People are really confused by short-term health plans

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Myles Ma, CPFCSenior ReporterMyles Ma, CPFC, is a senior reporter and certified personal finance counselor at Policygenius, where he covers insurance and personal finance. His expertise has been featured in The Washington Post, PBS, CNBC, CBS News, USA Today, HuffPost, Salon, Inc. Magazine, MarketWatch, and elsewhere.

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Few people understand the limits of short-term health plans, a new report finds.

As part of a study, a group of nine people spent an hour looking at a brochure for a 6-month short-term health plan. During the hour, none of the consumers noticed a federally required disclosure outlining the limits of the plan, said Katie Keith a member of Out2Enroll, a group that connects LGBT people with health insurance.

The representatives, appointed by the National Association of Insurance Commissioners, commissioned the Kleimann Communication Group to conduct the survey.

"Some folks never understood that this was a short-term policy and that it had limits," said Keith, who was also one of the consumer representatives.

Why people don't understand short-term plans

The Affordable Care Act has changed people's expectations for what health insurance covers, Keith said. For example, the health law requires health insurance to cover pre-existing conditions. Short-term plans don't have this requirement.

The disclosures on marketing materials for short-term plans cover many of the differences between traditional health insurance plans and short-term plans. That's important information, but none of the consumers in the study saw it, even though they spent more time with the brochure than a typical person, Keith said.

"Most people aren't going to read as much as these people are reading," she said.

The group interviewed for the study included healthy people and people with chronic conditions. The latter group was more likely to believe the short-term plan provided good coverage, Keith said. Few people also understood health insurance terms like "coinsurance." While the study was small, Keith said the results are troubling.

"We are very concerned that folks are inadvertently enrolling in these plans that they really just don't understand," Keith said.

There is little data tracking how popular short-term plans are, but the Trump administration has made them more appealing by allowing them to last up to three years.

Some states have moved to regulate the plans. For example, Colorado recently updated its regulations to require short-term plans to provide many of the same benefits as ACA plans, including coverage for pre-existing conditions. Other states have banned short-term plans altogether.

How to shop for a short-term plan

Make sure to read all the fine print before signing up, said Keith. Short-term plans offer lower premiums, but also limited coverage. (You can compare and shop for short-term health plans with our partner Agile Health.)

"Make sure you really understand what's covered and what's not," she said.

Short-term plans pay for doctor visits, emergency room visits, lab tests and other services, but with dollar limits. They may not provide prescription drug coverage or pay for maternal care. Because of these limits, they're best-suited for healthy people with few medical expenses.

If you're considering a short-term plan, first ask these eight questions.

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