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Consumer Insight

June 18, 2020

Worried about the high cost of health care? Health coverage can help, but not all health plans offer the same coverage or consumer protections.

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.    Other types of coverage, such as health care 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 health care services when you need them. Instead, they may offer discounts or ways to share your health care 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 health care services.     

Major Medical Insurance, also known as comprehensive health insurance, provides benefits for a broad range of health care 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 health care 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 health care 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.    

  • Your state insurance department can assist you with any complaints about health insurance, but it does not have authority over other types of coverage.  To find out if you are dealing with a licensed insurance company or agent, call or visit the website of your state insurance department. 

  • 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.


About the National Association of Insurance Commissioners

As part of our state-based system of insurance regulation in the United States, the National Association of Insurance Commissioners (NAIC) provides expertise, data, and analysis for insurance commissioners to effectively regulate the industry and protect consumers. The U.S. standard-setting organization is governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer reviews, and coordinate regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally.