Consumers are looking for ways to safeguard themselves financially in the event of a catastrophic illness or injury when health insurance runs out or an insurer denies coverage.
Insurance denials are up, according to recent reports, and this year new limitations on short-term, limited-duration health insurance (STLDI) policies go into effect. The use of supplemental health insurance is rising, reports Precedence Research. The firm forecasts the market for supplemental coverage could almost double by 2033, from $36.8 billion to $62.57 billion.
“As consumers become more educated about the risks and costs associated with healthcare, they are increasingly looking out for insurance products that provide additional economic protection,” the report states.
To avoid pricey Obamacare plans, consumers have resorted to STLDI plans, which the Biden administration limited to a maximum of four months. If insurance runs out during an extended medical claim, an individual’s only hope for coverage is to enroll in Obamacare, which will accept an enrollee with a preexisting medical condition. However, Obamacare enrollment is available during a limited period at the end and beginning of the calendar year.
Cash, Not Coverage
One option for financial protection is to purchase supplemental coverage such as an indemnity plan, “if you can find one,” says Beverly Gossage, president of HSA Benefits Consulting and a Kansas state senator (R-District 9). “The [Affordable Care Act] tied the hands of insurance carriers to offer plans other than those that are not underwritten.”
Indemnity-style plans, which are not major medical insurance, pay a cash benefit in the event of hospitalization, surgery, or injury. Blue Cross, UnitedHealthcare, Cigna, and other insurers offer such plans.
“They are regulated as insurance, but they are not subject to Obamacare regulations.” wrote John C. Goodman, co-publisher of Health Care News and president of the Goodman Center for Public Policy Research, in a Forbes column in 2019.
Goodman says another alternative to Obamacare plans is health sharing ministries, organizations that pool together funds to pay health claims directly.
Direct to Customer
Critical illness insurance indemnity plans will grow the fastest over the next eight years, reports Precedence. Dental indemnity plans still comprise the largest segment of the supplemental market. Consumers can also buy plans that cover expenses related to accidents, plus vision care or health care expenses not covered by a health plan. Unlike traditional health insurance, the benefits are paid directly to the insured person.
In recent years, politicians and activists have attacked indemnity plans as “junk insurance,” writes Goodman in an updated Forbes column on the topic.
“Let people buy health insurance that meets their financial and medical needs,” wrote Goodman. “At the end of the day, if there are any remaining and socially important unmet needs, those should be the limited focus of government.”
Regulatory Uncertainty
In his first administration, President Donald Trump allowed STLDI plans to last up to 36 months. Gossage says she hopes Trump will restore that rule in his second administration.
“I certainly hope so, for the sake of the consumer who does not fall into the low-income earnings category and could be forced to pay very high premiums for coverage with a nearly $10,000 out-of-pocket potential,” said Gossage.
Gossage says lasting reform will require Congress to take action.
“We must codify this into law rather than merely through regulation that is subject to the whim of a new administration,” said Gossage.
Gossage, who advises consumers on health care coverage, says she is on the fence about telling people whether STLDI is a good deal under the Biden administration’s new rules.
“It depends on the situation,” said Gossage. “There are folks who need a few months before their job insurance is effective or before they are entitled to start Medicare. The STLDI fills the gap.
“They can save nearly 70 percent in premiums with an STLDI plan if they pass the few underwriting questions,” said Gossage. “But being made to be re-underwritten every three months is cumbersome and frightening.”
AnneMarie Schieber ([email protected]) is the managing editor of Health Care News
AnneMarie Schieber is a research fellow at The Heartland Institute and managing editor of Health Care News, Heartland’s monthly newspaper for health care reform.
