A federal judge temporarily shut down Hollywood, Florida-based Simple Health Plans and its subsidiaries after it sold what the Federal Trade Commission called "worthless" health plans to thousands of people who were left uninsured and with "substantial medical expenses."
The FTC, which requested the court close the business, said Simple Health Plans and associated companies collected more than $100 million from customers. The FTC wants to stop the company and return money to consumers permanently.
In a complaint filed in federal court, the FTC said Simple Health Plans misled people into thinking they were buying comprehensive health insurance. The plans instead provided limited benefits.
This Florida case highlights ongoing worries about the short-term health plans and association health plans becoming available next year. The Trump administration changed regulations for those plans for 2019, making it easier for payers and companies to offer those options marketed as lower-cost alternatives to ACA plans. However, the plans often don't provide the same protections as ACA plans and may wind up causing people to flee the exchanges.
Plus, the end of the individual mandate penalty in 2019 means Americans no longer need health insurance to avoid a fee, which could lead to more low-cost plans with fewer patient protections entering the market.
Simple Health Plans reportedly collected as much as $500 monthly from each member. That could be a competitive premium for an Affordable Care Act-eligible plan, but the FTC said members were actually signing up to a medical discount program or an "extremely limited benefit program."
"The plans defendants were selling are not health insurance and they aren't a substitute for health insurance," Andrew Smith, director of the FTC's Bureau of Consumer Protection, said.
Simple Health falsely told prospective members that their plans were government-sponsored policies. The sites also allegedly featured the logos of trusted companies and well-known payers despite Simple Health not being affiliated with them.
Simple Health's telemarketers promised comprehensive PPO plans with no copays and deductibles, but the plans didn't offer that coverage. There were no pre-existing condition or prescription medication coverage. The plans also only paid $50 toward doctor visits and $100 for hospitalization and capped benefits at $3,200 per person, the FTC said.
To make matters worse, members discovered at tax time that Simple Health's offerings didn't qualify as health insurance under the ACA, so they were subjected to a fee for not having coverage.