Patients Pay the Price with Proliferation of Substandard Health Plans

There are significant risks patients face when they enroll in non-compliant and substandard health insurance products. A new report published by 30 patient organizations shares the risks and details ways state and federal lawmakers can help protect these vulnerable consumers.

The report, "Under-Covered: How 'Insurance-Like' Products Are Leaving Patients Exposed," issued by a coalition representing millions of people with pre-existing conditions, details eight different types of "non-compliant plans" that do not adhere to Affordable Care Act (ACA) consumer protections like coverage for pre-existing conditions, elimination of annual and lifetime coverage limits, and coverage for essential health benefits.

The plans have proliferated in recent years, and in many cases, are marketed to consumers who don't fully understand what they're purchasing. As a result, patients are often vulnerable to exorbitant medical bills. This report serves as a warning to consumers to avoid these plans – and a call to action to lawmakers.

These plans include:

• Short-Term, Limited-Duration Insurance: Short-term, limited-duration insurance (STLDI) plans predate the ACA and were intended, as their name indicates, to fill short gaps between coverage.
• Heath Care Sharing Ministries: Health care sharing ministries (HCSMs) are a form of non-compliant insurance-like coverage in which members who typically share religious beliefs make monthly payments to cover health care expenses of themselves and other HCSM members.
• Farm Bureau Plans: As of March 2021, five states — Indiana, Iowa, Kansas, South Dakota and Tennessee — allow the Farm Bureau, a member-based organization representing farmers and their families, to sell to its members health benefit plans that have been carved out from the definition of insurance and exempted from the states’ insurance code.
• Grandfathered Plans: Grandfathered plans are health insurance plans that were on the market before March 23, 2010. These plans do not have to provide the same level of coverage or have all the patient protections required by the ACA
• MEWAs and AHPs: ERISA allows employers to work together to form a multiple employer welfare arrangement (MEWA) for the purpose of providing certain benefits to their employees. An association health plan (AHP) — a health benefit plan sponsored by an employer-based association — is one type of MEWA.
• Spurious “Single-Employer Self-insured Group Health Plans”: Single-employer self-insured group health plans are not bound by some of the ACA’s core consumer protections (including, for example, the EHB requirement and premium rating rules) that apply only to individual and small group market coverage.
• Minimum Essential Coverage-Only Plans: Large-group health plans (50 or more employees in most states) are not subject to the requirement to cover EHBs, giving large employers the flexibility to exclude key categories of coverage that would be considered EHBs.
• Excepted Benefit Plans: Excepted benefits are a category of coverage that is exempt from the ACA and most other federal and state standards that apply to health insurance.

"Allowing these plans to remain on the market effectively turns back the clock to the days when insurers could reject people with pre-existing conditions, exclude coverage for specific diseases and hike premiums based on an individual's medical history, gender or age without limits," the coalition of 30 patient groups said.

The report details the specific harms of many types of non-compliant health plans and urges state and federal policymakers to take immediate steps to protect patients by limiting their expansion. The report also provides specific recommendations that policymakers should move quickly to implement to protect consumers.

"We're calling on Congress, the Biden Administration, and state policymakers to take immediate steps to mitigate the harm of these substandard products," the patient organizations said. "Patients need and deserve better, and once again, must be ensured access to comprehensive, affordable coverage."