What you need to know about short-term plans
As the open enrollment period for the individual health insurance market nears, consumers shopping for coverage may come across products called short-term limited duration plans. While these plans have existed for years, the administration recently released a final rule that may expand their availability to consumers. The following information on short-term plans may be useful to know before consumers shop for coverage, especially for individuals who have chronic conditions such as chronic kidney disease (CKD) and its leading causes, diabetes and hypertension. In most states, open enrollment for 2019 Affordable Care Act (ACA) marketplace coverage will start on November 1, 2018 and run through December 15, 2018. Some states have extended open enrollment periods that start before November 1 and/or end after December 15.
Short-term plans pre-date the ACA and were intended to serve as temporary coverage when a consumer experienced a gap in coverage (for example, when in between jobs) and policies had an expiration date of less than 12 months. From 2016 until recently, short-term plan policies were limited to less than 3 months in length and policies could not be renewed. In August the Trump administration finalized new regulations that now allow short-term plans to last up to a year and they can be renewed for up to three years.
How short-term plans are different
Short-term plans do not have to comply with ACA market reforms, which means insurers offering these policies can medically underwrite them – in other words, insurance companies can try figure out your health status to determine whether to offer you coverage, at what price, and with what exclusions or limits. Short-term plans can also exclude coverage for preexisting conditions, exclude coverage for entire essential health benefit categories, rescind coverage, impose annual and lifetime limits and impose higher out-of-pocket cost sharing than is allowed for ACA-compliant plans. Given this, short-term plans are relatively cheaper than ACA-compliant plans and tend to attract younger and healthier individuals. However, it also means short-term plans may not cover services like prescription drugs, mental health services, maternity care, or preventive care. If a person with a short-term plan gets sick, their plan may not cover needed services or may impose strict limitations and exclusions, resulting in significant out-of-pocket costs. The plan could also determine that a new diagnosis is a preexisting condition and exclude coverage altogether.
Individuals shopping for coverage this open enrollment season may see more short-term plans being offered, particularly if shopping on a private health insurance marketplace or using a broker. Consumers should be aware of how these plans differ from ACA-compliant plans, especially if you have a chronic condition and are seeking more comprehensive coverage.