The Trump administration has taken another step in its effort to roll out short-term health insurance plans by extending the amount of time such plans can be in effect.
Under the new rule, which was issued August 1, 2018, short-term health plans can be purchased for up to 12 months, and policyholders can renew coverage for a maximum of 36 months. These controversial plans, though, do not have to comply with the Affordable Care Act, including not covering 10 essential benefits and not having to cover pre-existing conditions – and they can even exclude coverage for medications.
As a result of the changes, the Centers for Medicare and Medicaid Services predicts that an additional 600,000 people will enroll in short-term plans in 2019, jumping to 1.6 million individuals by 2021. Part of that will include some 200,000 people who drop their plans in the individual market and sign up for short-term coverage. That’s compared with about 122,500 people enrolled in short-term plans in 2017, according to the National Association of Insurance Commissioners. Enrollment is expected to surge now that the individual mandate penalty is slated to be eliminated.
That said, CMS predicts that premiums for 2019 ACA exchange plans will rise 1%, while net premiums will decrease 6%. The final rule goes into effect 60 days after it is posted, but state regulators would still need to approve any new plans that come to market. In a few months, health insurers may start selling short-term plans that last up to a year. The new regulation, however, does not require insurers to renew the policies.
Health insurers and consumer advocates have assailed the plans, saying they provide limited coverage and that many people won’t understand just how skimpy the plans are when they buy them. They also said that if younger and healthier people gravitate to these less expensive plans, it would leave an older, unhealthy pool of enrollees in ACA marketplace plans, which could further force rates higher in the marketplaces.
New rules change the game
By skirting many of the ACA provisions, the short-term plans offer less coverage and are hence less expensive. That said, states will be able to regulate these plans as they see fit.
Jay is a graduate of the University of Pennsylvania School of Dental Medicine and also has an MBA from San Francisco State University. He has worked for a number of insurance carriers and brokers over the past 25 years. At UBF, Jay specializes in advocating for our clients in various issues, including grievances, benefit inquiries and eligibility issues.