From the Desk of Bob McNett……

Beware of Marketing Campaigns that may be Potentially Deceptive……

One of our small group health insurance clients sent us a copy of a mass-faxed piece they received advertising health insurance at temptingly low rates. They asked us “Why haven’t you shown us this?”

I have attached a copy of this fax to this email, so all our clients can be aware.

The “Sample Monthly Rates” that are shown are appreciably less than any comprehensive, Affordable Care Act (ACA)-compliant plan offered in the marketplace.

On the first page of the fax, it shows logos of major insurers such as Aetna, First Health and Cigna. However, note that the marketing piece does not claim that the illustrated premiums are offered on plans sponsored by these major carriers.

There are several things to be aware of in this marketing campaign, as well as others you might see:

#1—The fax says that “these plans are not ACA compliant.” It says you can combine these plans with a “Minimum Essential Coverage” plan, for minimum cost, to avoid the Obamacare non-compliance penalty. I cannot see other than what is on this marketing piece, but, I am familiar with the concept. if the IRS comes calling, based on my knowledge, I might want to duck out the back door. The ACA law was written to not allow loopholes to allow people to easily escape the non-compliance penalty.

#2—The fax says these plans are part of a “new trend in the insurance industry….Indemnity Health Plans.” What is an “indemnity” health plan? They do not define this in the marketing piece, but any plan I have ever seen that is an “indemnity” plan covers services based on a flat, fixed amount. These flat amounts may or may not be based on actual cost of services. So, for example, if a given heart surgery has an actual surgeon’s cost of $30,000, the “indemnity” may not allow for the full cost….perhaps something far less. Plus, does it allow for all the other associated costs of the treatment?

#3—The piece says that “These plans are medically underwritten.” This means that applicants have to answer health questions to be approved for coverage, and can be declined if the applicant has a history of health conditions. For example, if a small business with ten employees applied for this plan, it is quite possible that several of the employees would be declined for coverage. And a new employee that lost coverage with his previous employer to come to work for a new employer could find himself unable to qualify health-wise for the new employer’s plan, thus be left with no coverage at all. This is the way group health insurance worked some 38 years ago (holy moley!) when I started my career with Blue Cross as a small-business rep. No ACA-compliant plan can refuse coverage to an applicant nor can it impose a pre-existing condition waiting period.

I think the old adages “You get what you pay for” and “Buyer Beware” may apply. Someone once said that “more people have been harmed by paying too little than paying too much.” I think that’s pretty accurate.
Robert K. McNett, LUTCF
The McNett Agency
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Toll Free 1 866 497 7119