Buyer Beware: New Cheaper Insurance Policies May Have Big Coverage Gaps

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If you’re looking for cheaper health insurance, a whole host of new options will hit the market starting Tuesday.

But buyer beware!

If you get sick, the new plans – known as short-term, limited duration insurance — may not pay for the medical care you need.

“These are a niche product, always have been,” says Doug Badger, a visiting fellow at the conservative Heritage Foundation in Washington, and a senior fellow with the Galen Institute. “It’s simply another choice for consumers that for many is more affordable than the other products available,” he says.

Short-term health insurance isn’t entirely new. But the Obama Administration issued regulations that limited them to just three months, and they couldn’t be renewed.

The Trump Administration has changed that. Now people in some states will be able to buy policies that last a year, and consumers can renew them twice, for a total of three years’ coverage.

The administration says that Affordable Care Act insurance is too expensive for some people and this provides people a way to buy a less expensive health insurance policy.

“They give people an additional option. Instead of remaining uninsured, they have a product that makes sense for them, a product that they can afford,” Badger says. “It is something that in my view ought to be available to them.”

But if you’re considering one of these plans there’s a few things to keep in mind. Short-term policies are regulated by the states, so they don’t have to comply with the consumer protections laid out in the Affordable Care Act. This means insurers can refuse to offer these policies to people with pre-existing health problems, or charge people more who are likely to need medications and health care.

They also don’t have to cover all the of the 10 essential health benefits that must be included in Affordable Care Act policies. Those benefits include maternity coverage and mental health care.

The average monthly premium for a benchmark Affordable Care Act policy was $481 this year, according to the Kaiser Family Foundation. But most people don’t pay that much. Eighty-three percent of people who bought a plan during the open-enrollment period for 2018 qualified for subsidies from the government to help lower that cost.

You can find out what an ACA plan would cost, and if you qualify for a subsidy, by going to HealthCare.gov.

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