WAKE COUNTY, North Carolina — A crackdown on junk insurance is coming.
More information about the rules making this change is expected to be announced sometime this year, according to one expert 5 On Your Side spoke with.
The purpose of the change is to encourage people to use these policies only as emergency cover and not as a primary source of health cover.
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People are drawn to short-term, limited-duration insurance because of the low cost, but what many don’t realize is how little these policies cover until it’s too late.
Candace Trebus lost her job in May 2022 and struggled to find a health care plan to fill the gap.
“I realized my Cobra is running low, I need to get gap coverage until I can actually get a job,” Trebus said.
So Trebus ended up doing a Google search for coverage and filled out an online form.
“It wasn’t even 30 seconds after I hit send that I got the phone call,” Trebus said. “That was a huge red flag!”
She signed a policy with Federal Life Insurance through the person who called her. Weeks later, Trebus learned he needed surgery for gallstones.
“This surgery is necessary, it’s routine,” Trebus said she was told.
However, her policy did not cover the $30,000 bill.
“I’ve never had the procedure, and the first time I had it in my life, I didn’t have enough insurance,” she said.
Trebus didn’t realize she had signed up for a short-term, limited-duration plan, also known by some as junk insurance.
“[Short-term] plans don’t have the same protections as Marketplace plans, they don’t cover nearly as much,” explained Nicholas Riggs, director of the North Carolina Navigation Consortium.
- Outpatient care for patients
- Emergency medical Service
- Maternity and newborn care
- Mental health and substance use disorder services, including behavioral health treatment
- Prescription drugs
- Rehabilitation and rehabilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care
Short-term plans with a limited duration are different, they don’t have to cover these same benefits.
“Language sometimes, especially in short-term, limited-duration plans, can be confusing,” Riggs told 5 On Your Side. “Sometimes it can seem like it’s a more robust plan than it really is.”
For example, in Trebus’s case, her signed enrollment application listed surgery as a benefit of the plan. Is not.
So why did she sign up for this coverage? She said it had a lot to do with what the caller, James Bradley, told her in his sales pitch.
“He convinced me to enroll with him because he was a North Carolina native, lived here all his life. I have a good background, he had this insurance himself, it was accepted everywhere, he never had any problems. And he’d been doing that for a long time,” Trebus said Bradley told her.
However, when 5 On Your Side dug into state records, we discovered that Bradley is a Florida resident who received his license to sell insurance in North Carolina in July 2022, just five days before Trebus signed up for her policy. And Bradley wasn’t even authorized to sell federal life policies until February 2023.
“I feel embarrassed,” Trebus said of the whole situation.
The North Carolina Department of Insurance (DOI) is investigating Trebus’ complaint. Federal Life and Bradley submitted statements to the DOI denying Trebus’ claims.
Federal Life told DOI that it would reimburse Trebus for the amount it paid in premiums. Trebus received a check for $607, but when he tried to deposit it, Wells Fargo rejected it as an altered or fictitious check. It is not clear at this time why the check was returned.
“I really want other people to know that this predatory junk insurance is targeting you, vulnerable people,” Trebus said.
If you’re signing up for a plan that’s outside of the ACA Marketplace, be careful. You can’t just rely on what the brokers tell you.
There was a clause in Trebus’ contract that said that regardless of what the agent told her about the plan, the terms of the policy actually applied. So, know exactly what these terms are before you sign up.