Budget-priced health plans could cost you

Do you earn too much money to get government help for an Obamacare health insurance plan, but you can’t get on an employer-funded plan?

If so, you’re probably self-employed, a contract worker, a bartender or restaurant server, or you retired early and live off dividends.

If you make at least $50,000 a year, you’re in a tight spot: Comprehensive plans being sold on the individual marketplace through the Open Enrollment period that ends Dec. 15 are likely priced out of your reach because you don’t qualify for government subsidies. That makes you a target for a growing number of companies promoting alternative discount plans.

They come up on web searches for “short term plans,” “Obamacare plans” “low-cost health insurance” or any number of terms used by consumers hoping to avoid Affordable Care Act plans that next year will cost a 40-year-old nonsmoking Broward County man between $313 and $1,131 a month.

Some alternative plans have been accused of being outright scams, using agents to mislead consumers into believing they are buying comprehensive health insurance. Others are upfront about how they differ from ACA-compliant plans.

Whether any of those plans will suffice depends on how much health care you consume and how healthy — or lucky — you remain while enrolled.

Patients who buy alternative plans could be left with crippling medical bills if they develop serious illnesses or must undergo expensive procedures because, unlike plans that comply with the minimum requirements of the Affordable Care Act, most alternative plans stop reimbursing once a patient hits the plan’s benefit cap.

Typically, these products are medically underwritten — meaning their premiums are based on consumers’ medical histories. This type of pricing was eliminated for major medical health insurance when the ACA was enacted, because one of the primary reasons the law was created was that people with preexisting conditions could not afford coverage.

Nearly 5 million consumers must pay full price

Consumers who don’t qualify for an employerfunded plan but make too much money for government subsidies comprise a small but significant portion of the country’s insured population, estimated by the U.S. Census Bureau as 295 million in 2017.

According to the Kaiser Family Foundation, a nonprofit health care research organization, 4.5 million consumers enrolled in individual health plans with no financial help from the government during the first quarter of 2019.

Of those, 1.1 million plans did not include services and benefits guaranteed by the Affordable Care Act. Nationwide, 9.3 million consumers were enrolled in subsidized ACA plans. About 1.7 million Floridians were enrolled (including about 660,000 in Broward, Miami-Dade and Palm Beach counties), and of them, about 91% subsidies.

Kaiser warns consumers that they’re flying without a net once they stray from the official governmentrun Obamacare site Healthcare.gov. All available plans on that site comply with minimum coverage requirements of the Affordable Care Act. That means applicants can’t be denied coverage if they have preexisting conditions, including cancer, HIV/AIDS, hepatitis C or diabetes.

ACA-compliant plans must cover preventative services for no additional cost, including immunizations, screenings and birth control. Even though deductibles and out-ofpocket payment maximums can be ridiculously high, consumers pay for nothing — no matter how expensive the procedure — once they reach those maximums.

While criticism of the ACA focuses on high premiums and deductibles requiring patients without subsidies to spend thousands of dollars before reimbursements kick in, all ACA plans cap the amount of medical costs they would have to pay for outof-pocket at $8,150. (That’s in addition to monthly premiums).

That can matter quickly. According to Kaiser’s website, an average three-day hospital stay costs $30,000.

Huge debt is big risk outside the ACA

The risk of incurring huge debt for unexpected medical problems should be considered by anyone shopping outside the ACA, argues Karen Pollitz, senior policy fellow at Kaiser.

“It’s tempting to look for cheaper coverage, but they’re not going to pay your medical bills,” she said.

Pollitz says that patients put themselves at such risk even with newly formed companies that are introducing new coverage and reimbursement models, such as Sidecar Health, which just began selling plans in Florida last week after debuting in Alabama, Georgia, Texas, Arkansas and Kentucky earlier in the year.

Sidecar Health offers customized plans priced according to how much coverage a consumer

wants. A 50-year-old Broward County male with no preexisting conditions can buy as little as $5,000 in annual coverage with no deductible for $169 a month or $2 million in annual coverage for $375 a month.

Consumers pay for services using a special debit card, and then the company reimburses for those services based on fixed rates that the company’s CEO Patrick Quigley says are based on average cash prices for those services. That eliminates administrative fees, he said. The reimbursement model is known as an indemnity plan.

Providers tend to charge less to patients that pay in cash rather than directing the provider to bill their insurer, and if the provider charges less than Sidecar’s fixed reimbursement amount, the patient actually gets money back, he said.

But patients would still be liable for any amount over the fixed reimbursement rate for major procedures, said Cliff Eserman, a health insurance broker based in Wilton Manors.

And Sidecar Health doesn’t want patients over 300 pounds or who have had any major medical issues over the last five years. Checking yes to any of those conditions during an online signup session and then asking for a quote brings up a box declaring “our prices are no longer competitive” and directing the patient to Healthcare.gov.

Risks of short-term plans

Short-term plans are being sold more aggressively by some insurers and web brokers as a result of the Trump administration’s expansion of their allowable terms from three months to a full year and overall duration to three years.

Like Sidecar Health’s products, however, shortterm plans are priced according to a patient’s current health status. If a patient develops a serious condition during their term, insurers will increase their renewal rate or, more likely, refuse to renew them, Kaiser warns.

And if a consumer with a policy lasting shorter than a year gets sick and then gets non-renewed, they won’t qualify for a special ACA enrollment period and will have to go without coverage until the following Jan. 1.

Allan Baumgarten, an independent health market analyst who publishes Florida Health Market Research every two years, said short term plans might be suitable in specific situations. An example was “when my daughter finished graduate school at 26 and went off our group plan and needed coverage for the summer until she started a job with benefits that fall.”