By Liora Engel-Smith

On the heels of the Trump Administration relaxing its rules surrounding short-term health insurance plans, the North Carolina Department of Insurance said it saw an uptick in consumer complaints surrounding these low-cost, but limited, plans.

The department logged 75 complaints related to short-term insurance in 2019, up from 48 the previous year, according to data obtained by NC Health News. More than half of the complaints involved issues surrounding denied claims, exclusions of pre-existing conditions and delayed payments to consumers. The DOI processes thousands of complaints per year, a spokesman said in an email, but the rise in consumer complaints indicates that more North Carolinians are opting for these plans. None of these complaints, he noted, have yielded violations.

But observers in and out of the Tar Heel State say the surge in complaints is a cause for concern.

“For every one complaint filed there are usually many more people who experienced issues and didn’t report,” said Dania Palanker of the Georgetown University Center on Health Insurance Reforms.

In 2018, the Trump administration overturned an Obama-era rule that limited coverage of short-term health insurance to 90 days. Unlike Affordable Care Act health plans, short-term plans can turn away or refuse to cover people who developed a chronic illness before they signed up for coverage. Short-term plans tend to be cheaper because they aren’t required to offer essential health benefits that Obamacare plans have to offer by law.

It’s hard to determine the market share for these low-cost plans, though the proliferation of online websites that market these insurance products suggests a possible increase in offerings to consumers. The National Association of Insurance Commissioners is in the process of collecting data on the market following the rule change, an association spokeswoman said, but the results are not yet available.

According to reports in Modern Healthcare, an industry publication, more consumers have opted for these low-cost plans and more insurers entered the market following the rule change.

Demand for short-term health plans in North Carolina is still relatively low, said David C. Smith, vice president of compliance and risk management at the Fayetteville-based benefits company EbenConcepts. In the last four months, he said, fewer than 4 percent of Eben’s clients who bought coverage for themselves opted for short-term health plans.

Consumers are confused surrounding what short-term health plans do and do not cover, he said, as reflected in complaints to regulators.

And there’s often a lag from the moment a consumer purchases coverage to the time they need to use their policy, Smith, who was also president of the North Carolina Association of Health Underwriters from 2008-2009, added.

“The complaints are being driven by what I call the most obvious reason, which is, [short-term health] plans are not being well described when they’re sold,” he said. “People are thinking that [the plans] are actually full insurance and have comprehensive benefits when they are limited benefits.”

Got insurance questions? 

The NC Department of Insurance helps consumers understand their coverage through a toll-free number at 855-408-1212.

He said regulators could help consumers by requiring short-term plan providers to disclose what they cover more clearly. Texas regulators have already implemented a rule to that effect, he noted.

Smith said the increase in complaint volume is a minuscule “blip” that will likely not move the needle on the issue.

“This is unfortunate, but 75 complaints a year is never gonna rise to the level of attention until someone actually makes it a big deal,” he said.

These numbers should be viewed in context, Dania Palanker, the Georgetown University researcher said. Though she couldn’t find data that describes the size of the short-term insurance market nationwide and in North Carolina, these plans generally make up a small segment of the health insurance market. A double-digit increase in the number of complaints indicates that more such plans are being sold to North Carolinians.

In the absence of data on the size of the market and the number of people enrolled in it, Palanker said, regulators are in the dark about trends in that part of the health insurance market.

“We don’t [know the size of that market] and that’s a big problem,” Palanker said.

How we reported this:

  • Requested data from a government agency.
  • Discussed findings with experts and regulators.
  • Collated information from public reports.

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Liora Engel-Smith

Liora Engel-Smith joined NC Health News in July 2019 and covers policies, programs and issues that affect rural areas. She has previously worked for the The Keene Sentinel in New Hampshire and the Muscatine...

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