Short-Term Insurance Policy To Pay Out $515K to MA Enrollees

Health Insurance Innovations, a short-term insurance policy under Health Plan Intermediaries Holdings, LLC, will pay $625,000 to settle allegations that the payer engaged in deceptive and illegal practices to sell health plans to Massachusetts residents.

“Massachusetts has strict regulations regarding the marketing and sale of health insurance for a reason: to prevent companies like this one from taking advantage of people regarding something as serious and essential as healthcare,” Attorney General Maura Healey said in the press release. 

“We took action against this company for engaging in deceptive practices in violation of these regulations and secured monetary relief for harmed consumers.”

The Suffolk Superior Court found that the Florida-based health plan sold health insurance policies that violated Massachusetts law. The health plan had not been filed with or received appropriate approvals from the department of insurance, but the payer told Massachusetts residents that it had received approval.

Moreover, the court found that the company had engaged in a couple of misleading or false marketing practices. The health plan falsely claimed to cover services, falsely advertised the comprehensiveness of its plans, and framed its restrictive policies in a positive light.

The payer advertised its short-term medical insurance policy as covering mental healthcare claims as well as prescription drugs. However, when mental healthcare claims or requests for prescription drug coverage came through, the policy denied them. The payer represented its provider network as covering all providers without naming the exceptions.

Health Plan Intermediaries Holdings marketed its short-term medical insurance plan as having an AM Best rating that was higher than the rating that the plan actually achieved. The payer marketed the policy by comparing it to Blue Cross Blue Shield policies and targeted individuals who searched “blue” and “cross.”

“The Commonwealth alleges that Defendant has, in Massachusetts, unlawfully marketed and sold its health insurance coverage and non-insurance discount health plans through unfair and deceptive means,” the complaint read. 

“Defendant’s conduct harmed Massachusetts consumers and the Massachusetts health insurance market. Defendant sought to profit from siphoning healthy consumers out of the Massachusetts health insurance market and selling them plans that violated Massachusetts law in multiple ways.”

Of the $625,000 that the payer will pay out, $515,000 will go toward consumer relief, $100,000 will cover civil penalties and $10,000 will address investigation costs. The company will also be disallowed from selling their non-Medicare products in Massachusetts in 2022.

Short-term health insurance plans have been a source of conflict in the healthcare industry.

Studies have shown that short-term limited-duration policies often have pre-existing conditions exclusions attached. They may also have deductibles and out-of-pocket healthcare spending limits that far exceed the maximums for plans that have to comply with the Affordable Care Act.

Researchers have long expressed concerns about the marketing strategies exhibited by short-term limited duration health plans. Studies have explored the public’s awareness of short-term health insurance policies’ lack of compliance with the Affordable Care Act. For example, searches for Affordable Care Act-compliant plans often bring up short-term plans instead.

The Trump administration supported expanding the availability and longevity of short-term limited duration health plans. The administration released an executive order that sought to prevent health plans from leveraging pre-existing conditions exclusions, but critics argued that the order did nothing to establish protections.

In contrast, the Biden administration has emphasized and bolstered Affordable Care Act marketplace coverage. Premium tax credits that enrollees can receive for Affordable Care Act health plan coverage might attract members from short-term limited-duration health plans into more comprehensive coverage, according to a study from the Urban Institute.