As Rhode Island’s health insurance commissioner, Marie Ganim knows a lot about health plans. So when she started to get calls from telemarketers hawking a new type of short-term health insurance, she decided to play along.
When one caller asked her for her name, she gave the first name that popped into her head: her mother’s maiden name.
“And I made up an address that was not far from my office,’’ she said.
Ganim was then transferred to what the telemarketer called a Rhode Island licensed agent – or what sounded like an insurance broker.
“So I asked questions,’’ Ganim said, “about what kind of health insurance?”
The caller rattled off names of some big national health insurers. She pressed for details.
“Will this cover me so I wouldn’t have to pay income taxes on it? It’s legitimate? It’s individual insurance?” Ganim said. “And they said oh yes, yes, it covers all of those things.”
But Ganim said that wasn’t exactly the case. These plans – known in the industry as Short Term Limited Duration plans – generally don’t cover prescription drugs or maternity care or many other benefits required in Rhode Island.
“They said, well these policies might not cover mental health services,” Ganim said. “And in Rhode Island it’s a mandate to cover mental health services.”
Ganim jotted down the broker’s phone number and passed it along to her agency’s lawyers to investigate.
“They were trying to sell me a product that I know is illegal in Rhode Island,’’ she said, “and that I know doesn’t meet the basic consumer protections that we require in Rhode Island.”
The health insurance industry says these short term plans are filling an important need for less costly coverage – and it seems sales calls are on the rise.
“We have seen an uptick in the numbers of people who are getting solicited by phone for health insurance,’’ Ganim said.
So what’s behind this uptick? Two major changes in Washington. First, Congress repealed what’s known as the individual mandate. That’s the part of the Affordable Care Act that requires every person to carry certain minimum health insurance benefits -- or pay a tax penalty. The repeal means people won’t be penalized if they chose health plans that don’t cover things like prescription drugs or maternity care. The second change allows short-term health plans that extend up to a year.
Jack Peacock, a registered Rhode Island insurance broker, said he doesn’t sell short-term insurance plans because he thinks they would cost him clients. “In their mind they think they’re buying a health insurance plan,’’ he said. “Then all of a sudden something happens and it doesn’t cover much of anything. And then you know who gets sued? Me. So I just stay away from products like that.”
Ganim, the health insurance commissioner, supported state legislation similar to that enacted in New York and New Jersey that would have required short-term plans to include the same consumer protections as other insurance plans. The bill passed the Rhode Island Senate but died in the House. Ganim said she plans to try again next session.
In the meantime, she said, consumers need to be cautious. And she says she’ll keep answering callers offering insurance with more questions of her own.
More information about Rhode Island health insurance is available by calling the insurance commission’s consumer hotline: (401)270-0101.
Short-term policies typically:
- Exclude coverage for pre-existing conditions
- Turn down or charge higher premiums for applicants based on factors including health status, gender and age
- Do not have to cover maternity care, prescription drugs, mental health care, preventative care and other so-called essential health benefits
- Have no cost sharing limits so plans may, for example, cost in excess of $20,000 per person per policy compared with the ACA-annual cost-sharing cap in 2018 of $7,350
- Are not renewable after the policy expires, so if policy holders who become seriously ill they will not be able to renew their policies and may have trouble qualifying for new ones.
Source: Kaiser Family Foundation.