Health Insurance Innovations (HII) had no trouble selling short-term medical insurance during the first quarter, while the individual major medical open enrollment period was still under way.
Individual major medical coverage issuers have to meet Patient Protection and Affordable Care (PPACA) benefits and benefit design standards. Many people who buy individual health plans through the PPACA public exchange system can qualify for PPACA premium tax credit subsidies.
Consumers cannot use short-term medical insurance to avoid paying the PPACA individual coverage mandate penalty. Short-term medical coverage buyers have to get through a underwriting process, and they usually face limits on coverage of pre-existing conditions. A short-term medical policy may not cover mental health care, or care for a normal pregnancy, and it may put a tight cap on total benefits payments.
But HII (Nasdaq:HIIQ) says it took 95,400 applications for short-term medical coverage in the first quarter, up from 30,700 applications in the first quarter of 2015.
The total number of short-term medical policies the company had in force increased to 115,300 at the end of the quarter, up from 45,800 a year earlier.
HII executives talked about the numbers today during a conference call they held to discuss first-quarter earnings with securities analysts.
Pat McNamee, HII’s president, told analysts the company is still trying to understand whether its products will sell better during the major medical open enrollment period, or whether the products will sell better at other times of the year. Outside the open enrollment period, which now runs from Nov. 1 through Jan. 31, consumers have to show they qualify for a special enrollment period (SEP) to buy major medical coverage.
“We’re not sure,” McNamee said during the conference call, which was streamed live on the Internet. “We’ve done our best to forecast sales.”
HII designs and distributes insurance products written by insurance companies. It makes some sales through its own website, Agile, and it makes other sales through outside agents and call centers.
HII is reporting $905,000 in net income for the quarter on $42 million in revenue, up from $53,000 in net income on $23 million in revenue for the year-earlier quarter.
The amount of commission payments HII made to other distributors increased to $26 million, from $11 million.