The 2025 Reasonably priced Care Act (ACA) open enrollment interval has been a troublesome one, as Market enrollees are going through important premium hikes for 2026 protection. When Market protection—which has to fulfill ACA requirements for advantages, non-discrimination, and community adequacy—turns into harder to afford, non-ACA compliant merchandise (typically known as “junk plans” due to the shortage of state and federal protections) might achieve traction, particularly when they’re marketed as low cost options to the Market and the federal authorities has relaxed enforcement.
These non-ACA compliant merchandise could be dangerous in 3 ways: as a result of they don’t seem to be topic to most state and federal medical health insurance requirements, they typically include main protection limitations, together with skimpy advantages and an array of exclusions; these merchandise are sometimes misleadingly marketed as options to ACA Market protection however the merchandise being bought aren’t main medical protection in any respect, making a false and complicated comparability; and these non-ACA merchandise are sometimes marketed towards comparatively wholesome people, siphoning off these populations from the person market and exacerbating the affordability points in that market.
State coverage makers can curb the provision of those merchandise or put guardrails and protections round them by means of laws or regulation. Within the speedy time period, although, state insurance coverage regulators can ramp up oversight of those non-ACA compliant merchandise and extra aggressively monitor misleading advertising and marketing practices. Because the advertising and marketing of non-ACA compliant merchandise grows, customers who find yourself in a plan that was “too good to be true” can face important monetary hurt.
What Are “Junk Plans”?
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The time period “junk plans” is a catch-all meant to seize a variety of merchandise that shouldn’t have to adjust to ACA protections equivalent to advantages necessities and non-discrimination provisions. Many of those merchandise deploy medical underwriting, which permits insurers to base the provision and worth of a plan on a person’s well being standing. This will make these merchandise extra enticing to youthful individuals with out preexisting circumstances. Exhibit 1 lists varieties of junk plans.
Exhibit 1: Varieties Of Junk Plans
Supply: Authors’ creation.
How Does Deceptive Advertising and marketing Of Junk Plans Impression Shoppers?
Most of the non-ACA-regulated merchandise described above aren’t meant to exchange main medical insurance coverage. A hard and fast indemnity plan, as an example, offers what is basically an earnings alternative profit when somebody is hospitalized, which might function an additional layer of economic safety when paired with a significant medical insurance coverage plan. The issue arises when these non-ACA regulated merchandise are marketed as options to main medical insurance coverage. Propping up a substandard product as simply one other insurance coverage plan alternative in a dizzying array of choices creates an apples to oranges comparability, with customers considering they’ve discovered an inexpensive various that finally ends up too good to be true.
Take the instance from a dealer advertising and marketing textual content trade with one of many authors, described in exhibit 2.
Exhibit 2: Textual content trade with dealer
Supply: Authors’ transcript.
The implication is that the dealer is promoting a product on a “personal trade” which may be an alternative choice to ACA Market protection (the Market can be typically known as an trade, including, seemingly deliberately, to the confusion). Nonetheless, a name with this dealer revealed that the merchandise out there on this personal trade are mounted indemnity plans. The dealer famous that not like a Market plan, the personal plan has no deductible or copayments, as an alternative it offers “first greenback protection” (which means the insurer begins fee as quickly as an insurable occasion happens with out requiring a affected person to fulfill a deductible or pay out of pocket on the level of sale) and is obtainable at a premium a whole lot of {dollars} decrease than Market plans. Whereas it’s true {that a} mounted indemnity plan sometimes doesn’t include copayments or deductibles, this isn’t as a result of a shopper has discovered the deal of a lifetime. It’s as a result of the product will not be designed like an insurance coverage plan in any respect. With a set indemnity plan, customers might pay nothing once they obtain care, solely to be saddled with a invoice later once they study the plan’s mounted greenback fee for the service obtained doesn’t come near overlaying the complete value, leaving the patron chargeable for the stability.
A number of research have documented deceptive advertising and marketing getting used to lure customers searching for protection into non-ACA regulated merchandise. A 2019 Georgetown CHIR examine discovered that short-term plans have been typically marketed as cheaper options to “Obamacare” plans, leaving customers confused as to how short-term plans have been totally different from Market plans. The same 2020 evaluation from the Brookings Establishment and one other from CHIR discovered that deceptive advertising and marketing might have been much more pronounced in the course of the COVID-19 pandemic as uninsured customers struggled to seek out protection choices amid widespread unemployment. A Authorities Accounting Workplace examine revealed in 2020 performed covert testing of selling practices for choose non-ACA compliant merchandise and located that in 1 / 4 of their covert calls “gross sales representatives engaged in doubtlessly misleading advertising and marketing practices … by omitting or misrepresenting details about the merchandise they have been promoting.” Extra just lately, CHIR researchers discovered brokers utilizing deceptive advertising and marketing to steer low-income customers dropping Medicaid to restricted profit plans.
What Are State Regulators Doing About Junk Plans?
Whereas deceptive advertising and marketing of non-ACA compliant plans will not be new, it might be a extra pronounced downside throughout an open enrollment interval when customers are going through massive Market premium hikes. There are two routes that states can take to guard customers, and their insurance coverage markets, from the harms related to these kind of merchandise. First, states can place guardrails across the merchandise themselves, in some circumstances prohibiting their sale altogether or placing circumstances on their sale.
Second, states can tamp down on deceptive advertising and marketing of non-ACA compliant merchandise. State insurance coverage regulators have main authority over the regulation of insurance coverage, together with licensure and oversight of insurance coverage brokers. Some states require particular shopper “black field” warnings on these merchandise, requiring carriers to disclose clearly that the product will not be compliant with the ACA and in some circumstances how the product differs from ACA protection. State insurance coverage departments—together with Colorado, Marylandand Texas—have issued steering for customers on how one can inform Market protection from non-ACA compliant merchandise. New Mexico issued steering placing insurers and brokers on discover that misleading and deceptive advertising and marketing is prohibited beneath state shopper safety legal guidelines.
Not all non-ACA-compliant plans are inherently dangerous to customers, however when they’re marketed as low cost options to main medical protection, customers can discover themselves enrolled in merchandise that don’t truly present the monetary safety they thought they have been getting. The Trump administration is shifting ahead with a proposed regulatory agenda that features increasing entry to non-ACA compliant merchandise and even incentivizing states to decontrol these plans. States, nonetheless, have an excessive amount of regulatory authority over many of those merchandise, as a new report from Blood Most cancers United factors out. States might think about implementing further guardrails and heightened oversight to make sure customers don’t find yourself underinsured or in substandard merchandise they thought have been main medical plans.
Amy Killelea and JoAnn Volk “The Peddling Of “Junk Plans” To Shoppers Going through Increased Insurance coverage Premiums” January sixteenth, 2026, https://www.healthaffairs.org/content material/forefront/peddling-junk-plans-consumers-facing-higher-insurance-premiums. Copyright © 2026 Well being Affairs by Venture HOPE – The Folks-to-Folks Well being Basis, Inc.
