Short-term, or limited duration insurance plans have just been amended as of last week.
These plans are the Trump Administration’s alternative to the comprehensive, yet costly Affordable Care Act (ACA). It’s aimed at people who are in life transitions:
- Those switching jobs
- Retiring before they are eligible for Medicare
- Or, aging out of parental coverage
These plans are cost-effective which has attracted those in the younger, healthier demographic.
However, it is important to know what’s in the fine print when it comes to these plans.
Although these plans may come at a lower cost, it is being reported that some short term plans out of pocket maximums can be as high as $30,000.
There is also no guarantee of coverage for existing medical conditions, and plan benefits are limited because they do not have to hold to the same standard as the ACA compliant plans.
Here’s 3 things to be aware of with short-term plans
- They’re not new– This isn’t the first-time short-term plans have been brought to the forefront. In fact, insurers came under fire back in 2016 for marketing short term plans as primary coverage. Federal regulators at tri-agencies placed a regulation in response. “The rule limited short-term coverage to a period of less than three months and required each policy and all applications to prominently state that the policy does not satisfy the individual mandate”. Under the new regulation, now these policies can last up to 364 days and be renewed for 36 months.
- Pre-existing conditions may disqualify you- When it comes to short-term plans or associated health plans, it is lawful for them to deny those with any pre-existing conditions, “or provide benefits like coverage for maternity, mental health, prescription drugs and substance abuse treatment”. They may either refuse the applicant completely or only supply coverage for almost everything, but their pre-existing condition.
- Less coverage- Since short-term plans are not held to the same standards as those required to be ACA compliant, they do not need to provide coverage for the “10 benefits”. For instance, if you get in an accident and need to be hospitalized, may not be covered or must pay a much higher out of pocket cost due to limited coverage. Not to mention, the exemptions which could cause more financial burden. Say for instance, you are a student athlete who breaks their leg while playing football. If you are covered by a short-term plan, and they have a policy exemption that states they don’t cover injuries during organized sports, it would be up to that student to cover the cost.
Although these plans are aimed at the young and are well intentioned it is up to the consumer to decide if the benefits outweigh the costs. These plans are also not to be confused with Student Health Insurance Plans (SHIPs). SHIPs must still comply with ACA requirements and provide the 10 essential benefits. However, it states that an issuer may sell short-term, limited-duration insurance to individual students in institutions of higher education, just not as a student health insurance plan to a group of students. The Trump administration estimates that as many as 1.6 million will purchase short-terms plans by 2022. For a detailed summary of the final rule, please click here.