Insurers, too, see strong profits from plans because they generallypay out very little toward medical care when compared with the morecomprehensive ACA plans. (Photo: Shutterstock)

Sure, they're less expensive for consumers, but short-term health policies have another side:They're highly profitable for insurers and offer heftysales commissions.

Driven by rising premiums for Affordable Care Act plans,interest in short-term insurance is growing, boosted by Trumpadministration actions to ease Obama-era restrictions and possiblymake federal subsidies available to consumers to purchase them.

That's good news for brokers, who often see commissions on such policies hit 20 percent ormore.

Related: What are consumers really getting in short-termhealth plans?

On a policy costing $200 a month, for example, that couldtranslate to a $40 payment each month. By contrast, ACA plancommissions, which are often flat dollar amounts rather than apercentage of premium, can range from zero to $20 per enrollee permonth.

“Customers are paying less and I'm making more,” said CindyHoltzman, a broker in Woodstock, Ga., who said she gets 20 percenton short-term plan commissions.

Large online brokers also are eagerly eyeing the market.

Ehealth, one such firm, will “continue to shift our focus toselling short-term plans and non-ACA insurance packages,” CEO ScottFlanders told investors in October. The firm saw an 18 percentannual jump in enrollment in short-term plans this year, headded.

Insurers, too, see strong profits from plans because theygenerally pay out very little toward medical care when comparedwith the more comprehensive ACA plans.

Still, some agents like Holtzman have mixed feelings aboutselling the plans, because they offer skimpier coverage than ACAinsurance. One 58-year-old client of Holtzman's wanted one, but hehad health problems. She also learned his income qualified him foran ACA subsidy, which currently cannot be used to purchaseshort-term coverage.

“There's no way I would have considered a short-term plan forhim,” she said. “I found him an ACA plan for $360 a month with areduced deductible.” (A federal district court judge inTexas issueda ruling Dec. 14 striking down the ACA, which wouldamong other things impact the requirements of ACA coverage andsubsidies. The decision is expected to face appeal.)

Short-term plans can be far less expensive than ACA plansbecause they set annual or lifetime payment limits. Most excludepeople with medical conditions, they often don't cover prescriptiondrugs, and policies exclude in fine print some conditions ortreatments. Injuries sustained in school sports programs, forexample, often are not covered. (These plans can be purchased atany time throughout the year, which is different than plans soldthrough the federal marketplaces. The open enrollment period for those ACAplans in most states ends Dec. 15.)

Consequently, insurers providing short-term plans don't have topay as many medical bills, so they have more money left over forprofits. In forms filed with state regulators, IndependenceAmerican Insurance Co. in Ohio shows it expects 60 percent of itspremium revenue to be spent on its enrollees' medical care. Theremaining 40 percent can go to profits, executive salaries,marketing and commissions.

A 2016 report from theNational Association of Insurance Commissioners showed that, onaverage, short-term plans paid out about 67 percent of theirearnings on medical care.

That compares with ACA plans, which are required under the lawto spend at least 80 percent of premium revenue on medicalclaims.

Short-term plans have long been sold mainly as a stopgap measurefor people between jobs or school coverage. While exact figures arenot available, brokers say interest dropped when the ACA tookeffect in 2014 because many people got subsidies to buy ACA plansand having a short-term plan did not exempt consumers from thelaw's penalty for not carrying insurance.

But this year it ticked up again after Congress eliminated thepenalty for 2019 coverage. At the same time, the premiums for ACAplans rose on average more than 30 percent.

“If I don't want someone to walk out of the office with nothingat all because of cost, that's when I will bring up short-termplans,” said Kelly Rector, president of Denny & Associates, aninsurance sales brokerage in O'Fallon, a suburb of St. Louis. “ButI don't love the plans because of the risk.”

The Obama administration limited short-term plans to 90-dayincrements to reduce the number of younger or healthier people whowould leave the ACA market. That rule, the Trump administrationcomplained, forced people to reapply every few months and riskrejection by insurers if their health had declined.

This summer, the administration finalized new rules allowinginsurers to offer short-term plans for up to 12 months — and gavethem the option to allow renewals for up to three years. States canbe more restrictive or even bar such plans altogether.

Administration officials estimate short-term plans could be half the cost of the morecomprehensive ACA insurance and draw 600,000 people to enroll in2019, with 100,000 to 200,000 of those dropping ACA coverage to doso.

And recent guidance to states says they could seek permission to allowfederal subsidies to be used for short-term plans. Currently, thosesubsidies apply only to ACA-compliant plans.

Granting subsidies for short-term plans “would mean tax dollarsare not only subsidizing commissions, but also executive salariesand marketing budgets,” said Sabrina Corlette of GeorgetownUniversity Center on Health Insurance Reforms.

No state has yet applied to do that.

For now, brokers are focusing on getting their clients into somekind of coverage for next year. Commissions on both ACA andshort-term plans are getting their attention.

After several years of declining commissions for ACA plans —with some carriers cutting them altogether a couple of years ago —brokers say they are seeing a bit of a rebound.

Among Colorado ACA insurers, “it's gone from about $14 to $16per enrollee [a month] to $16 to $18,” said Louise Norris, a healthpolicy writer and co-owner of an insurance brokerage.

Rector, in Missouri, said an insurer that last year paid nocommissions has reinstated them for 2019 coverage. For her, thatdoesn't really matter, she said, because once carriers startedreducing or eliminating commissions, she began charging clients aflat rate to enroll.

Norris noted that some states changed their laws so brokerscould do just that.

At least one state, Connecticut, ruled that insurers had to paya commission, which she thinks is protective for consumers.

“Insurance regulators need to step in and make sure brokers aregetting paid,” said Norris, or some brokers, “out of necessity,”might steer people to higher-commission products, such asshort-term plans, that might not be the best answer for theirclients.

Her agency does not sell short-term or some other types oflimited-benefit plans.

“I don't want to have a client come back and say I've had aheart attack and have all these unpaid bills,” she said.

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.

Read more:

• Who's buying short-term health insurance, andwhy?
• 10 highlights of the short-term health planregs
• 3 tips for helping clients with short-termplans