The Obama administration banned the sale of junk health insurance–policies that offer only limited coverage–as an alternative to comprehensive coverage because junk insurance provides very limited coverage. President Trump lifted that ban so that insurers could sell people policies that cost less than comprehensive coverage. But, when it comes to health insurance, less does not offer the protection people need, causing much pain and financial distress. Who should beware?
Fortunately, people with traditional Medicare or a private Medicare Advantage plan are not buying junk insurance. Health insurers are not allowed to sell junk insurance to older adults and people with disabilities with Medicare. People with Medicare have “comprehensive” coverage.
However, if you get really ill and need costly care, beware of denials from your Medicare Advantage plan and/or out-of-pocket costs that could be as high as $7,550 a year beginning in 2021. In traditional Medicare, you need supplemental coverage to protect yourself from financial risk. With that, you should have few out-of-pocket costs.
Younger people need to recognize the difference between junk health insurance and comprehensive coverage. Michelle Andrews reports for Kaiser Health News on the fate of a 31-year old man whose insurance broker convinced him to buy junk insurance because it was less expensive than insurance available to him on his state health insurance exchange. When he was diagnosed with stage four cancer, his insurance would not cover his costly care. His junk insurance only provided limited benefits and did not cover treatment for his “pre-existing conditions.”
Keep in mind that big insurers market their junk health insurance wherever they can and don’t explain to you that they do not offer comprehensive coverage. In the case of this man, his junk insurance was issued by UnitedHealthcare. And, it did not cover the stem-cell transplant he needed or, for that matter, $800,000 in bills he incurred to treat his cancer.
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