Thus, while individual policies must comply with the ACA’s prohibition on lifetime caps on coverage, the Essential Blue Freedom plan imposes a $1 million lifetime cap. While individual policies have to offer the ACA’s set of essential health benefits and comply with the mental health parity law, this plan doesn’t cover maternity care (unless you buy it separately) and mental illness coverage is capped at $1,000 per person per policy. And, while ACA-compliant individual policies can no longer discriminate against consumers based on health status, consumers must pass medical underwriting to enroll in and renew an Essential Blue Freedom plan.
How can Blue Cross Blue Shield get away with this? By taking advantage of yet another loophole in the law that allows insurers to sell so-called “limited duration” or short-term plans that are not regulated as traditional health insurance and thus exempted from many federal and state consumer protections. Short-term policies were originally designed for people who needed just that – short-term coverage – to get through a life transition, such as a gap between jobs. These were often 3-month or 6-month policies. With its 364-day plan, Arkansas Blue Cross has stretched the definition of short-term coverage beyond any reasonable interpretation.
Third, and perhaps most important in a state like Arkansas where an estimated 282,000 residents will be eligible for federal tax credits to reduce the cost of coverage, consumers could be persuaded to sign up for one of these plans in the mistaken belief they’re getting a better deal. If they do, they’re forgoing an opportunity to get premium tax credits and cost-sharing reductions through Arkansas’ health insurance marketplace. And the plans sold on the marketplace will be more comprehensive and provide greater financial protection.
Unfortunately, if Blue Cross Blue Shield in Arkansas sees short-term policies as a way to get around the ACA, it’s likely other companies in other states do, too. Especially if state regulators allow them to advertise these plans as “comprehensive” and “full” coverage, even when they’re not. For consumers, unless they’re shopping on the new health insurance marketplaces, they need to read the fine print and heed the saying “buyer beware” before enrolling in a plan.