Short-Term Health Plans Lack Mental Health, Prescription Benefits

April 27, 2018 - Short-term health plans generally lack mental health and prescription drug benefits and may create financial-based health insurance barriers for unhealthy beneficiary populations, according to a Kaiser Family Foundation (KFF) analysis.

The KFF research team reviewed short-term plan benefits and cost-sharing features within 24 health plan products (in 45 states) and found that 43 percent of the plans do not cover mental health services and 71 percent don’t cover outpatient prescription drugs.

Additionally, 62 percent of short-term health plans do not cover substance-abuse treatment and all observed plans did not cover maternity care.

Researchers warned that a potential mass market-migration sparked by federal expansion of short-term and association health plan (AHP) sales may blindside consumers into purchasing these plans without getting potentially critical health benefits.

Short-term plans are not required to provide essential health benefits (EHBs) as defined by the ACA because the plans were intended as transitional coverage for consumers to avoid the individual mandate penalty. The plans also provide limited benefits for lower premiums and contain stricter cost sharing requirements.

“Individuals who buy short-term policies and then develop health conditions will lose coverage when the contract ends,” KFF explained. “Short-term policies typically do not cover essential benefits, such as prescription drugs, and often apply dollar caps and higher deductibles on coverage that are no longer allowed under ACA-compliant individual market and group health plans.”

However, consumers may be incentivized by lower premiums to enroll in the short-term health plans. Individuals who elect to enroll in short-term plans instead of ACA-compliant plans could be taking a serious financial gamble.

“As a result, people who buy short-term policies today in order to reduce their monthly premiums take a risk that, if they do need medical care, they could be left with uncovered bills and/or find themselves ‘uninsurable’ under such plans in the future (though they would be able to buy ACA-compliant policies at the next open enrollment period),” the organization contended.

Short-term health plan premiums have a drastic range and can sometimes go beyond ACA-compliant premium rates for subsidized bronze plans, the team claimed.

In Phoenix (AZ), short-term health plan monthly premium rates range from $36 to $437, while bronze ACA plans charge $405 a month. The KFF researchers found that short-term plan premium rates may cost significantly more in certain metropolitan areas.

The monthly premium rates for bronze ACA plans in Miami, Florida are $297. Short-term plan premiums in the same city range from $46 to $983 per month.  

In addition, cost-sharing responsibilities and out-of-pocket maximums for a three-month long short-term plan coverage can also experience significant disparities.

Out-of-pocket maximums for short-term health plans in the Houston, Texas area range from $250 to $22,500. Plans in Los Angeles, California and Denver, Colorado areas had the highest minimum out-of-pocket limits at $2,500 and $2,000, respectively.

Short-term plans in certain areas also did not contain any sort prescription drug, substance abuse, mental health, nor maternity benefits, the team found.

Plans in Anchorage (AK), Baltimore (MD), Billings (MT), and Honolulu (HI) offered none of the aforementioned benefits.

Additionally, geographic areas that offered more than 20 types of short-term plans only had a handful of plans offer the four benefits.

Twenty-one short-term policies are offered in Philadelphia, Pennsylvania area but only 57 percent of plans provide mental health benefits. Thirty-three percent of plans in the Philadelphia area provide prescription drug or substance benefits.

Huntington, West Virginia offers the highest number of short-term plans with 22 plans, but also were found to provide limited benefits. Fifty-nine percent of plans cover mental healthcare, 36 percent provide prescription drug benefits, and 32 percent offer substance abuse treatment.

The analysts concluded their findings by expressing caution related to a potential short-term health plan expansion.

The concerns suggested that expanding the short-term insurance market could create lingering damages to the individual market. These warnings were previously shared by industry stakeholders including AHIP and the BlueCross BlueShield Association.

“The combined effect of repealing the individual mandate penalty and the administration’s efforts to promote the sale of short-term plans could result in fewer people signing up for ACA-compliant plans and higher premiums in the ACA-compliant individual market, potentially adversely affecting the stability of the ACA-compliant individual market,” KFF concluded.