State officials are warning Vermonters to steer clear of health care sharing arrangements, following a cease and desist order against four entities alleged to have marketed the unlicensed insurance in the state earlier this year.
The Department of Financial Regulation and the Attorney General’s Office say it’s important for the public to be wary of these products that promise considerably lower costs, especially with open enrollment starting on Nov. 1 and lasting through Dec. 15.
“While the cost of health care is a huge concern, there is no value to the consumer in these illegal arrangements and could only make the challenge of health care coverage worse if the entity or individual is not required to cover any potential costs,” Gov. Phil Scott said in a statement.
The July 31 cease and desist order was put out against four companies alleged to have been offering the lower-cost insurance alternatives in Vermont: the Vermont Alliance for Health Care Alternatives; the group’s national organization, Small Association Leadership Alliance; the National Association of Senior Move Managers; and Sedera Health Inc.
The way the companies deceived Vermonters, according to Financial Regulation Commissioner Mike Pieciak, was by advertising “VAHCA healthcare programs” providing preventive care coverage and “medical cost sharing” provided by Sedera Health.
These kinds of health care sharing arrangements tend to be marketed to closely resemble licensed insurance plans, offering tiers like “gold,” “silver” and “bronze,” Pieciak said.
However, officials note, they often use alternative language that makes their programs sound more welcoming, using terms like “share” instead of “premium” or “need” instead of “claim,” leading some consumers to believe the products are a viable alternative to licensed insurance plans.
But the arrangements do not legally guarantee payment of claims. While the administrators may share funds with members who have health needs, they are not obligated to do so by law.
“Vermonters should be wary of so-called ‘plans’ that seem too good to be true with low costs, but no guarantees,” Attorney General TJ Donovan said in a statement. “All Vermonters should get great care at an affordable price when they can — but there is nothing ‘affordable’ about finding out that the plan you bought just stuck you with the bill.”
The Department of Financial Regulation said no Vermonters were actually enrolled in the VAHCA’s unlicensed health insurance products, and that the respondents to the injunction earlier this year “fully cooperated” with the investigation.
The VAHCA website has since been taken down, removing information that stated its health insurance products are available in all 50 states. It also updated its marketing materials to expressly advise consumers that its health insurance products cannot be purchased by Vermont residents.
“So at this juncture, it is not an ongoing issue in Vermont,” said Stephanie Brackin, spokesperson for the DFR.
