BEYOND THE NUMBERS
With about two weeks left before the December 15 deadline to sign up for Affordable Care Act (ACA) plans through health insurance marketplaces, people who need health coverage for 2019 should focus on them — and not the short-term plans that new federal rules aim to establish as an alternative. Unlike marketplace plans, short-term plans don’t offer comprehensive coverage or protections for people with pre-existing conditions.
Among the advantages of marketplace plans, especially when compared to short-term plans:
- Protections for people with pre-existing health conditions. Marketplace plans can’t deny coverage or charge higher premiums due to a person’s pre-existing health conditions or past medical treatments. Nor can marketplace plans exclude a person’s pre-existing health conditions from coverage, as short-term plans typically do.
- Comprehensive benefits. ACA plans must cover a set of “essential health benefits,” such as maternity and mental health care, substance use disorder treatment, and prescription drugs, and they provide preventive services at no cost to enrollees. That ensures that enrollees can get coverage for what they expect to need, such as an annual check-up or medication for a chronic condition, and what they don’t expect, such as a costly hospital stay.
Of the short-term plans available through two major online broker sites, by contrast, 43 percent don’t cover mental health services, 62 percent don’t cover substance use disorder treatment, 71 percent don’t cover outpatient prescription drugs, and none cover maternity care, an April 2018 study found.
- Safeguards against high out-of-pocket spending. Marketplace plans can’t impose annual or lifetime limits on how much they will pay in benefits, as short-term plans frequently do. Marketplace plans also cap what each enrollee spends out of pocket each year on deductibles and other cost-sharing charges when they receive in-network health care. They must also set deductibles and other out-of-pocket amounts at levels that meet ACA benefit design standards. Together, these features help ensure that people are protected from catastrophically high spending if they face a costly medical event.
- Help with paying premiums and deductibles. Many people are eligible for federal premium tax credits, which reduce the monthly amount a person pays for health insurance, and which are only available for marketplace plans. Some 79 percent of people shopping for coverage on HealthCare.gov can find a 2019 plan with a premium of less than $75 per month after accounting for tax credits, according to the Department of Health and Human Services. Many people also qualify for reduced deductibles and other cost-sharing, which, like the tax credits, are only available for marketplace plans.
- Same premiums regardless of gender, and limits on what older people pay. Marketplace plans can’t base their premiums on a person’s gender, as plans commonly did before the ACA when women often paid more than men. In addition, marketplace plans are limited in how much more they can charge people due to their age, and they can’t charge more based on other characteristics such as a person’s occupation or participation in high-risk activities.
- Guaranteed value for enrollees’ premium dollars. Under the ACA’s “medical loss ratio” provision, marketplace insurers must spend at least 80 percent of what they collect in premiums on medical care and improving health care quality. That limits the portion of consumers’ money that can go toward insurers’ profits, salaries, and administrative costs. Due to the medical loss ratio requirement, insurers in the individual market paid more than $1 billion in rebates to employers and consumers from 2011 to 2016.
Short-term health plans, meanwhile, aren’t subject to the federal medical loss ratio requirement — and it shows: in 2017, the top three companies selling short-term health plans paid just 43 percent, 34 percent, and 52 percent of the premiums they collected on medical claims.