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Open enrollment is the window of time at the year’s end when consumers make a critical health care decision — which health insurance plan to buy for the coming year to cover themselves and their families.

Those with coverage through a job typically have a handful of plans to choose from. Those who buy on their own — such as early retirees, farm families or entrepreneurs — have a dizzying array of choices. It’s that latter group, currently right in the middle of open enrollment, who should take heed of recent data from Colorado underscoring an old truth:

If something sounds too good to be true, it probably is.

The Colorado state regulators’ information concerns a product known as “health care sharing ministries” that may be marketed to consumers shopping for a health plan. In a Health Care Sharing Ministry (HCSM), “members follow a common set of religious or ethical beliefs and make monthly payments to help pay the qualifying medical expenses of other members,” according to the Commonwealth Fund, a nonpartisan health policy organization.

It sounds like health insurance. And to someone on a budget, it likely sounds like a good deal, with monthly payments often less, perhaps substantially so, than the monthly premiums for insurance sold through MNsure and other trusted marketplaces.

But the National Association of Insurance Commissioners has long cautioned that health care ministry plans “are not insurance.” The consumer protections provided by the Affordable Care Act don’t apply, and in some states, ministries may fall between regulatory cracks.

That can mean big problems. “HCSMs are under no obligations to pay members’ claims,” Commonwealth said in a new warning last week. Coverage for pre-existing conditions such as cancer, diabetes or asthma may be excluded. So might be other needs, such as preventive care or mental health treatment. In contrast, traditional medical plans “must cover essential health benefits and all pre-existing conditions.”

The regulatory gray zone in which HCSMs operate has provided little visibility into their operations. But in 2022, Colorado legislators passed a measure requiring the state to collect data on them. State regulators have issued two yearly reports since then. Open enrollment is a smart time to highlight the findings:

1. In 2021, nearly 68,000 Colorado residents were enrolled in an HCSM. That’s about 30% of those who bought insurance in the state on their own that year, an alarming number.

2. The yearly medical claims far exceeded what the HCSMs paid out — $362 million in medical claims were submitted, while $97 million in fees were collected — enough to pay for 28% of members’ medical costs. HCSMs contend that the $362 million included duplicate and ineligible charges and didn’t reflect discounts or what members had agreed to pay. But even when adjusting this sum to reflect that, the amount collected by HCSMs only covered 74% of total eligible share requests. Translation: Members are at risk for significant out-of-pocket medical costs.

3. Many HCSMs reported excluding important types of medical claims, such as those for mental health and alcohol use disorders, ADHD treatments, contraceptives or prescription drugs for chronic conditions. In addition, some excluded or limited maternity care unless the pregnant woman belonged to a certain membership tier (one likely more expensive) for a required time.

4. Members in some HCSMs had to petition clinics or hospitals to write off or discount medical care, or request charity care or government assistance before the organization would pay the bill.

A recent Commonwealth analysis of the Colorado data adds further troubling perspective. One HCSM recently surveyed members, and found that 42% of them had incomes below 200% of federal poverty guidelines. That means they probably could have qualified for medical assistance programs or Affordable Care Act financial subsidies. Either could provide low-cost or no-cost coverage without the gaping benefit loopholes.

There are HCSMs operating in Minnesota. On Monday, the state Department of Commerce advised “consumers seeking affordable insurance options to research legitimate plans available through MNsure.” Officials also noted that the agency “does have the ability to take enforcement action should an unlicensed entity engage in the business of insurance.”

Consumers, as always, should be on guard during open enrollment, which began Nov. 1 and runs through Jan. 15. Minnesotans are also welcome to file complaints with Commerce about insurance or insurance-like products. They can file a complaint online, via email at consumer.protection@state.mn.us or call 651-539-1600.

— Minneapolis Star Tribune, Nov. 20