By now you’ve probably heard the news: the Department of Health and Human Services, in conjunction with the Department of Labor and Department of Treasury, has issued the final rule on the expansion of short-term, limited duration health insurance plans that the President called for in his executive order last October. The rule expands the length of short-term plans, which is a big deal for healthy individuals who do not have access to employer-sponsored coverage and who do not qualify for a premium tax credit.
As CMS explains in its press release about the final rule, “Short-term, limited-duration insurance is a type of health insurance coverage that was primarily designed to fill gaps in coverage that may occur when an individual is transitioning from one plan or coverage to another plan or coverage, such as in between jobs. This type of coverage is exempt from the definition of individual health insurance coverage under the Patient Protection and Affordable Care Act (PPACA) and is therefore not subject to the PPACA provisions that apply to the individual market.”
That said, the final rule expands the definition of short-term plans so that they are no longer really short-term in nature. Instead of being a temporary solution for people who are in-between jobs, short-term plans will likely become the go-to solution for many individuals who cannot afford ACA plans or who do not use health care services very often.
Believe it or not, the final rule on short-term, limited-duration health insurance is 121 pages long. What you probably care about, though, can be summarized in just a few sentences:
The final rule is effective 60 days from the date it was published in the Federal Register, so that means short-term health plans can be offered as early as October 2, 2018. UnitedHealth One (Golden Rule) began offering STM plans up to 12 months in duration as of Sep 14 for policies with effective dates October 2nd and later, while National General will permit sales of 12 month duration STM plans starting on October 2.
For your individual clients who do not qualify for a premium tax credit, there will likely be quite a bit of interest in this new solution. Short-term health plans can be less expensive than ACA-compliant individual plans, sometimes much less expensive, and with the individual mandate penalty going away in 2019, your clients don’t have to worry about getting hit with a tax penalty for failing to maintain minimum essential coverage. That said, there are pros and cons to this strategy.
Recognizing that short term medical plans do have limitations, are they really “junk policies” like some people say? It really depends on who you ask. For someone with a pre-existing condition, or someone who is prescribed an expensive medication while covered under a short-term plan, an argument could certainly be made that these plans are inferior compared with ACA-compliant metallic plans. On the other hand, for people who cannot afford the high premiums of today’s health plans, having access to health coverage can be a lifesaver. Short-term plans might be the only coverage some of your clients can afford, and they will likely be a very popular solution going forward.
As with any health insurance strategy, short-term health plans are not a one-size-fits-all solution. Instead, they provide a practical alternative for a select group of clients. For those clients who do not qualify for a premium tax credit and who do qualify for a short-term plan, this can be an excellent solution that can save them money. Keep in mind, though, that these are not as comprehensive as ACA plans, so there are definitely some holes in the coverage and some risks in choosing this less costly alternative. To learn about short term medical plans available in your state and to get appointed, call AHCP Agency Services at 877-228-8773 or click here to explore further.