Some plans have exclusions thatcould blindside consumers, such as not covering hospitalizationsthat occur on a Friday or Saturday, so consumers considering such aplan best read it very closely. (Photo: Shutterstock)

Supporters of the nation's health law condemn them. A few states, includingCalifornia and New York, have banned them. Other states limit them.

But to some insurance brokers and consumers, short-term insurance plans are an enticing,low-cost alternative for healthy people.

Related: 10 situations where short-term health insurancemight be a good idea

Now, with new federal rules allowing short-term plans that last up tothree years, agents said, some consumers are opting for these morerisky policies. Adding to the appeal is the elimination of afederal tax penalty for those without comprehensive insurance,effective next year. Short-term health plans often exclude peoplewith preexisting conditions and do not cover services mandated bythe Affordable Care Act.

Colorado resident Gene Ferry, 66, purchased a short-term healthplan this month for his wife, Stephanie, who will become eligiblefor Medicare when she turns 65 in August. The difference in themonthly premium price for her new, cheaper plan through LifeShieldNational Insurance Co. and the policy he had through the ACA is$650.

“That's a no-brainer,” said Ferry, who considers the ACA“atrocious” and supports President Donald Trump's efforts to lowercosts. “I was paying $1,000 a month and I got tired of it.”

He signed up his wife for a three-month plan and said that ifshe is still healthy in January, he will purchase another one tolast six months. But Ferry, who is covered under Medicare, said ifsomething happens to her before open enrollment ends — which inColorado is in January — he would buy a policy through theexchange.

Dan Walterman, who lives in Iowa, says he chose a short-termpolicy for himself, his wife and their 3-year-old daughter becauseit was less expensive and provided the coverage he needed.

There's a lot of “political jockeying” over the value ofshort-term plans, said Dan Walterman, owner of Premier HealthInsurance of Iowa, which offers such policies. “I think people canmake their own choices.”

Walterman, 42, said he chose a short-term policy for himself,his wife and their 3-year-old daughter — at a sixth of the price ofmore comprehensive insurance. “The plan isn't for everybody, but itworks for me,” he said, adding that he gets accident coverage butdoesn't need such things as maternity care or prescriptions.

You get what you pay for

Essentially, short-term plans cost less because they coverless.

Some plans have exclusions that could blindside consumers, suchas not covering hospitalizations that occur on a Friday or Saturdayor any injuries from sports or exercise, said Claire McAndrew,director of campaigns and partnership for Families USA, a consumeradvocacy group.

“People may see a low premium on a short-term plan and thinkthat it is a good option,” she said. “But when people actually goto use a short-term plan, it will not actually pay for many — orany — of their medical expenses.”

The plans can exclude people with preexisting conditions such as cancer orasthma and often don't cover the “essential benefits” requiredunder the health law, including maternity care, prescription drugsor substance abuse treatment. They also can have ceilings on whatthey will pay for any type of care. Insurers offering such planscan choose to cover — or not cover — what they want.

“Democrats are condemning them as 'junk plans,' but the adequacyof the health plan is in the eye of the beholder,” said MichaelCannon, director of health policy studies for the libertarianCato Institute. “The only junk insurance is a plan that doesn'tpay as it was promised.”

The plans originally were designed to fill brief gaps ininsurance coverage for people in the individual market. When theACA went into effect, the Obama administration limited short-termplans to three months, but the Trump administration this yearexpanded that to 364 days, with possible extensions of up to threeyears. Critics fear healthy people may abandon the ACA-compliantmarket to buy cheaper short-term plans, leaving sicker people inthe insurers' risk pool, which raises premiums for thosecustomers.

But some agents said the policies may be good for healthy peopleas they transition between jobs, near Medicare eligibility or go tocollege — despite significant limitations.

“It's hard to encourage those types of people to spend hundredsof dollars extra on a health insurance plan that they are rarelyusing,” said Cody Michael, director of client and broker servicesfor Independent Health Agents in Chicago.

Michael said agents also get a higher commission on the plans,providing them with more of an incentive to sell them. But headvises clients that if they do have a chronic illness, they mayface denials for coverage. “This is old-world insurance,” he said.“You basically have to be in perfect health.”

Dania Palanker, assistant research professor at Georgetown University's Center onHealth Insurance Reforms, said preexisting conditions aren'talways well understood — or well explained. A person might discovertoo late that, for example, they aren't covered if they have astroke because an old blood test showed they had highcholesterol.

But Ryan Ellis, a 40-year-old lobbyist and tax preparer inAlexandria, Va., who is considering a short-term plan for himself,his wife and his three children, said his decision will be made“very deliberately, with my eyes wide open knowing the advantagesand disadvantages.”

Buyer beware

Some agents said they offer the short-term plan as a lastresort—only after warning clients that if they have an accident orget sick, they might not be able to renew their plan. That meansthey could be stuck without insurance while waiting for the nextopen-enrollment period.

“They could really be in a world of hurt,” said Coloradoinsurance agent Eric Smith. “This is just a ticking time bomb.”

Roger Abel, of Marion, Iowa, said he's willing to take the risk.He has a short-term plan for his 2-year-old daughter. Abel said hepays about $90 a month for her, compared with more than $450 thathe would have paid for comprehensive coverage. He and his wife havea separate policy from before the Affordable Care Act tookeffect.

California resident Neena Moorjani says she wanted to buy ashort-term plan, but they are now banned in the state.

But Abel, who is an investment adviser, has a backup option. Hesaid he could always start a group health plan under his companythat would provide his daughter with more coverage.

Neena Moorjani, 45, said she wanted to buy a short-term plan butcan't because she lives in California, where they were prohibitedunder a law signed by Democratic Gov. Jerry Brown this year.Moorjani, a tax preparer in Sacramento, said she rarely gets sickand doesn't need an ACA plan.

She decided on religious-based health coverage known as aChristian ministry plan. These cost-sharing programs usemembers' fees to pay for others' medical bills. Such programs arenot regulated by government agencies and may not cover preexistingconditions or preventive care.

When California banned short-term plans, “I was really, reallyupset,” Moorjani said. “I wish I had the freedom to choose whathealth care insurance is appropriate for me.”

Kaiser Health News isa nonprofit news service covering health issues. It is aneditorially independent program of the Kaiser Family Foundation,which is not affiliated with Kaiser Permanente.

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