June 23, 2020

This article was originally published as an “Insurance News Item” by the Alabama Department of Insurance on June 19, 2020.

When choosing a health plan, it is important to consider the differences between your options. Some plans provide more generous coverage, while others could leave you responsible for high medical bills. A plan’s monthly premium is not the only cost to keep in mind when choosing a plan. A health plan with a lower premium may seem like a good deal, but it might mean less coverage and fewer consumer protections. It’s important to think about your costs, not only when you’re healthy and have few doctor visits, but also the potential costs if you need a lot of health care services while you’re enrolled.

In addition to costs, different plans have different rules about how they can handle disagreements with you. Consumer protection laws govern many types of health coverage, like plans purchased through an employer or the Health Insurance Marketplace at healthcare.gov. Other types of coverage, such as healthcare sharing ministries (HCSMs), short-term, limited duration plans, discount plans or risk-sharing plans, may have lower monthly premiums. But they do not cover as much in healthcare services when you need them.

Instead, they may offer discounts or ways to share your healthcare costs with others.

Things You Should Know

There is a wide variety of health coverage available. The first step in determining what coverage to purchase is to decide which plan type is right for you, your family, and your likelihood of needing a lot of healthcare services.

Major Medical Insurance, also known as comprehensive health insurance, provides benefits for a broad range of healthcare services. These health plans offer a detailed list of health benefits. They can often limit your costs if you get services from one of the providers in the plan’s network. You’re usually responsible for paying co-payments and deductibles. State insurance departments or other government agencies set rules to prevent unfair practices. Enrollees have a right to file complaints and challenge denials.

Short-term, limited duration insurance (STLDI) provides health insurance coverage for as little as one month and up to three years. These plans are designed to have lower monthly premiums. As a result, they have less coverage and consumer protections than major medical plans. For instance, they might limit how much they pay for certain services in a year. This can leave enrollees to pay for health care bills above that amount.

Healthcare Sharing Ministries (HCSMs) are organizations where members usually share a common ethical or religious belief and agree to share health care costs. Members typically pay a monthly fee that allows them to submit qualifying medical expenses for sharing with others. These health plans may pay part of your healthcare bills by sharing funds from other members. However, they are not legally required to do so. HCSMs are not insurance, so they are not supervised by state insurance departments. They do not need to comply with the consumer protections in the Affordable Care Act.

Discount Plans charge a monthly fee in exchange for access to healthcare services at a reduced fee. These plans are not insurance and do not make any payments when you need health care services.

Non-Licensed Risk-Sharing Plans pool the monthly payments of participants into a fund that can be used to pay some of your health care costs. They are also not insurance that is subject to the rules of your state’s insurance department.

Top Three Things to Remember

- Health care coverage varies greatly among the different plan types. Before you sign up for a health plan, read the policy carefully. Make sure you understand what is covered and what is not and what your costs might be if you need health care services.

- The Alabama Department of Insurance can assist you with complaints about health insurance. To find out if you are dealing with a licensed insurance company or agent, visit www.aldoi.gov.

- The NAIC provides many tools to assist you in learning which health plans best meet your needs. They include Questions to Ask and the NAIC Health Insurance Shopping tool.