MOUNTAIN VIEW, Calif., Feb. 20, 2018 /PRNewswire/ -- Today the Trump administration proposed a new regulation for the short-term health insurance market that allows plans to last up to 364 days and reverses the three-month coverage restriction imposed by the outgoing Obama administration. Given the criticism and highly politicized commentary this reversal will attract, AgileHealthInsurance.com has published a report that examines five myths about short-term health insurance against actual data on short-term plan enrollees. Below is a condensed overview of the findings.
Myth #1: Only The "Young and Healthy" Qualify For Short-Term Coverage - The average age of a short-term insurance buyer was 36.3 years old at the time of application. This means the average age of a short-term health insurance buyer was roughly the same as the average age of an American (37.9 years old). With respect to older enrollees within the sample (people ages 55 through 64), they accounted for 13 percent of buyers. This is a slightly higher representation of this older age group than is found in the U.S. (12 percent) as a whole.
Myth #2: Eligibility For Short-Term Insurance Is Narrow & Lacks Transparency - The typical short-term health insurance application includes five to seven eligibility questions depending on the insurance company. The purpose of the questions is to ensure applicants do not have expensive chronic health conditions that are ill suited for a temporary insurance product whose enrollees pay premiums for less than a single year. A 2016 study by eHealth, Inc. found only 13 percent of applicants were rejected for short-term coverage.
Myth #3: Short-Term Health Plans Are Not As Cheap As People Think - Short-term plans are designed to serve populations with an immediate need for low-cost coverage, the most common reason being job loss. According to the Bureau of Labor Statistics, the ensuing unemployment period averages 6 months. Consequently, the cost of short-term coverage needs to be low given the income loss during this period. For a 30 year-old in 2017, the average short-term premium was $79 a month. In comparison, the average premium nationwide for bronze plan coverage was $311 for a 30-year-old without subsidies. For a 50 year-old, the average short-term premium was $198 a month while the average unsubsidized premium for a bronze plan was $489.
Myth #4: Short-Term Plans Are "Junk Insurance" That Provide Inadequate Coverage - While it is true that short-term plans cover fewer benefits than ACA plans and exclude health conditions that began prior to purchasing the insurance, these plans do include all major benefit categories including coverage of doctor and specialist visits, emergency care, x-rays, lab tests, and hospitalization. Drug coverage is included in some but not all plans. Additionally, when comparing the average deductibles associated with the use of health benefits, the average deductible for short-term insurance averages at $3,434, which was $2,658 less than the average deductible for an entry-level bronze plan ($6,092).
Myth #5: Most Consumers Are Using Short-Term Plans As Long-Term Primary Coverage, Continuously Re-Applying For Years - When analyzing a random sample of consumers enrolled in short-term plans prior to the three-month restriction, the average effective term of a short-term policy was 201 days (6.7 months). Moreover, only 9 percent maintained short-term coverage beyond the statutory maximum of one year for a single policy. These customers did so by reapplying for a new short-term plan with an effective date that started after the expiration of their existing plan, either from the same or a different insurance company.
The full report, "Five Myths About Short-Term Health Insurance," will be released on AgileHealthInsurance.com later today.
AgileHealthInsurance.com was created to educate people about the benefits of short-term health insurance and provide a fast, online process for purchasing these plans. Short-term health insurance is a flexible and low-cost major medical insurance for individuals without expensive pre-existing health conditions. It is not Obamacare. Short-term health plans offer consumers the flexibility to choose health plans with the benefits that matter most to them and combine these benefits with broad provider networks. Additional information about AgileHealthInsurance can be found at www.AgileHealthInsurance.com.
AgileHealthInsurance is a Silicon Valley-based technology company and independently managed division of Health Insurance Innovations, Inc. (Nasdaq: HIIQ). This press release contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements other than historical fact, and may include statements relating to goals, plans and projections regarding new markets, products, services, growth strategies, anticipated trends in our business and anticipated changes and developments in the United States health insurance system and laws. Forward-looking statements are based on our current assumptions, expectations and beliefs are generally identifiable by use of words "may," "might," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue," or similar expressions and involve significant risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those contemplated by these statements. These risks and uncertainties include, among other things, our ability to maintain relationships and develop new relationships with health insurance carriers and distributors, our ability to retain our members, the demand for our products, the amount of commissions paid to us or changes in health insurance plan pricing practices, our ability to integrate our acquisitions, competition, changes and developments in the United States health insurance system and laws, and our ability to adapt to them, the ability to maintain and enhance our name recognition, difficulties arising from acquisitions or other strategic transactions, and our ability to build the necessary infrastructure and processes to maintain effective controls over financial reporting. These and other risk factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements are discussed in HIIQ's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) as well as other documents that may be filed by HIIQ from time to time with the Securities and Exchange Commission, which are available at www.sec.gov. Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. You should not rely on any forward-looking statement as representing our views in the future. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.