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PPACA rules send consumers to short-term health market

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Many U.S. consumers who buy short-term health insurance online say the new market rules are pushing them away from major medical coverage.

Analysts at eHealth (Nasdaq:EHTH), a Web broker, surveyed 394 of its short-term medical buyers in mid-August. The company found that 70 percent of the short-term medical buyers considered buying major medical coverage, and that 41 percent actually tried to apply for major medical coverage.

Only 38 percent of the consumers who considered both major medical and short-term health said they bought short-term health to hold down monthly premiums. 

Many more — 57 percent — said they were unable to get major medical because they were unable to qualify for a special enrollment period (SEP).

The Patient Protection and Affordable Care Act (PPACA) now forbids insurers from considering personal health information when deciding whether to sell people individual major medical coverage. PPACA prohibits the use of health status factors other than age and tobacco use when insurers are pricing the coverage.

Regulators, public exchange managers and insurers have tried to limit the risk that people will wait until they get sick to buy coverage by letting consumers have guaranteed access to coverage only during a limited open enrollment period. The first open enrollment period ran from Oct. 1 to mid-November in most of the country. The next open enrollment period, for 2015 coverage, is supposed to start Nov. 15 and end Feb. 15.

Consumers who want to buy individual commercial coverage during the exchange nap period have to qualify for a SEP, or an exemption from the usual enrollment calendar system, because they have undergone a major “qualifying life event,” such as a divorce or moving to a new community, or because they qualify for some other reason.

Federal regulators have exempted short-term health insurance from the PPACA rules that apply to major medical coverage.

Only 35 percent of the survey participants said they were satisfied with their short-term coverage, and 29 percent said they were “sort of satisfied.” Sixty-two percent of the participants who had filed a short-term health claim said getting paid back was difficult.

Under current rules, short-term health will not help holders avoid paying the PPACA penalty to be imposed on people who lack what PPACA defines as adequate health coverage. About 62 percent of the survey participants said having coverage that protects them from the PPACA penalty is very important.

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