Short-term health coverage is flourishing as a cheaper alternative to Obamacare, reports say.
The Wall Street Journal
reports sales of short-term health insurance have surged since Obamacare took effect in 2014 —
and continue to grow even though people buying the coverage face bigger penalties because the coverage doesn't meet Obamacare standards.
"This is saving me a ton of money for the year," Robin Herman, a marketing firm owner in San Francisco, tells the Journal, adding plans that comply with the health law's rules cost more than her old pre-Obamacare policy and are "just not affordable."
The average monthly premium for a family of three on a short-term plan is about $283, or about $500 less per month than coverage through a major medical plan, CBS News
reports, citing online marketplace eHealth.
"That $500 difference is a car payment, that's a mortgage payment," Nate Purpura, vice president of consumer affairs at eHealth, tells CBS News. "If you do the math on it, a lot of times people are figuring it's a wash, or they are saving money on a monthly basis."
Before the the Affordable Care Act went into effect, eHealth sold about 60,000 short-term policies per year; that's more than doubled in 2014 and 2015, with about 140,000 of the policies sold both of those years, CBS News reports.
There's drawbacks: none appears to cover prescription drugs, while others exclude certain coverage, such as maternity care, Purpura tells CBS News.
Also, the plans can refuse to cover preexisting conditions, something that's forbidden under Obamacare, and customers have to reapply for coverage every year — and may be rejected if their costs are too high, also illegal under Obamacare.
And because the plans don't qualify as individual coverage under Obamacare, they automatically trigger the tax penalty for lack of coverage under the federal law.
"Ultimately, this is about affordability," Purpura tells CBS News. "People have to make financial decisions about what they can afford every month."
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