclusions for pre-existing conditions.
To make matters worse, pre-existing conditions exclusions can go back as far as five years and can be very broadly defined, which leaves insurers much wiggle room when deciding to pay claims or deny them.
According to the National Association of Insurance Commissioners, the following insurance companies were in the short term health insurance market in 2017:
- UnitedHealth Grp
- Golden Rule
- Amtrust NGH GRP
- Tokio Marine Holdings INC GRP
- Geneve Holdings INC GRP
- New Era Life GRP
- Arkansas BCBS GRP
- Blue Cross Of ID GRP
- BCBS Of KC GRP
- Cambia Health Solutions INC
- Medical Mutual Of OH GRP
- Spectrum Health GRP
- Westbridge Capital GRP
- BCBS Of SC GRP
- Munich Re GRP
- Boston Mutual GRP
- Standard Life & Cas Insurance Company
- IHC INC GRP
- Carle Holding Co GRP
- Warrior Invictus Holding Company GRP
- Capital Blue Cross GRP
- Knights Of Columbus
- Highmark GRP
- Medica GRP
- Jackson National GRP
- North Carolina Mutual Life Insurance Company
- Catholic Health Initiatives GRP
- Wisconsin Physicians Serv Ins GRP
- HCSC GRP
- China Minsheng GRP
- BCBS OF TN GRP
- American Financial Security Life Insurance Company
- Lifeshield National Insurance Company
- National General Accident & Health Insurance Company
- Assurance IQ
- Integon Indemnity Insurance Company
- National Health Insurance Company
Can I trust the marketing of short-term health insurance policies?
Often, these policies are marketed on websites such as Agile Health or E-Health. These websites are owned by companies that act as brokers for these types of policies. These companies in turn hire call centers to deal directly with purchasers.
Companies marketing these policies go out of their way to emphasize the broad coverage available and do not clearly explain the coverage limitations. In fact, reports have surfaced of salesmen lying to purchasers about pre-existing conditions being covered and about whether the policies comply with the Affordable Care Act.
These types of policies have also been sold by individuals who are not licensed to sell them. One company, Health Insurance Innovations, which owns Agile Health, is currently under investigation by 42 state departments of insurance in connection with the sale of short term health care policies.
These types of insurance sales practices could potentially give rise to fraud claims, misrepresentation claims, deceptive trade practice act claims, RICO violations, and violations of state insurance law.
What are some claims handling issues that come up with short term health insurance?
Real difficulties may arise if an individual has a serious health claim under these policies. Insurers will often order extensive medical records to search for pre-existing conditions even when the claim is for something accidental like a broken leg.
As result, even if the claim is paid, it is often paid late. Worse still, these companies may comb through these records looking for reasons to rescind (revoke) the policy or to deny the claim.
We have seen claims denied because the insurance company incorrectly claimed it had not received requested medical records, claimed that a charge resulted from a pre-existing condition, or claimed other technicalities such as the failure to file a claim form.
To make matters worse, these companies often contract customer contact out to call centers and other third parties. They may even contract out claims services. As result, while an insured may think that they are talking to an employee of the insurance company, they may actually be talking to a third party. We have seen instances where an insured provided critical information to one of these call centers, only to have it ignored by the insurance company.
When a short term health care insurer denies a claim that should be covered under a policy, an insured will have a breach of contract claim against the company. The insured may also have a bad faith claim against the company.
Courts often find bad faith when an insured can show that an insurance company committed an intentional or reckless failure to investigate a claim, intentionally or recklessly denied the claim or used an improper financial motive to deny the claim.
These short term health care insurance plans are much more profitable than ACA policies. While ACA policies require that a certain amount of premiums collected be paid to cover medical expenses, short-term plans do not. As result, the more claims the short term health insurer denies, the more money they can make. Bad faith laws prevent these insurers from denying claims for improper reasons.
What if I have already purchased a short term health care policy and my insurance company is saying they won’t cover my claim?
We fight the abuses of short term health care insurers. If you find yourself in this situation, please contact us. When you contact us please gather together your application and policy (these may have been e-mailed to you or may be on the insurer’s website), any explanation of benefits forms that you received from the insurer, any other letters or e-mails to or from the insurer, and any forms that you have received or provided.
If you have relevant medical records, please have these available too. We will review these document free of charge. In states where we are not licensed, we will contact and associate counsel that meet our standards for competence and commitment.
I am considering purchasing a short-term health care policy. Where can I get more information?
The following information may help you better decide whether you should buy one of these plans:
- The Henry J. Kaiser Family Foundation is one of the best consumer-friendly sources of information relating to insurance and health care. They have informative issue briefs that explain short term health care insurance.
- National Public Radio has also covered this story. Here is a link.
- The New York Times has published an article called “What to Know Before You Buy Short-Term Health Insurance”, which is very helpful.
- The Health Affairs Journal publishes a blog called “Following the ACA” by Katie Keith.
- The Short-Term Health Insurance Regulation and Comments. The Department of Health and Human Services recently amended the regulations to allow the sale of more short-term health insurance policies. The comments discuss many of the concerns voiced by pro-consumer groups. Unfortunately, the Department ignored these concerns and published the regulation anyway.