Consumers coping with the high cost of health insurance are the targetmarket for new plans claiming to be lower-cost alternatives to theAffordable Care Act that fulfill the law’srequirement for health coverage.

But experts and regulators warn consumers to be cautious — andare raising red flags about one set of limited benefit plansmarketed to individuals for as little as $93 a month. Offeredthrough brokers and online ads, the plans promise to be an “ACAcompliant, affordable, integrated solution that help … individualsavoid the penalties under [the health law].”

Such skinny plans — sold for the first time to individuals —come amid uncertainty over the fate of the ACA and whether President DonaldTrump’s administration will ease rules on plans for individuals.Dozens of brokers are offering the plans.

“The Trump administration is injecting a significant amount ofconfusion into the implementation of the ACA,” said Kevin Lucia,project director at Georgetown University’s Health PolicyInstitute. “So it doesn’t surprise me that we would havearrangements popping up that might be trying to take advantage ofthat confusion.”

Apex Management Group of the Chicago area and Pennsylvania-basedXpress Healthcare have teamed up to offer the plans, and executivesfrom both companies say they don’t need approval from stateregulators to sell them. They are selling the policies across thecountry, although their websites note one state — Massachusetts —where the plans are not offered.

David Shull, Apex’s director of business development, said “thisis not insurance” and the plans are designed to meet the “bulk ofsomeone’s day-to-day needs.”

Legal and policy experts have raised concerns that the new planscould leave buyers incorrectly thinking they are exempt from payinga penalty for not having coverage. Additionally, they say, planssold to individuals must be state-licensed — and one regulator hasalready asked for an investigation.

“Generally speaking, any entity selling health insurance in thestate of California has to have a license,” Dave Jones, the GoldenState’s insurance commissioner, said earlier this month. “I haveasked the Department of Insurance staff to open an investigationwith regard to this company to ascertain whether it is in violationof California law if they are selling it in California.”

Asked about a possible investigation, Apex owner Jeffrey Bemorasemailed a statement last week saying the firm is not offering plansto individuals in California. He also noted that the individualmarket accounts for only 2 percent of the company’s business.

“To be clear, Apex Management group adheres closely to all stateand federal rules and regulations surrounding offering aself-insured MEC [minimal essential coverage] program,” he wrote.“We are test marketing our product in the individual environment,if at some point it doesn’t make sense to continue that investmentwe will not invest or focus in on that market.”

Continued on next page>>>

Kaiser HealthNews (KHN) is a national health policy news service. It isan editorially independent program of the Henry J. Kaiser FamilyFoundation.

Price-tag appeal, but what about coverage?

The new plans promise to be a solution for individuals who saythat conventional health insurance is too expensive. Those lookingfor alternatives to the ACA often earn too much to qualify for taxsubsidies under the federal law.

Donna Harper, an insurance agent who runs a two-person brokeragein Crystal Lake, Ill., found herself in that situation. She sellsthe Xpress plans — and decided to buy one herself.

Harper says she canceled her BlueCross BlueShield plan, whichdid meet the ACA’s requirements, after it rose to nearly $11,000 inpremiums this year, with a $6,000 annual deductible.

“Self-employed people are being priced out of the market,” shesaid, noting the new Xpress plan will save her more than $500 amonth.

The Xpress Minimum Essential Coverage plans come in threelevels, costing as little as $93 a month for individuals to as muchas $516 for a family. They cover preventive care — includingcertain cancer screenings and vaccinations — while providinglimited benefits for doctor visits, lab tests and lower-costprescription drugs.

There is little or no coverage for hospital, emergency room careand expensive prescription drugs, such as chemotherapy.

Harper said she generally recommends that her clients who signup for an Xpress plan also buy a hospital-only policy offered byother insurers. That extra policy would pay a set amount towardin-patient care — often ranging from $1,500 to $5,000 or so aday.

Still, experts caution that hospital bills are generally muchhigher than those amounts. A three-day stay averages $30,000,according to the federal government’s insurance website. And hospital plans canhave tougher requirements. Unlike the Xpress programs, which don’treject applicants who have preexisting medical conditions, mosthospital-only coverage often does. Harper says she personally wasrejected for one.

“I haven’t been in the hospital for 40 years, so I’m going toroll the dice,” she said. And if she winds up in thehospital? “I’ll just pay the bill.”

About 100 brokers nationwide are selling the plans, and interest“is picking up quick,” said Edward Pettola, co-owner and founder ofXpress, which for years has sold programs that offer discounts ondental, vision and prescription services.

Caveat Emptor

Experts question whether the plans exempt policyholders from theACA’s tax penalty for not having “qualified” coverage, defined as apolicy from an employer, a government program or a licensed productpurchased on the individual market.

The penalty for tax year 2017 is the greater of a flat fee or apercentage of income. The annual total could range from aslittle as $695 for an individual to as much as $3,264 for afamily.

Trump issued an executive order in October designed to looseninsurance restrictions on lower-cost, alternative forms ofcoverage, but the administration has not signaled its view on whatwould be deemed qualified coverage.

Continued on next page>>>

Kaiser HealthNews (KHN) is a national health policy news service. It isan editorially independent program of the Henry J. Kaiser Family Foundation.

Responding to questions from KHN, officials from Apex and Xpresssaid their plans are designed to be affordable, not to mimic ACAhealth plans.

“If that is what we are expected to do, just deliver what everyMarketplace plan or carriers do, provide a Bronze, Silver Plan,etc. it would not solve the problem in addressing a benefit planthat is affordable,” the companies said in a joint email on Nov.14. “Individuals are not required to have an insurance plan, but aplan that meets minimum essential coverage, the required preventivecare services.”

Bemoras, in a separate interview, said his company has beenselling a version of the plan to employers since 2015.

“As we see the political environment moving and wavering and notunderstanding what needs to be done, the individual market becameextremely attractive to us,” Bemoras said.

Still, experts who reviewed the plans for KHN said policies soldto individuals must cover 10 broad categories of health care toqualify as ACA-compliant, including hospitalization and emergencyroom care, and cannot set annual or lifetime limits.

The Xpress/Apex programs do set limits, paying zero to $2,500annually toward hospital care. Doctor visits are covered for a $20copayment, but coverage is limited to three per year. Lab tests arelimited to five services annually. To get those prices, patientshave to use a physician or facility in the PHCS network, which saysit has 900,000 providers nationwide. Low-cost generics are coveredfor as little as a $1 copay, but the amount patients pay risessharply for more expensive drugs.

“I’m very skeptical,” said attorney Alden J. Bianchi of MintzLevin, who advises firms on employee benefits. “That would be hard[to do] because in the individual market, you have to cover all theessential health benefits.”

The details can be confusing, partly because federal law allowsgroup health plans — generally those offered by large employers —to provide workers with self-funded, minimal coverage plans likethose offered by Apex, Bianchi said.

Apex’s Shull said last week in an email that the firm simplywants to offer coverage to people who otherwise could not afford anACA plan.

“There will be states that want to halt this. Why, I do notunderstand,” he wrote. “Would an individual be better off goingwithout anything? If they need prescriptions, lab or imagingservices subject to a small copay, would you want to be the one todeny them?”

Some consumers might find the price attractive, but also findthemselves vulnerable to unexpected costs, including the taxliability.

Harper, the broker who signed up for one of the plans, remainsconfident: “As long as Xpress satisfies the [mandate], which I’mtold it does, my clients are in good hands. Even if it doesn’t, Idon’t think it’s a big deal. You are saving that [the tax penaltyamount] a month.”

Kaiser HealthNews (KHN) is a national health policy news service. It is aneditorially independent program of the Henry J. Kaiser FamilyFoundation.