The 2025 Inexpensive Care Act (ACA) open enrollment interval has been a tough 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 more durable to afford, non-ACA compliant merchandise (typically known as “junk plans” due to the shortage of state and federal protections) might acquire 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 will be dangerous in 3 ways: as a result of they aren’t topic to most state and federal medical health insurance requirements, they usually 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 usually are not 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 way of laws or regulation. Within the rapid 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 spread of merchandise that would not have to adjust to ACA protections akin to advantages necessities and non-discrimination provisions. Many of those merchandise deploy medical underwriting, which permits insurers to base the provision and value of a plan on a person’s well being standing. This could make these merchandise extra engaging to youthful folks with out preexisting situations. 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 Customers?
Lots of the non-ACA-regulated merchandise described above usually are not meant to switch main medical insurance coverage. A hard and fast indemnity plan, for example, offers what is actually an revenue alternative profit when somebody is hospitalized, which might function an additional layer of monetary 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 pondering they’ve discovered an affordable different that finally ends up too good to be true.
Take the instance from a dealer advertising and marketing textual content change with one of many authors, described in exhibit 2.
Exhibit 2: Textual content change with dealer
Supply: Authors’ transcript.
The implication is that the dealer is promoting a product on a “non-public change” which may be a substitute for ACA Market protection (the Market can be typically known as an change, including, probably deliberately, to the confusion). Nonetheless, a name with this dealer revealed that the merchandise accessible on this non-public change are fastened indemnity plans. The dealer famous that in contrast to a Market plan, the non-public plan has no deductible or copayments, as an alternative it offers “first greenback protection” (that 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 accessible at a premium lots of of {dollars} decrease than Market plans. Whereas it’s true {that a} fastened indemnity plan usually doesn’t include copayments or deductibles, this isn’t as a result of a client has discovered the deal of a lifetime. It’s as a result of the product shouldn’t be designed like an insurance coverage plan in any respect. With a hard and fast indemnity plan, customers might pay nothing once they obtain care, solely to be saddled with a invoice later once they study the plan’s fastened greenback fee for the service acquired doesn’t come near masking the total value, leaving the patron liable for the steadiness.
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 had been usually marketed as cheaper options to “Obamacare” plans, leaving customers confused as to how short-term plans had 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 through the COVID-19 pandemic as uninsured customers struggled to search 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 had been promoting.” Extra not too long ago, CHIR researchers discovered brokers utilizing deceptive advertising and marketing to steer low-income customers shedding Medicaid to restricted profit plans.
What Are State Regulators Doing About Junk Plans?
Whereas deceptive advertising and marketing of non-ACA compliant plans shouldn’t be new, it could 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 instances prohibiting their sale altogether or placing situations 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 client “black field” warnings on these merchandise, requiring carriers to disclose clearly that the product shouldn’t be compliant with the ACA and in some instances how the product differs from ACA protection. State insurance coverage departments—together with Colorado, Marylandand Texas—have issued steerage for customers on learn how to inform Market protection from non-ACA compliant merchandise. New Mexico issued steerage placing insurers and brokers on discover that misleading and deceptive advertising and marketing is unlawful below state client 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 really present the monetary safety they thought they had 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, nevertheless, 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 contemplate implementing extra guardrails and heightened oversight to make sure customers don’t find yourself underinsured or in substandard merchandise they thought had been main medical plans.
Amy Killelea and JoAnn Volk “The Peddling Of “Junk Plans” To Customers Going through Greater 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 Mission HOPE – The Folks-to-Folks Well being Basis, Inc.
