Page 1 GAO-20-634R
441 G St. N.W.
Washington, DC 20548
August 24, 2020
The Honorable Robert P. Casey, Jr.
Ranking Member
Special Committee on Aging
United States Senate
The Honor
able Debbie Stabenow
United States Senate
Pr
ivate Health Coverage: Results of Covert Testing for Selected Offerings
Millions of Americans obtain health insurance coverage in the individual market, which consists
mainly of private plans sold directly to consumers without access to group coverage. While
generally regulated by states, starting in 2014, the Patient Protection and Affordable Care Act
(PPACA) established a number of new federal requirements for individual health insurance
coverage. For example, PPACA prohibited insurers from excluding coverage or charging higher
premiums for pre-existing conditions and required that individual market plans cover a set of
essential health benefits, including coverage for mental health and substance abuse disorder
services, prescription drugs, and maternity and newborn care.
1
Certain types of health coverage arrangements that can be sold directly to consumers do not
have to comply with some or all of PPACA’s individual market requirements and, as a result,
may be less expensive, but also offer more limited benefits compared to PPACA-compliant
plans. For example, short-term, limited-duration insurance (STLDI), which was primarily
designed to fill gaps in coverage, is excluded from the definition of individual health insurance
under federal law and is therefore generally not subject to PPACA’s requirements for the
individual market.
1
Pub. L. No. 111-148, §§ 1201, 1302, 124 Stat. 119, 154, 163 (2010).
Page 2 GAO-20-634R
R
ecent changes to federal law and regulations could result in the increased use of PPACA-
exempt health coverage arrangements as alternatives to PPACA-compliant plans in the
individual market.
2
For example, in 2018, federal regulations expanded the availability of STLDI
plans, a type of PPACA-exempt arrangement. In addition, as of January 1, 2019, individuals
who fail to maintain “minimum essential coverage,” as required by PPACA, no longer face a tax
penalty.
3
Further, the devastating economic effects of the Coronavirus Disease 2019 (COVID-
19)
pandem
ic could create additional demand for affordable health coverage, including PPACA-
exempt plans.
With these changes, and because of their lower relative c
osts, PPACA-exempt health coverage
arrangements may be attractive to consumers, particularly those who find it difficult to afford
PPACA-compliant plans. However, such arrangements generally do not need to follow PPACA’s
requirement that plans in the individual market be presented to consumers in defined categories
outlining the extent to which they are expected to cover medical care. As a result, depending on
how they are marketed and sold, PPACA-exempt arrangements could present risks for
consumers, if, for example, they buy them mistakenly believing that coverage is as
comprehensive as for PPACA-compliant plans. Several states have raised concerns that
insurance agents and brokers (hereafter referred to as sales representatives) may try to sell
PPACA-exempt arrangements to consumers regardless of their suitability for the individual—for
example, to those with pre-existing conditions that would not be covered—or mischaracterize
the health coverage offered because of financial incentives.
4
You requested that we obtain insights on the marketing and sales practices of insurance sales
representatives who sell PPACA-exempt plans. In this report, we describe the results of covert
tests we conducted involving selected sales representatives (as described below), when
contacted by individuals stating that they had pre-existing conditions
.
In thi
s regard, we performed a number of covert tests (i.e., undercover phone calls) from
November 2019 through January 2020, posing as individuals needing to purchase health
insurance to cover pre-existing conditions. Specifically, we performed 31 covert tests to selected
sales representatives and stated that we had pre-existing conditions, such as diabetes or heart
disease, and we requested coverage for these conditions to see if the sales representative
directed us to a comprehensive PPACA-compliant plan, or a PPACA-exempt plan that does not
cover what we requested. The results of our covert testing are illustrative only of the sales and
related behaviors we experienced during the calls and are not generalizable to any specific
insurance brokerage or agency, state, or the PPACA-exempt health insurance industry at large.
2
For the purposes of this report, we are defining PPACA-exempt as including health coverage arrangements that do
not comply with PPACA’s individual health care market requirements, such as STLDI and limited benefit plans,
depending on how they are sold. We are also including arrangements whose health coverage provisions are not
explicitly addressed in federal law, such as health care sharing ministries.
3
PPACA required that most individuals maintain “minimum essential coverage” or pay a tax penalty. Health insurance
that meets the definition of “minimum essential coverage” includes certain types of government-sponsored coverage
(such as Medicare Part A or most Medicaid coverage) as well as most types of private insurance plans that provide
benefits consistent with the law, but does not include coverage that provides limited benefits. Legislation enacted in
2017 reduced this tax penalty to $0, effective January 1, 2019. Pub. L. No. 115-97, § 11081, 131 Stat. 2054, 2092
(2017).
4
Agents and brokers are generally paid by insurers and may sell products for one issuer from which they receive a
salary, or from a variety of insurers and be paid a commission for each plan they sell. We use the term “sales
representatives” in this correspondence to capture a variety of job titles that we encountered during our covert tests,
including brokers, agents, call screeners, and compliance personnel.
Page 3 GAO-20-634R
A
s part of these tests, we gauged whether sales representatives engaged in potentially
deceptive practices, such as making false or misleading statements about coverage or omitting
material information about coverage. To do this, we used the Federal Trade Commission’s
(FTC) definition of deceptive practices to evaluate the marketing practices used during our
covert tests.
5
Deceptive practices are defined in the FTC’s Policy Statement on Deception as
involving a material representation, omission or practice that is likely to mislead a consumer
acting reasonably in the circumstances.
6
For example, given the scenarios we tested, a
misleading statement could include instances in which a sales representative said that a plan
covered a pre-existing condition when it did not. An example of an omission could include
instances in which a sales representative did not disclose that the plan offered would not cover
our pre-existing condition after we expressed that we wanted this coverage, among other things.
When sales representatives indicated to us that the PPACA-exempt coverage they were selling
us would cover our pre-existing condition, we purchased the product to compare its benefits as
described in a plan document we obtained with the benefits advertised and described during the
covert phone calls.
We made the covert phone calls to representatives in a non-generalizable selection of five
states (Alabama, Florida, Kansas, Pennsylvania, and Wyoming) selected for geographic and
population-size variation. Given that STLDI plans—a type of PPACA-exempt arrangement—are
not available for purchase in some states due to state laws prohibiting them or simply because
they are not commercially available, we selected among states that offered STLDI plans.
To select sales representatives within a selected state, we performed web searches using
search terms such as “affordable health insurance,” and “cheap health insurance,” similar to
how typical consumers likely seek out and purchase insurance, in order to create a list of
entities from each state. After we created a list of potential entities, we randomly sorted the list
for each state and selected different entities for 20 of 31 tests while ensuring variability across
the states. For the remaining 11 of 31 tests, we attempted to contact a health insurance provider
directly, as opposed to going through a third-party sales representative identified via a web
search.
7
To do this, we identified insurance companies to select for testing using a health
insurance consumer-information website that provides a listing of companies that offer STLDI
plans among our selected states
.
8
5
FTC enforces provisions of the FTC Act, including 15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or
practices affecting commerce.
6
Federal Trade Commission, FTC Policy Statement on Deception, October 1983. https://www.ftc.gov/public-
statements/1983/10/ftc-policy-statement-deception, accessed June 10, 2020.
7
Although we attempted to select separate entities and to contact and test each of these selected entities only once, it
is possible that we contacted and tested the same entity on more than one undercover call. This is because our
undercover phone calls were sometimes transferred to multiple parties in the course of a single call, and we could not
always identify the entity we ultimately spoke with.
8
This website is not associated with www.healthcare.gov or the Centers for Medicare & Medicaid Services (CMS),
and we did not assess the comprehensiveness of the website, but instead used it to make non-generalizable
selections of insurers. As mentioned, this selection of insurers is not intended to be a representative sample of
insurers.
Page 4 GAO-20-634R
The 2020 O
pen Enrollment Period (OEP) for individual health insurance coverage sold through
the federally facilitated exchange
9
ran from November 1, 2019, to December 15, 2019. We
performed 16 of the 31 tests during the 2020 OEP as most individuals apply for and enroll in
health insurance plans offered on the exchanges required by PPACA during this time.
Performing tests during this time helped to ensure our testing closely resembled the experience
most individuals have when purchasing insurance. The remaining tests (15 of 31) were
conducted outside of the OEP to assess examples of marketing practices used in both time
periods. For tests conducted outside of the OEP, we explained during those phone calls that we
had recently moved to a new state so that we would trigger a PPACA Special Enrollment
Period, and therefore, would be eligible to purchase a PPACA-compliant plan.
10
Finally, to discuss the marketing and oversight of PPACA-exempt arrangements, we met with
senior officials from federal agencies, including the FTC, and Centers for Medicare & Medicaid
Services (CMS)
11
within the Department of Health and Human Services, as well as the National
Association of Insurance Commissioners (NAIC).
12
We conducted this performance audit from October 2019 to August 2020 in accordance with
generally accepted government auditing standards. Those standards require that we plan and
perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that the evidence obtained
provides a reasonable basis for our findings and conclusions based on our audit objectives. We
conducted our related investigative work in accordance with investigative standards prescribed
by the Council of the Inspectors General on Integrity and Efficiency.
S
ummary
In summary, the results of the covert tests ranged from sales representatives appropriately
explaining to us that a PPACA-exempt plan would not cover the pre-existing condition we stated
that we had, to engaging in potentially deceptive marketing practices that misrepresented or
omitted information about the products they were selling. Specifically, in 21 of 31 covert tests,
the sales representative appropriately referred us to a PPACA-compliant plan. In two of 31
covert tests, the sales representatives did not appear to engage in deceptive marketing
9
PPACA introduced significant changes to the individual market including how consumers shop for insurance
coverage. PPACA directed each state to establish an exchange—referred to as a state-based exchange—or elect to
use the federally facilitated exchange established by the Department of Health and Human Services (HHS). The
exchanges are marketplaces where individuals can compare and select among plans that meet certain standards
offered by participating private issuers licensed to engage in the business of insurance in a state.
10
A Special Enrollment Period is a time outside the yearly OEP when individuals can sign up for health insurance.
Individuals qualify for a Special Enrollment Period if they have had certain triggering events, including losing minimum
essential health coverage, permanently moving into a new state and therefore gaining access to new Qualified Health
Plans, or gaining a dependent though marriage, birth, or adoption. Depending on the Special Enrollment Period type,
individuals may have 60 days before or 60 days following the event to enroll in a plan.
11
While the business of insurance is primarily regulated by states, we met with CMS due to certain relevant federal
requirements. For example, under 45 C.F.R. § 155.220, an agent or broker that assists or facilitates enrollment of
individuals in PPACA-compliant plans through a federally-facilitated exchange must be registered with the federally
facilitated exchange and comply with certain standards of conduct. Sales representatives who sell PPACA-exempt
plans, but do not also facilitate enrollment into PPACA-compliant plans, are not subject to this requirement.
12
NAIC is the standard setting and regulatory support organization created and governed by the chief insurance
regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance
regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.
Page 5 GAO-20-634R
pr
actices but were not always consistent or clear in their explanation of the type of coverage
and plans they were selling. In the remaining eight of 31 covert tests, the sales representatives
engaged in potentially deceptive marketing practices, such as claiming our pre-existing
condition was covered when the health plan documents we received after purchase said
otherwise. We plan to refer these eight cases of potential deceptive marketing practices to the
FTC and corresponding state insurance commissioners’ offices for follow-up as appropriate.
Background
PPACA-Exempt Health Arrangements
There are several health coverage arrangements that can be sold directly to consumers and do
not need to comply with at least some of PPACA’s individual market requirements. These
include:
• STLDI: Health insurance that is primarily designed to fill temporary gaps that may occur
when an individual is transitioning from one plan or coverage to another plan or coverage. In
A
ugust 2018, the Departments of Health and Human Services, Labor, and the Treasury
issued a final rule changing the definition of STLDI from coverage that has an expirati
on
date of l
ess than 3 months from its effective date to coverage that has an expirati
on date of
l
ess than 12 months, and that is renewable for no more than 36 months.
13
STLDI is
excluded from the definition of individual health insurance coverage under federal law,
and
ther
efore generally does not need to comply with PPACA’s individual market requirements.
• Limited benefit plans: Different types of health insurance options that offer limited benefits,
also known as “excepted benefits”. For example, these include indemnity plans that cover a
s
et dollar amount for limited prescription benefits, hospital stays or physician visits, or plans
that offer accident-only coverage, limited scope dental or vision coverage, or coverage for
a
s
pecified disease. These plans may be combined to mirror more comprehensive cover
age,
but
generally do not need to comply with PPACA individual market requirements, dependi
ng
on how they are offered.
• Health care sharing ministries: Entities whose members share a common set of religious or
ethical beliefs and contribute funds to pay for medical expenses of other members; however,
pay
ment for member claims is not guaranteed. Health care sharing ministries in some ways
may resemble insurance, but the requirements for what is covered are not explicitly
addressed in federal law and typically do not comply with PPACA.
14
In addition, according to
N
AIC officials, the majority of states have exempted health care sharing ministries from s
tate
i
nsurance laws provided they meet certain requirements, and in states where they ar
e not
ex
plicitly exempted, states may not regulate them.
• Association health plans (AHP): Health insurance coverage sponsored by a group or
association of employers, which may include trade associations who make plans available
13
83 Fed. Reg. 38,212 (Aug. 3, 2018).The definition of STDLI as coverage that has an expiration date of less than 3
months from its effective date was promulgated in 2016. 81 Fed. Reg. 75,316 (Oct. 31, 2016). Prior to the 2016
rulemaking, STLDI had been defined as coverage that has an expiration date within 12 months from its effective date,
but was not renewable past this time. See 62 Fed. Reg. 16,894 (April 8, 1997).
14
While not as common, there are other arrangements that similarly resemble insurance, but are also not explicitly
addressed in federal law, such as farm bureau coverage currently offered in three states—Iowa, Kansas, and
Tennessee. Farm bureau membership is open to anyone who pays a membership fee.
Page 6 GAO-20-634R
to their members.
15
While these plans are generally considered group health insurance
coverage, historically, AHPs sold directly to consumers under certain circumstances were
considered individual health insurance and subject to relevant PPACA requirements.
16
However, in June 2018, the Department of Labor issued a final rule that expanded
provisions for determining when employers may join together to offer AHPs, which included
self-employed individuals without employees. This would have broadened the types of AHPs
that were considered large group insurance and could be sold to the self-employed,
meaning such plans would no longer be subject to certain small group and individual market
requirements, such as the requirement to cover essential health benefits.
17
However, in
March 2019, a federal court vacated this provision of the final rule; however, the Department
of Labor has appealed the decision.
18
According to NAIC officials, some states have
authorized the sale of certain AHPs that meet the rule’s broader definition.
Data on the extent to which consumers purchase PPACA-exempt health coverage
arrangements are limited, but generally suggest that use of such arrangements is growing. For
example, the most recently available estimate of the STLDI market was about 87,000 covered
people in 2018, but these data are based on policies issued before the 2018 final rule that
extended the allowed duration for STLDI plans. In October 2019, NAIC issued a data call to
better understand the extent of the STLDI market in each state.
19
In another example, while the
estimated number of individuals enrolled in health care sharing ministries in 2010 prior to
PPACA was less than 200,000, as of 2018 the enrollment is estimated to be about 1 million
people.
20
Oversight of the Marketing and Sale of PPACA-Exempt Arrangements
Under the McCarran-Ferguson Act, the business of insurance is primarily regulated by states.
21
Therefore, states are the primary regulators of private health insurance, including the marketing
and sale of PPACA-exempt health coverage arrangements. As such, each state sets its own
standards for most PPACA-exempt arrangements and licenses and oversees insurers, and
third-party sales representatives that sell such arrangements in their state. According to NAIC
officials, state insurance commissioners may take enforcement actions against insurers and
15
Association health plans are formed under the authority of the Employee Retirement Income Security Act of 1974.
This Act authorizes some employer associations to qualify as “employers” for the purpose of sponsoring an employee
benefit plan, such as a plan that offers medical, surgical, or hospital care or benefits, so long as the group or
association of employers acts “in the interest of an employer.” 29 U.S.C. § 1002.
16
Centers for Medicare & Medicaid Services, Application of Individual and Group Market Requirements under Title
XXVII of the Public Health Service Act when Insurance Coverage Is Sold to, or through, Associations, (Baltimore,
MD.: September 2011).
17
83 Fed. Reg. 28,912 (June 21, 2018).
18
New York v. Dep’t of Labor, 363 F. Supp. 3d. 109 (D.D.C. 2019), appeal docketed, No. 19-5125 (D.C. Cir. Apr. 30,
2019).
19
For the 2018 estimate see National Association of Insurance Commissioners, 2018 Accident and Health Policy
Experience Report (NAIC, 2019).
20
See K. Lucia, J. Giovannelli, S. Corlette et al., “State Regulation of Coverage Options Outside of the Affordable
Care Act: Limiting the Risk to the Individual Market.” The Commonwealth Fund, March 2018
21
Pub. L. No. 79-15, 59 Stat. 33 (1945), codified as amended at 15 U.S.C. §§ 1011 - 1015.
Page 7 GAO-20-634R
s
ales representatives that engage in deceptive marketing practices, such as by suspending or
revoking their license to sell insurance.
22
FTC and CMS also have a more limited role in overseeing the marketing and sale of PPACA-
exempt arrangements. Specifically, FTC enforces provisions of the FTC Act, including 15 U.S.C.
§ 45
(a), which prohibits unfair or deceptive acts or practices affecting commerce.
23
Under the
l
aw, FTC’s jurisdiction in this area includes instances where entities sell health car
e
ar
rangements, but are not themselves engaged in the business of insurance—such as business
associations that may offer health insurance plans to their members, but are not themselves
engaged in the business of insurance.
24
Similarly, federal regulations require sales
representatives that assist or facilitate enrollment in PPACA-compliant plans sold thro
ugh the
w
ww.healthcare.gov website to provide consumers with correct information,
25
without omission
of m
aterial fact, and refrain from marketing or conduct that is misleading.
26
However, sales
representatives who sell PPACA-exempt plans, but do not also facilitate enrollment i
nto the
PPAC
A-compliant plans sold through www.healthcare.gov, are not subject to this requirem
ent.
A
lthough CMS does not provide oversight of PPACA-exempt plans, officials told us
that the
agency works with state insurance commissioners to confirm that insurance sales
representatives listed on www.healthcare.gov —which can include those that sell both PPACA-
compliant and PPACA exempt plans—have an active state license to sell insurance
.
Covert Tests Identified Potentially Deceptive Marketing Practices by Some Insurance
Sales Representatives
The results of our 31 covert tests—all of which included individuals requesting coverage for pre-
existing conditions—ranged from insurance sales representatives appropriately explaining that a
PPACA-exempt plan would not cover the pre-existing condition, to engaging in potentially
22
According to NAIC officials, states may exempt policies issued by out-of-state associations from some or all of their
market standards. Specifically, in out-of-state associations—which are separate from AHPs—insurers file plans for
approval in one state and sell the same plans in other states, which may lack authority to regulate such associations.
Where associations are exempt from standards, they are regulated by the state of approval, rather than the state in
which consumers’ purchase coverage.
23
An “unfair” act or practice is one that is likely to cause substantial injury to consumers which is not reasonably
avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition,
whereas a “deceptive” act or practice is one involving a material representation, omission or practice that is likely to
mislead a consumer acting reasonably in the circumstances. For purposes of this report, we focus on deceptive acts
or practices because of the results of our covert tests.
24
Specifically, those activities that constitute the “business of insurance” are exempted from the FTCs jurisdiction, but
only to the extent that such activities are regulated by state law. 15 U.S.C. § 1012(b).
25
Sometimes called the “health care exchange,” www.healthcare.gov is a federal government website managed by
CMS. The website allows users to enroll in PPACA-compliant plans and apply for various marketplace insurance
options.
26
45 C.F.R. § 155.220(j)(2). An agent or broker that assists or facilitates enrollment of individuals in PPACA-compliant
“qualified health plans” through a federally facilitated exchange or state-based exchange on the federal platform must
be registered with the federally facilitated exchange and comply with certain standards of conduct. These standards
include the requirement that the individual or entity "must provide consumers with correct information, without
omission of material fact, regarding the federally facilitated Exchanges, [PPACA-compliant plans] offered through the
federally facilitated exchanges, and insurance affordability programs, and refrain from marketing or conduct that is
misleading (including by having a direct enrollment Web site that the Department of Health and Human Services
determines could mislead a consumer into believing they are visiting HealthCare.gov)."
Page 8 GAO-20-634R
dec
eptive marketing practices that omitted or misrepresented information about the products
they were selling. Specifically,
• In 21 of 31 covert tests, the sales representatives appropriately referred us to PPACA-
compliant plans. In these instances, the representatives typically referred us
to the
feder
al government’s PPACA health care exc
hange.
• For
example, one sales representative stated that a PPACA plan woul
d be a
better
option for us and recommended that we contact the federal PPACA
exchange for coverage required for our pre-existing condition. The representativ
e
tol
d us that plans sold by him lacked coverage for our condition, which in this
case was diabetes. The representative further told us that our condition would
di
squalify us from a short-term health plan and also informed us that our
condition would not be covered in the event that anyone else tried to sell us suc
h
a plan.
• In t
wo of 31 covert tests, the sales representatives did not appear to engage in deceptiv
e
m
arketing practices, but the representatives were not always consistent or clear in their
explanation of the type of coverage and plans they were selling.
• For example, one sales representative recommended a PPACA plan due to the
pre-existing condition that we stated we had and told us that the plan als
o
i
ncluded an accidental and critical illness benefit to cover the financial ga
p that
c
ould be created by the plan’s deductible and high out-of-pocket maximum, as
well as a basic dental plan. Information we later obtained from the representative
s
howed that the PPACA plan was free of cost due to our stated incom
e, and that
100 per
cent of the price the representative quoted during the call was for t
he
addi
tional gap coverage and dental plans. The sales representative had
not
c
learly disclosed that we could obtain comprehensive PPACA cover
age at no
cost, nor did he clarify that the additional coverage he sold us was optional and
w
ould cost additional money until we specifically requested this information
and
s
poke to the representative in a follow-up phone call made after reviewi
ng the
doc
uments we obtained. The representative explained that this optional cover
age
pr
ovided value at a cost that was significantly less money than our s
tated
monthly budget.
• In th
e remaining eight of 31 covert tests, the sales representatives engaged in potentially
deceptive marketing practices while we were posing as customers with pre-existi
ng
conditions, by omitting or misrepresenting information about the products they were
s
elling.
27
While conducting the covert tests, we were provided with applications
containing terms and disclosures about the purchase that we were required to sign
electronically. However, the oral descriptions provided by the sales representatives di
d
not al
ways align with these terms and disclosures. We plan to refer these eight cases of
potential deceptive marketing practices to the FTC and corresponding state insurance
c
ommissioners’ offices as appropriate.
27
In performing our 31 covert tests, we purchased a total of eight limited benefit health insurance plans and one
health care sharing ministry membership across nine tests. For further details on the covert tests and the products we
purchased, see Enclosure.
Page 9 GAO-20-634R
• For
example, one sales representative told us that we were purchasi
ng a
c
omprehensive health insurance plan, but instead sold us two limited benefi
t
i
nsurance plans. During the call, we repeatedly informed the sales representativ
e
that we had diabetes and had recently been seeking treatment for the condition.
However, the application filled out by the sales representative on our behalf, which w
e
l
ater obtained, stated that we had not been treated for or diagnosed with diabetes for
the past 5 years. This indicates that the broker may have intentionally falsifi
ed
i
nformation on the application, which allowed the application to be submi
tted and
the insurance policy to be purchased, but would not allow health care services
related to our pre-existing condition to actually be covered under the terms
of the
pol
icy. Figure 1 illustrates where the sales representative falsified informati
on on
our
application. Further, during this call, the sales representative told us that t
he
pl
an’s pre-existing condition limitations only applied to people who were pregnant or
had cancer, but plan documents we later obtained as part of our purchase showed
t
hat pre-existing condition limitations would also apply to treatment for diabetes.
Figure 1: Illustration of Falsified Information on Application for Insurance
• I
n another example, a sales representative for another company told us multipl
e
ti
mes that the plan would cover our diabetes and necessary medication, includi
ng
insulin. However, plan documents we obtained after purchase stated that pre-
existing conditions and prescription drug costs were not covered by the plan.
While the sales representative acknowledged the plan was not comprehensiv
e,
the r
epresentative described it as a typical health insurance plan similar
to
c
overage offered by employers. However, the representative sold us a limi
ted
benefit health insurance supplement and a vision and dental discount program,
Page 10 GAO-20-634R
w
hich we had not sought. Additionally, when we asked the name of the insurance
carrier, the representative instead told us the name of the plan itself instead of
the insurance company.
While the results of our covert tests cannot be generalized to all sales representatives, any particular
state, or the PPACA-exempt health care industry at large, they illustrate how sales representatives in
some cases engaged in potentially deceptive marketing practices that could lead a consumer to make
poor decisions with the potential to incur significant and unexpected costs if plans purchased do not
meet their health coverage needs. The enclosure provides additional details on each of the 31
covert tests we performed. To view selected video clips of these covert tests, go to
https://www.gao.gov/products/GAO-20-634R.
A
gency Comments
We provided a draft of this product to FTC, HHS, and NAIC for comment. FTC, HHS, and NAIC
provided technical comments that we incorporated as appropriate. HHS also provided written
comments, which are attached as enclosure II.
In i
ts comments, HHS stated that it plans to conduct a review of sales representatives who we
identified as engaging in potentially deceptive marketing practices to determine whether they
are registered with the PPACA federal exchange and take action as appropriate. HHS also
described steps it takes to validate the state licenses of sales representatives who are
registered to work with the exchange and noted that these sales representatives sign
agreements that prohibit them from providing misleading or false information to consumers or to
the exchange. HHS also stated that STLDI plans offer another option for consumers facing
rising costs of PPACA-compliant plans and noted our finding that sales representatives we
identified as engaging in potentially deceptive marketing practices did not offer or sell STLDI
plans. With the scope of our review, we did not evaluate HHS’s efforts to validate the selected
sales representatives’ licenses or assess health insurance costs and other factors that may lead
individuals to select STLDI or other PPACA-exempt plans.
- -
- - -
A
s agreed with your offices, unless you publicly announce the contents of this report earlier, we
plan no further distribution until 30 days from the report date. At that time, we will send copies of
this report to appropriate congressional committees, the Chairman of the Federal Trade
Commission, the Administrator of CMS, the Chief Executive Officer of the National Association
of Insurance Commissioners, and other interested parties. In addition, the report will be
available at no charge on the GAO website at http://www.gao.gov.
Page 11 GAO-20-634R
If y
ou or your staff have any questions concerning this report, please contact Seto J. Bagdoyan
at (202) 512-6722 or [email protected], or Howard Arp at [email protected]. Contact points for
our Offices of Congressional Relations and Public Affairs may be found on the last page of this
report. GAO staff who made key contributions to this report were Robert Graves (Assistant
Director), Jonathon Oldmixon (Assistant Director), Scott Clayton (Analyst-in-Charge), Barbara
Lewis, Maria McMullen, James Murphy, George Ogilvie, Ramon Rodriguez, Daniel Silva,
Rachel Svoboda, and Elizabeth Wood.
Se
to J. Bagdoyan
Director of Audits; Forensic Audits and Investigative Service
Howard Arp
Director of Investigations; Forensic Audits and Investigative Service
E
nclosures – 2
Page 12 GAO-20-634R
Enclosure 1
The table below describes the results of 31 covert tests (i.e., undercover phone calls) we performed from November 2019 through
January 2020, posing as individuals needing to purchase health insurance to cover pre-existing conditions. For tests performed
outside the federal health insurance exchange 2020 open enrollment period of November 1, 2019 – December 15, 2019, we
explained that we had recently moved to a new state so that we would trigger a Patient Protection and Affordable Care Act (PPACA)
Special Enrollment Period, and therefore, would be eligible to purchase a PPACA-compliant plan. During these covert tests, we
stated that we had pre-existing conditions, such as diabetes or heart disease, to see if the sales representative would direct us to a
comprehensive PPACA-compliant plan, or to a PPACA-exempt plan that does not cover what we requested. As part of these tests,
we observed whether sales representatives engaged in potentially deceptive practices, such as making false or misleading
statements about coverage or omitting material information about coverage. The results of our covert testing are presented below by
test outcome and are illustrative only and not generalizable to any specific insurance brokerage or agency, state, or the PPACA-
exempt health insurance industry at large.
Table 1. Results of Covert Phone Tests to Insurance Sales Representatives When Contacted by Individuals Claiming to Have Pre-existing Conditions
Test
Number
Covert
Scenario
Coverage GAO
Purchased
Test Outcome
1
Test performed
outside the federal
health insurance
exchange 2020 open
enrollment period
with the pre-existing
condition of heart
disease
a
purchased
The
sales representative appropriately referred us to a Patient Protection and
Affordable Care Act (PPACA)-compliant plan. Specifically, during the call, the sales
representative stated that a short-term insurance plan would not provide coverage
for us due to our pre-existing condition. The representative further explained the
steps we should take to obtain the proof necessary to qualify for a Special
Enrollment Period in order to buy a PPACA-compliant plan outside of open
enrollment.
2
Test performed
during the federal
health insurance
exchange 2020 open
enrollment period
with the pre-existing
condition of heart
disease
purchased
The
sales representative appropriately referred us to a PPACA-compliant plan. The
sales representative told us PPACA plans covered pre-existing conditions,
compared the benefits and costs of several options, and emailed us a summary of
benefits to review.
Page 13 GAO-20-634R
T
est
Number
Covert
Scenario
Coverage GAO
Purchased
Test Outcome
3
Test performed
outside the federal
health insurance
exchange 2020 open
enrollment period
with the pre-existing
condition of heart
disease
purchased
The
sales representative appropriately referred us to a PPACA-compliant plan. The
representative told us that we would not qualify for short-term health insurance
because of our pre-existing condition. The representative told us a PPACA plan
would provide coverage for our pre-existing condition, noted that our recent move to
a different state would qualify us to obtain PPACA coverage outside the open
enrollment period, and provided us with contact information for the PPACA federal
exchange.
4
Test performed
outside the federal
health insurance
exchange 2020 open
enrollment period
with the pre-existing
condition of diabetes
purchased
The
sales representative appropriately referred us to a PPACA-compliant plan. The
sales representative recommended we consider a PPACA plan first to cover our pre-
existing condition and told us the plans he sold would not cover our pre-existing
condition until after 12 months.
5
Test performed
during the federal
health insurance
exchange 2020 open
enrollment period
with the pre-existing
condition of diabetes
purchased
The
sales representative appropriately referred us to a PPACA-compliant plan. The
sales representative recommended a PPACA plan that would cover our pre-existing
condition and informed us that we were eligible to receive federal subsidies that
would lower the cost of our monthly premium due to our stated low income. A
different representative we spoke with during the call also informed us that non-
PPACA plans would not cover our pre-existing condition.
6
Test performed
during the federal
health insurance
exchange 2020 open
enrollment period,
with the pre-existing
condition of heart
disease
purchased
The
sales representative appropriately referred us to a PPACA-compliant plan. The
sales representative informed us that we qualified for federal PPACA subsidies due
to our stated low income and stated that, unlike short-term plans, PPACA plans
could not disqualify us because of our pre-existing condition. The representative
also compared the benefits and costs of several options, and emailed us written
information to review.
Page 14 GAO-20-634R
T
est
Number
Covert
Scenario
Coverage GAO
Purchased
Test Outcome
7
Test performed
outside the federal
health insurance
exchange 2020 open
enrollment period with
the pre-existing
condition of heart
disease
purchased
The
sales representative appropriately referred us to a PPACA-compliant plan. The
sales representative stated that he could sell us a short-term plan, but he wanted to
ensure we found a plan that covered our pre-existing condition and provided us with
contact information for the PPACA federal exchange.
8
Test performed during
the federal health
insurance exchange
2020 open enrollment
period with the pre-
existing condition of
heart disease
purchased
The
sales representative appropriately referred us to a PPACA-compliant plan. The
sales representative explained that short-term insurance wouldn’t cover our pre-
existing condition and recommended we contact the PPACA federal exchange for a
health insurance plan that would cover it.
9
Test performed during
the federal health
insurance exchange
2020 open enrollment
period, with the pre-
existing condition of
diabetes
purchased
The
sales representative appropriately referred us to a PPACA-compliant plan. The
sales representative we spoke with said we would not qualify for the plans offered
due to our pre-existing condition and provided us with PPACA federal exchange
contact information for a plan that would cover it.
10
Test performed
outside the federal
health insurance
exchange 2020 open
enrollment period,
with the pre-existing
condition of heart
disease
purchased
The
sales representative appropriately referred us to a PPACA-compliant plan. The
sales representative we spoke with explained that our recent move qualified us to
enroll in a PPACA-compliant plan outside of open enrollment and told us to visit the
PPACA federal exchange web site.
Page 15 GAO-20-634R
T
est
Number
Covert
Scenario
Coverage GAO
Purchased
Test Outcome
11
Test performed during
the federal health
insurance exchange
2020 open enrollment
period, with the pre-
existing condition of
heart disease
purchased
The
sales representative appropriately referred us to a PPACA-compliant plan. The
sales representative we spoke with informed us that we may qualify for a federal
subsidy if we enrolled for a PPACA plan through the federal exchange and provided
us information on how to contact the exchange.
12
Test performed
outside the federal
health insurance
exchange 2020 open
enrollment period,
with the pre-existing
condition of heart
disease
purchased
The
sales representative appropriately referred us to a PPACA-compliant plan. The
sales representative we spoke with said that she did not recommend a short-term
plan due to our pre-existing condition and told us that a PPACA plan would be the
best option for us, explaining that our recent move qualified us to purchase a plan
outside of open enrollment.
13
Test performed
outside the federal
health insurance
exchange 2020 open
enrollment period with
the pre-existing
condition of diabetes
purchased
The
sales representative appropriately referred us to a PPACA-compliant plan. The
sales representative told us that we may be eligible for federal subsidies due to our
stated low income and advised us to contact the PPACA federal exchange. The
representative told us that we would not qualify for a short-term insurance plan due
to our pre-existing condition and also informed us that our condition would not be
covered in the event that anyone else tried to sell us such a plan.
14
Test performed during
the federal health
insurance exchange
2020 open enrollment
period with the pre-
existing condition of
diabetes
purchased
The
sales representative appropriately referred us to a PPACA-compliant plan. The
sales representative we spoke with informed us that the insurance she sold would
not be our best option due to our pre-existing condition and recommended we
contact the PPACA federal exchange.
Page 16 GAO-20-634R
T
est
Number
Covert
Scenario
Coverage GAO
Purchased
Test Outcome
15
Test performed
outside the federal
health insurance
exchange 2020 open
enrollment period with
the pre-existing
condition of heart
disease
purchased
The
sales representative appropriately referred us to a PPACA-compliant plan. The
representatives we spoke with recommended that we contact the PPACA federal
exchange and explained that we likely would qualify to enroll outside of open
enrollment because of our recent move. One sales representative informed us that
short-term plans would not be good for us due to our pre-existing condition.
16
Test performed during
the federal health
insurance exchange
2020 open enrollment
period with the pre-
existing condition of
heart disease
purchased
The sales representative appropriately referred us to a PPACA-compliant plan. The
sales representative we spoke with recommended that we obtain a PPACA plan if we
had a pre-existing condition, and assisted us with determining whether we would
potentially qualify to receive federal subsidies to help pay for the plan.
17
Test performed during
the federal health
insurance exchange
2020 open enrollment
period with the pre-
existing condition of
diabetes
purchased
The sales representative appropriately referred us to a PPACA-compliant plan. The
sales representative recommended a PPACA plan, stating it would cover pre-
existing
conditions, and transferred us to a PPACA federal exchange representative.
18
Test performed during
the federal health
insurance exchange
2020 open enrollment
period with the pre-
existing condition of
diabetes
purchased
The
sales representative appropriately referred us to a PPACA-compliant plan. The
sales representative we spoke with provided cost and benefit information for PPACA
plans and e-mailed us information about them. The representative did not
recommend a short-term plan due to our pre-existing condition.
Page 17 GAO-20-634R
T
est
Number
Covert
Scenario
Coverage GAO
Purchased
Test Outcome
19
Test performed
outside the federal
health insurance
exchange 2020 open
enrollment period with
the pre-existing
condition of diabetes
purchased
The
sales representative appropriately referred us to a PPACA-compliant plan. The
sales representative told us that a PPACA plan would cover our pre-existing
condition and that short-term plans would not. The representative checked costs and
benefits of multiple plans on the federal PPACA exchange, told us that our recent
move qualified us to enroll outside of open enrollment, and provided us with contact
information for the PPACA federal exchange.
20
Test performed
outside the federal
health insurance
exchange 2020 open
enrollment period with
the pre-existing
condition of heart
disease
purchased
The
sales representative appropriately referred us to a PPACA-compliant plan. The
sales representative stated because of our recent move we would likely qualify for a
PPACA plan outside of open enrollment, referred us to a PPACA plan specialist due
to our pre-existing condition, and told us that while he sold short-term plans, a short-
term plan would not immediately cover our pre-existing condition.
21
Test performed during
the federal health
insurance exchange
2020 open enrollment
period with the pre-
existing condition of
heart disease
purchased
The
sales representative appropriately referred us to a PPACA-compliant plan. The
sales representative we spoke with told us the short-term plans she sold did not
cover prescription drugs or pre-existing conditions and were not PPACA-compliant,
and recommended that we contact the PPACA federal exchange.
Page 18 GAO-20-634R
T
est
Number
Covert
Scenario
Coverage GAO
Purchased
Test Outcome
22
Test performed during
the federal health
insurance exchange
2020 open enrollment
period with the pre-
existing condition of
heart disease
plan
The sales representative did not appear to engage in deceptive marketing practices,
but was not clear in the explanation of certain information provided to us. The
representative accurately described his recommended policy as a non-PPACA
indemnity insurance plan and described pre-existing condition limitations that would
prevent us from immediately receiving coverage. The representative also provided us
with the opportunity to review plan documents for 7 days after signing the application
prior to being billed.
The representative stated that the prescription discount program he was enrolling us
in did not generally cover name brand medications. When we inquired about the
potential need for name-brand medications, he told us he would add “prescription
coverage” to our plan. However, documents we later obtained indicate that we were
enrolled in two non-insurance prescription discount programs, which the
representative previously acknowledged would generally not cover name-brand
medications. The representative initially stated that he could not speak to whether we
would potentially be prescribed name brand medications in the future because he
was not a doctor, but in a subsequent phone call told us that it was unlikely. The
representative also did not disclose our total cost included a membership that
provides individuals with service and product discounts.
Page 19 GAO-20-634R
T
est
Number
Covert
Scenario
Coverage GAO
Purchased
Test Outcome
23
Test performed
outside the federal
health insurance
exchange 2020 open
enrollment period with
the pre-existing
condition of heart
disease
purchased
The sales representative did not appear to engage in deceptive marketing practices,
but was not clear in the explanation of the type of plans that were being offered. The
customer service representative recommended a PPACA plan due to our pre-
existing condition.
The representative stated that the plan also included an accidental
and critical illness benefit to cover the financial gap that could be created by the
plan’s deductible and high out-of-pocket maximum, as well as a basic dental plan.
Information we later obtained showed that the PPACA plan was free of cost due to
our stated income and that 100 percent of the price quoted in the call was for the
additional gap coverage and dental plans. However, the representative did not
clearly disclose that we could obtain comprehensive PPACA coverage at no cost. He
also did not clarify that the additional coverage he sold us was optional and would
cost additional money until we specifically requested this information and spoke to
the representative in a follow-up phone call made after reviewing the documents we
obtained. The representative explained that this optional coverage provided value at
a cost that was significantly less money than our stated monthly budget.
24
Test performed during
the federal health
insurance exchange
2020 open enrollment
period with the pre-
existing condition of
diabetes
plan
The
sales representative we spoke with engaged in potentially deceptive marketing
practices by misrepresenting and omitting information. Specifically, the
representative stated the plan would cover our pre-existing condition, but did not
inform us that illness resulting from pre-existing conditions would not be covered for
12 months or that there would be a limit on covered doctor’s visits. The
representative described the plan he was selling as “a national PPO”
that was “a type
of insurance” but did not make it clear it was not PPACA-compliant insurance.
b
During the call, the agent denied our multiple requests to provide documentation
describing the plan benefits prior to purchase. After purchasing the plan and
reviewing plan documents, we found that the representative had sold us a variety of
different products – none of which were major medical insurance. These products
included a non-insurance prescription discount program, a limited benefit indemnity
insurance plan, and a membership that provides individuals with non-insurance
services and product discounts.
Page 20 GAO-20-634R
T
est
Number
Covert
Scenario
Coverage GAO
Purchased
Test Outcome
25
Test performed during
the federal health
insurance exchange
2020 open enrollment
period with the pre-
existing condition of
diabetes
plan
The
sales representative we spoke with engaged in potentially deceptive marketing
practices by misrepresenting and omitting information. For example, the
representative stated that diabetes was covered by the plan and that our diabetes
was not a pre-existing condition. However, documents we later obtained indicated
that our diabetes would be considered a pre-existing condition, and would not be
covered for 12 months under the limited benefit plan that we were sold. The
representative quoted benefits that did not match information in the documents we
received. For example, the representative said our coverage included doctors’ visits
but did not disclose we were limited to three office visits per plan year.
Additionally, we were not informed that we were being enrolled and charged monthly
for membership in an association that offers discounts and other benefits or that we
were enrolling in a limited benefit health insurance plan. Plan documents we later
obtained showed that we were also enrolled in two non-insurance prescription
discount programs, though the representative did not inform us that this was the case
during the call.
Page 21 GAO-20-634R
T
est
Number
Covert
Scenario
Coverage GAO
Purchased
Test Outcome
26
Test performed
outside the federal
health insurance
exchange 2020 open
enrollment period with
the pre-existing
condition of diabetes
plan
The sales representative we spoke with engaged in potentially deceptive marketing
practices by misrepresenting and omitting information. The representative told us
that he was enrolling us into
a health plan that was subsidized by the state due to our
low income, and that the state required us to purchase supplemental insurance in
order to receive these benefits. Moreover, the representative told us that the state
subsidy was not available to anyone if they received comprehensive medical
insurance. However, when we subsequently asked another representative for
clarification on this issue, the representative told us that the state had nothing to do
with the product we were purchasing and that the state was not providing any
financial assistance.
During this call, the initial sales representative also stated that the limited benefit
insurance plan he recommended was better than a PPACA plan and quoted benefits
that did not match information in the documents we received. For example, the
representative stated that the plan would completely cover emergency room visits,
but plan documents showed that the plan does not have any benefits for emergency
room treatment, and the plan’s certificate of coverage does not guarantee the
amount we would be required to pay for health care visits that the representative
quoted us. The representative also did not inform us that
there would be no coverage
for our pre-existing condition for 12 months following the effective date of our plan or
that the plan would limit us to three physician visits per coverage year. Further, a
representative also told us that we would receive free diabetic medication, but we
were enrolled in two non-insurance prescription discount programs that would not
provide us with our prescription for free.
During the call, this representative did not inform us that we were being enrolled in
an accidental death and dismemberment policy or joining
a small business advocacy,
education, and service association. Before completing
the purchase, a representative
told us that we did not need to read the policy application prior to signing and
enrolling because it did not contain information that pertained to our coverage.
Page 22 GAO-20-634R
T
est
Number
Covert
Scenario
Coverage GAO
Purchased
Test Outcome
27
Test performed
outside the federal
health insurance
exchange 2020 open
enrollment period with
the pre-existing
condition of diabetes.
plan
The
sales representative we spoke with engaged in potentially deceptive marketing
practices by misrepresenting and omitting information. Specifically, the
representative told us multiple times that the plan would cover our diabetes and
necessary medication, including insulin. However, plan documents we obtained after
purchase stated that pre-existing conditions and prescription drug costs were not
covered by the plan.
While acknowledging that the plan was not comprehensive, the representative
desc
ribed it as a typical health insurance plan similar to coverage offered by
employers. However, the representative sold us a limited benefit health insurance
supplement and a vision and dental discount program. When we asked the name of
the insurance carrier, the representative instead told us the name of the plan itself
instead of the insurance company behind it. The representative also would not
provide us with documentation describing the plan’s benefits prior to our enrollment.
28
Test performed during
the federal health
insurance exchange
2020 open enrollment
period, with the pre-
existing condition of
diabetes
sharing ministry
The
sales representative we spoke with engaged in potentially deceptive marketing
practices by misrepresenting and omitting information. The representative falsely
referred to the product as an insurance plan that met the PPACA requirements and
that was sold by an insurance carrier and did not state that it was a non-insurance
health share plan. Unlike a PPACA plan, under this health share plan there is a 12
month pre-existing condition waiting period on inpatient hospitalization.
After we provided an income that would allow us to receive subsidies and asked
about PPACA coverage, the representative stated that it was difficult to find
insurance and available plans in our state, and that the plan he was offering was
what was available. However, we independently identified several PPACA plans that
were available to our applicant in the state at that time. The representative also told
us that we would be required to enroll in the plan prior to receiving documents
describing the policy’s coverage.
Page 23 GAO-20-634R
T
est
Number
Covert
Scenario
Coverage GAO
Purchased
Test Outcome
29
Test performed
outside the federal
health insurance
exchange 2020 open
enrollment period,
with the pre-existing
condition of diabetes
plan
The sales representative we spoke with engaged in potentially deceptive marketing
practices by misrepresenting and omitting information. During the call, we repeatedly
informed the representatives we spoke with that we had diabetes and had recently been
seeking treatment for the condition. However, the application filled out by the representative on
our behalf, which we obtained after the call, incorrectly stated we had not been treated for or
diagnosed with diabetes for the past 5 years. This misrepresentation allowed the application
to be submitted and insurance policy to be purchased, but would not allow health care
services related to our pre-
existing condition to actually be covered under the terms of the
policy.
The sales
representative described our purchase as one comprehensive health insurance
plan, but plan documents we later obtained indicate we purchased two limited benefit
insurance plans. Further, during this call, the sales representative told us that the plan’s pre-
existing limitations only applied to people who were pregnant or had cancer, but plan documents
we later obtained showed that pre-existing condition limitations would also apply to treatment for
our diabetes for both the critical illness and the wellness and preventive plans we were sold. The
sales representative also omitted additional limitations of the products being sold, such as the
limited number of primary care visits that would be available to us.
Prior to speaking with the sales representative who sold us the health plans, a different
representative incorrectly informed us that we would not be able to obtain an PPACA plan, that
PPACA coverage was expensive, and that it would serve no purpose to try to find one on our
own because other representatives would tell us that PPACA was no longer in effect as of 2020,
which was not correct. Specifically, during this call, we told the representative we had
recently moved into a new state, indicating that we were likely eligible to enroll in a
PPACA plan outside the open enrollment period. The sales representative we later spoke
to, however, correctly informed us that moving into a new state qualified us to enroll
outside of Open Enrollment.
The sales representative also told us that private insurance was a better option due to
costs associated with a PPACA plan and recommended a plan he stated had better
pricing. The representative did not provide us with written information about his
recommended plan prior to enrollment.
We were ultimately enrolled in a limited benefit preventative and wellness insurance plan,
a limited benefit health insurance supplement, a generic medication prescription plan,
and a membership that provides individuals with service and product discounts.
Page 24 GAO-20-634R
Test
Number
Covert
Scenario
Type of
Coverage GAO
Purchased
Test Outcome
30
Test performed
outside the federal
health insurance
exchange 2020 open
enrollment period with
the pre-existing
condition of diabetes
Limited benefit
plan
The
sales representative we spoke with engaged in potentially deceptive marketing
practices by misrepresenting and omitting information. For example, during the call,
we informed the representative that we had been admitted to the hospital the prior
week and suffered from diabetes. In response, the representative told us that his
plan’s pre-existing condition limitations did not apply to our diabetes because we
were healthy and stated that this plan was offered to healthy individuals. However,
plan documents we obtained after enrollment indicate that our diabetes would be
considered a pre-existing condition under the plan, and plan limitations would apply,
because we received medical treatment for it during the previous 90 days. The
representative also stated that we could visit a provider an unlimited number of
times, but plan documents stated that such visits were limited to three visits every 12
months. The representative also told us that insulin for our diabetes would be
covered by the policy, but plan documents state that prescription medication is
excluded from coverage.
The representative enrolled us in a benefit association offering a limited benefit
indemnity insurance plan. The representative would not provide us with
documentation describing the plan prior to enrollment, and stated that we had to
purchase the plan on the day of our call if we wanted to be guaranteed the quoted
price.
Page 25 GAO-20-634R
T
est
Number
Covert
Scenario
Coverage GAO
Purchased
Test Outcome
31
Test performed during
the federal health
insurance exchange
2020 open enrollment
period with the pre-
existing condition of
heart disease
plan
The
sales representative we spoke with engaged in potentially deceptive marketing
practices by misrepresenting and omitting information. The representative was
inconsistent on her explanation of the plan, first stating that the plan included
discounts that were in effect immediately while covered benefits for our pre-existing
condition would not be covered right away, but later stating without qualification that
half the cost of pre-existing condition medical visits would be covered by the limited
benefit indemnity insurance plan she sold us. According to the plan documents, we
would be required to wait 12 months to receive benefits from an illness resulting from
our diabetes. During the call, the representative also stated that the PPACA federal
exchange agents did not know how insurance works and stated that we could not
receive major medical insurance sold by her because we had a pre-existing
condition, but noted that the PPACA federal exchange may be a good option for us
because it would cover our pre-existing condition.
The representative also did not inform us that we were being enrolled as a member
in a service and product discount association and that prescription coverage
consisted of two non-insurance discount programs. The representative did not
provide us with policy coverage documents prior to the enrollment process, stating
that we would only receive complete policy details after we had submitted payment.
Source: GAO analysis of covert phone call recordings and associated transcripts. I GAO-20-634R
a
The federal health insurance exchange 2020 open enrollment period ran from November 1, 2019, to December 15, 2019, for insurance coverage starting on January 1, 2020.
Individuals can enroll in a 2020 PPACA plan after the open enrollment period by qualifying for a Special Enrollment Period due to certain triggering events, including gaining a
dependent through marriage, birth, or adoption or permanently moving into a new area and therefore gaining access to new Qualified Health Plans.
b
Preferred Provider Organizations (PPO) are types of health plans that contract with medical providers, such as hospitals and doctors, to create a network of participating
providers. PPOs generally allow enrollees to obtain care from any provider, but charge enrollees less if they obtain care from the plans’ networks of preferred providers.
Page 26 GAO-20-634R
Enclosur
e 2: Written Comments from the Department of Health and Human Services
Page 27 GAO-20-634R
(103845)
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