Here’s another thing health care consumers need to watch out for in the midst of the proposed changes to the Affordable Care Act: The comeback of short-term health insurance policies.
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Blogger’s Note: News agencies tend to interpret the alternatives to Obamacare in a limited or biased manner. This blog, based on a recent CBS article, is intended to clarify the facts and provide you, the reader with the benefit of my 28 years of experience as a health insurance agent. My clarifications are in Blue Text.
Actually, they never truly went away, even though they aren’t considered a qualified health insurance option under the ACA. (Clarification: What this means is they are not guaranteed issue, don’t cover normal maternity and have limited coverage for drug, alcohol recovery or mental health. In addition, in Texas they don’t cover anything you have been treated for in the last 12 months prior to your effective date (pre-existing conditions). Short answer – Short Term Policies are like health insurance used to be.)
These plans, which provide coverage for less than a year and as little as three months, appeal to recent grads, people who are between jobs and consumers who are caught between health exchange enrollment periods. (Clarification: They also apply to healthy families who don’t want to pay triple the price they did just a few years ago for coverage.)
Consumers who opt for these plans don’t fulfill the Obamacare mandatory coverage requirement and are subject to penalties. (Clarification: As a blanket statement this is FALSE. Click here to read my vintage Blog How to Legally Opt Out Of Obamacare.) What’s more, benefits under these policies are extremely limited, (Clarification: Some low quality short term medical plans exist, some are fully comprehensive and mirror coverage like insurance plans did just before Obamacare took place – that is why you have an agent to point out the differences and keep you protected.) often excluding preexisting conditions and other illnesses. Deductibles can be high, (Clarification: Obamacare plans have huge deductibles too – who are they kidding we are not that stupid!) and dollar amount caps on coverage are common. (Clarification: Sure $1 million to $2 million is common- but the plan only has to last to the end of the year. In my 28 years of experience, I have never had a person use more than $1 million dollars in a 12 month period EVER. IF you are still worried about that you will read about a solution a bit later in the article.)
Because coverage is so limited, (Clarification: Limited in this case means “coverage does not include pre-existing conditions”. Another way of looking at the limitation is that these policies are not guaranteed issue, therefore not letting in the 300 pound diabetics who smoke and drink.) premiums are extremely low. Healthy individuals who simply want short-term catastrophic coverage in case of an accident or sudden illness have found that even with the ACA penalty, they’re still paying less than they would for coverage in an exchange. (Clarification: First of all, I can show you how to have NO penalty GUARANTEED and yes they are paying less – WAY Less).
As a result, sales of short-term policies have actually increased in recent years. (Clarification: Not increased- Skyrocketed) To thwart that trend and avoid siphoning off consumers from the exchanges, the Obama administration passed a new rule stating that short-term policies can last no longer than three months, explained Sabrina Corlette, research professor at the Georgetown University Health Policy Institute. The rule is slated to go into effect April 1. (Clarification: This is true- however we expect the new HHS secretary to nullify this illegal Obama administration edict shortly).
However, if some of the Republican proposals to replace the ACA become a reality, sales of short-term policies may increase even more. (Clarification: In fact HR 522 has been introduced into Congress to make Short Term Medical coverage permanently 12 months. I feel this type of plan will be the “go to” plan endorsed by the Administration until the new replacement for Obamacare is ready.) Taking away the mandate that all Americans have qualified coverage or pay a penalty may certainly boost sales. (Clarification: Of course sales will “increase” – people are sick and tired of paying more for their health insurance than their mortgage.)
Another jump may come from a common element of Republican replacement plans: In order to maintain coverage for preexisting conditions patients must have “continuous coverage.” In other words, your insurance cannot lapse. So patients with health issues may buy a short-term policy simply to maintain coverage, said Sandra Hunt, a principal with PwC who specializes in health care. She said people looking to find a less expensive option for COBRA coverage are especially vulnerable. (Clarification: Substitute “vulnerable” for “eligible and likely to benefit from Short Term Medical”.)
That trend has some experts worried because of the limited coverage and the fact that short-term policies don’t have to adhere to federal regulations, (Clarification: Who are these experts who want you to pay triple what you did just a few years ago? Why don’t these experts tell you that short-term policies adhere to State Regulations as Health Insurance is regulated by the State you live in?) said Corlette. If you find yourself considering a short-term health plan in the future, keep these points in mind:
You may not get the coverage you need most. Because so many short-term plans exclude preexisting conditions, you may find you’re paying for insurance, but you’re not getting coverage for your health needs. Yes, a short-term policy may (Clarification: Will cover) you if something catastrophic happens, but not if it’s related to a health issue you are already have. (Clarification: We made this clear in the beginning and only sell plans that are health appropriate to the customer. Sick people WILL have to stay in the high risk pool known as Obamacare – the rest of us are smart enough to bail out.)
Your coverage may end in the midst of treatment. If you’re diagnosed with an illness and undergo treatment, that treatment may well last longer than your insurance policy. Because short-term policies don’t fall under ACA regulations, the insurer doesn’t have to renew coverage and likely won’t. (Clarification: ABSOLUTELY TRUE – this is why we align the end date of your plan with open enrollment of Obamacare – Problem Solved. You only pay the ridiculous high price for Obamacare once you are seriously ill, and only for that specific family member. The rest will continue on the Short Term by reapplying for a new plan.)
You may not qualify for continued coverage. “With the new administration and the many proposed health law changes, it’s not clear yet what would qualify as continuous coverage and what won’t,” said Corlette. Unsuspecting consumers with health issues may buy one of these policies hoping for a less expensive way to keep coverage only to find it doesn’t count.
(Clarification: That last point is a bit of political babble. What it should say is, “Once my short term ends – IF you are seriously ill, what are my choices? – This is why I pair the much lower cost Short Term Medical with a Living Benefits plan. The Living Benefits Plan is a term life insurance policy – a long term care plan – and a critical illness policy rolled into one. The plan usually accelerates a portion of your death benefit into tax free cash. This “chunk” of money is used as a golden parachute and better positions you to make the transition back into guaranteed issue coverage- like the expensive Obamacare with limited doctor access – or better yet may position you to purchase a small group health insurance plan by providing you the cash to start a business and get guaranteed PPO coverage. With this small business option you can get a “big company” benefit package at the first of ANY month during the year once you have a legitimate business – be the owner and have a full time paid employee.)
Ask yourself these questions – Would I be better off buying Cobra or Obamacare (and paying ridiculously high premiums and having only my Medical Bills paid) OR Would I be better off getting my medical bills paid PLUS having a Living Benefit payout of up to $1.5 million in cash to spend for what ever I see fit?
The obvious answer is to position yourself better with Short Term Medical and a Living Benefit plan.
Oh, and did I tell you that the savings from buying Short Term Medical more than pays for the Living Benefits Policy? That’s like getting living benefits for FREE.
Having an agent such as myself can help you navigate the health insurance landscape and provide quality coverage for far less. Benefit from my knowledge by contacting me, Mark Deschenes at 210-696-7900 or click here now to schedule an appointment.
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