Short-term health insurance plans are not anything new. They have been around for decades for people who are in between jobs or recently graduated from school. Since the health law passed, more people are willing to trade comprehensive coverage for a better price, even if they have to pay the tax penalty. As the health law’s coverage requirements appear to be loosening up, these short-term plans may grow even more.
Short-term plans provide coverage an average of six months or less. They don’t cover preexisting conditions, maternity services, or prescription drugs. The maximum coverage is usually capped at one million dollars. The premiums are much cheaper than those that are ACA-compliant. The average monthly premium on ehealth.com last fall was $124, while it would have been $393 on the insurance exchange. Insurers are stretching these “short” periods up to 364 days, since a regular plan is defined as 365 days. These plans don’t have to comply with ACA protections.
The numbers of those with short-term plans increased from 108,800 in 2013 to 148,100 in 2015. Some insurers are focusing on the sales of these short-term plans. Carriers have a lot of flexibility with benefits and pricing, much like the old individual market before the ACA. The big health insurance companies are mixed on this.
Last October, the Obama administration issued a rule taking effect this coming April 1 that short-term plans must be less than three months long. People can request renewals, but they can be turned down. Some hope that this rule will be changed or rescinded by the Trump administration. Health insurance brokers and agents would like to continue selling the longer term short-term plans. The short-term plan is cheaper and is the consumers’ way of saying “I don’t need all of those things.”
Andrews, Michelle. “Demand For Popular Short-Term Insurance Plans Could Surge If Health Law Is Relaxed.” News. Kaiser Health News, 31 Jan 2017. Web. 31 Jan 2017.