Shopping for cheaper health insurance? Oregon regulators warn about risky alternatives

As Oregonians brace for some of the steepest health insurance increases in years, state regulators are warning consumers hunting for cheaper options to make sure they know what they’re buying.

The Oregon Division of Financial Regulation this week warned about health plans that advertise enticingly low monthly prices and can appear to be traditional insurance. Regulators say some companies call customers “employees” or “limited partners” and offer them what they describe as self-funded employer plans exempt from state insurance rules.

Many of these so-called “limited-partner plans” cover only preventive care, such as checkups and annual screenings, according to state officials. People who think they bought comprehensive health insurance could end up with medical bills their plan won’t pay.

“Consumers should remember the adage that if a deal looks too good to be true, it probably is,” Oregon Insurance Commissioner T.K. Keen said in a statement. “If a health insurance policy offers unusually low premiums and low deductibles yet promises full or unlimited coverage, be skeptical.”

The warning comes as health insurance costs are climbing sharply in Oregon.

Premiums for Oregonians who buy their own health insurance are set to jump an average of nearly 22% next year. Small businesses that buy coverage for their workers face an average increase of 15.5%.

People shopping for their own coverage will also have fewer choices next year. Providence and PacificSource are leaving the Obamacare marketplace, while Moda Health is pulling out of some parts of the state. Small businesses will have fewer choices, too, as Moda and Health Net stop selling coverage to small employers.

Those departures and pullbacks could affect roughly 100,000 Oregonians, based on enrollment figures state regulators presented to the Senate Health Care Committee earlier this month. Some people will have to switch insurers, while some businesses will have to find new health plans for their workers.

Enrollment in Oregon’s individual insurance market has fallen by about 21,000 people over the past year. Regulators don’t know where everyone went, but told lawmakers that many likely became uninsured while some may have turned to health plans that don’t meet Affordable Care Act requirements. Those rules require health plans to cover a broad range of care and provide certain protections for consumers.

As insurance gets more expensive, Keen told lawmakers, some consumers are looking elsewhere for cheaper options. Some of those alternatives aren’t licensed by the state and, in some cases, are fraudulent.

Self-funded health plans themselves aren’t unusual. Many employers legally use them to cover their workers, paying employees’ medical claims directly instead of buying a traditional insurance policy. Those workplace plans generally have to follow a federal law known as the Employee Retirement Income Security Act, or ERISA, rather than state insurance requirements.

Regulators say some companies try to claim plans sold directly to consumers are also exempt from state insurance rules, sometimes by making customers “limited partners” in a business and offering health coverage through that arrangement. Unlike traditional health insurance, those plans may not meet Affordable Care Act requirements and may cover little beyond preventive care.

Oregon regulators have already taken action against one company over similar concerns. In April, the state ordered ClearShare Health and its affiliate Clearwater Benefits to stop selling or renewing memberships in Oregon. About 370 Oregonians were enrolled at the time. Regulators concluded the companies were conducting insurance business without state approval.

ClearShare describes itself as a health-sharing program rather than an insurance company. On its website, the company calls it a “membership-based non-insurance community” whose members share eligible medical expenses.

The Division of Financial Regulation included ClearShare and Clearwater Benefits on a list of 13 organizations that have marketed similar health plans in Oregon or other states. But that doesn’t mean Oregon regulators have accused every company on the list of breaking state law.

As open enrollment for 2027 coverage begins Nov. 1, regulators say consumers should be wary of salespeople who claim they don’t need an insurance license or companies that offer coverage outside open enrollment regardless of whether the buyer qualifies to enroll.

Regulators also warn consumers to be cautious about companies that pressure them to make large payments quickly or repeatedly delay or deny claims. Regulators say consumers should also be cautious of plans sold directly to individuals that mention “stop-loss” insurance.

Before paying or sharing personal information, consumers can check whether the salesperson is licensed by asking for their full name and National Producer Number and looking them up through the state’s license page.

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