Feature

Marketplace confusion opens door to questions about skinny plans


 

Consumers coping with the high cost of health insurance are the target market for new plans claiming to be lower-cost alternatives to the Affordable Care Act that fulfill the law’s requirement for health coverage.

But experts and regulators warn consumers to be cautious – and are raising red flags about one set of limited benefit plans marketed to individuals for as little as $93 a month. Offered through brokers and online ads, the plans promise to be an “ACA compliant, affordable, integrated solution that help ... individuals avoid the penalties under [the health care law].”

Such skinny plans – sold for the first time to individuals – come amid uncertainty over the fate of the ACA and whether the Trump administration will ease rules on plans for individuals. Dozens of brokers are offering the plans.

“The Trump administration is injecting a significant amount of confusion into the implementation of the ACA,” said Kevin Lucia, project director at Georgetown University’s Health Policy Institute. “So it doesn’t surprise me that we would have arrangements popping up that might be trying to take advantage of that confusion.”

Apex Management Group of the Chicago area and Pennsylvania-based Xpress Healthcare have teamed up to offer the plans, and executives from both companies say they don’t need approval from state regulators to sell them. They are selling the policies across the country, although their websites note one state – Massachusetts – where the plans are not offered.

David Shull, Apex’s director of business development, said “this is not insurance” and the plans are designed to meet the “bulk of someone’s day-to-day needs.”

Legal and policy experts have raised concerns that the new plans could leave buyers incorrectly thinking they are exempt from paying a penalty for not having coverage. Additionally, they say, plans sold to individuals must be state-licensed – and one regulator has already asked for an investigation.

“Generally speaking, any entity selling health insurance in the state of California has to have a license,” Dave Jones, the Golden State’s insurance commissioner, said earlier this month. “I have asked the Department of Insurance staff to open an investigation with regard to this company to ascertain whether it is in violation of California law if they are selling it in California.”

Asked about a possible investigation, Apex owner Jeffrey Bemoras emailed a statement last week saying the firm is not offering plans to individuals in California. He also noted that the individual market accounts for only 2% of the company’s business.

“To be clear, Apex Management group adheres closely to all state and federal rules and regulations surrounding offering a self-insured MEC [minimal essential coverage] program,” he wrote. “We are test marketing our product in the individual environment. If at some point it doesn’t make sense to continue that investment we will not invest or focus in on that market.”

Price-tag appeal, but what about coverage?

The new plans promise to be a solution for individuals who say that conventional health insurance is too expensive. Those looking for alternatives to the ACA often earn too much to qualify for tax subsidies under the federal law.

Donna Harper, an insurance agent who runs a two-person brokerage in Crystal Lake, Ill., found herself in that situation. She sells the Xpress plans – and decided to buy one herself.

Ms. Harper says she canceled her BlueCross BlueShield plan, which did meet the ACA’s requirements, after it rose to nearly $11,000 in premiums this year, with a $6,000 annual deductible.

“Self-employed people are being priced out of the market,” she said, noting the new Xpress plan will save her more than $500 a month.

The Xpress Minimum Essential Coverage plans come in three levels, costing as little as $93 a month for individuals to as much as $516 for a family. They cover preventive care – including certain cancer screenings and vaccinations – while providing limited benefits for doctor visits, lab tests, and lower-cost prescription drugs.

There is little or no coverage for hospital, emergency room care, and expensive prescription drugs, such as chemotherapy.

Ms. Harper said she generally recommends that her clients who sign up for an Xpress plan also buy a hospital-only policy offered by other insurers. That extra policy would pay a set amount toward inpatient care – often ranging from $1,500 to $5,000 or so a day.

Still, experts caution that hospital bills are generally much higher than those amounts. A three-day stay averages $30,000, according to the federal government’s insurance website. And hospital plans can have tougher requirements. Unlike the Xpress programs, which don’t reject applicants who have preexisting medical conditions, hospital-only plans often do. Ms. Harper says she personally was rejected for one.

“I haven’t been in the hospital for 40 years, so I’m going to roll the dice,” she said. And if she winds up in the hospital? “I’ll just pay the bill.”

About 100 brokers nationwide are selling the plans, and interest “is picking up quick,” said Edward Pettola, co-owner and founder of Xpress, which for years has sold programs that offer discounts on dental, vision, and prescription services.