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Short Term Health Insurance Policies Increasing – Are They Leaving Folks Unprotected and Underinsured?


The recent changes to the Affordable Care Act (ACA) have increased the number of insured Americans and have weakened protections for those that do have insurance. What changes are we referring to? The current administration canceled payments that previously went to reducing cost sharing, and expanded short term and association health plans that lack the same coverage requirements as ACA-compatible plans. Congress also repealed the healthcare law’s individual insurance mandate.

About 12% of Americans were uninsured in 2018, according to the Commonwealth Fund’s biennial survey, compared to a record low of 8.8% after the ACA was enacted. In addition, more of those who did have insurance were considered underinsured, meaning their out-of-pocket medical expenses exceeded a certain threshold.

Recent changes in the law have enabled the proliferation of short term policies

Last fall, the Departments of Health and Human Services, Labor, and Treasury issued a final rule to dramatically expand access to short term health insurance coverage. This amendment largely reverses the previous rule on short term plans by extending the maximum duration of them from three months to up to 12 months. In 2016, the maximum duration was reduced to no more than three months, citing concerns that these policies were being sold as primary coverage and adversely impacting the ACA risk pool. This new amendment goes even further by allowing insurers to renew or extend short term coverage for up to 36 months. These policies allow insurers to exclude coverage for pre-existing conditions and encourage insurers to make creative arguments for what a pre-exiting condition is.

Some are making protecting those with pre-existing conditions a priority

Katie Keith, J.D., M.P.H., serves as part-time research faculty for Georgetown University’s Center on Health Insurance Reforms. She advises nonprofits and foundations on health care issues and conducts original legal, policy, and qualitative analysis to support policy goals. In her testimony at the recent hearing on “Strengthening Our Health Care System: Legislation to Reverse ACA Sabotage and Ensure Pre-Existing Conditions Protections” to the U.S. House of Representatives on February 13th, Katie states, “Each of these changes has or could leave consumers who become sick without access to the care they need and increase premiums for people with pre-existing conditions, especially middle-income Americans with health needs who do not qualify for premium tax credits.”

Why the concern with the increase in short term plans?

Short term plans do not have to comply with the ACA’s market reforms. Short term insurers can charge higher premiums based on health status, exclude coverage for pre-existing conditions, impose annual or lifetime limits, opt not to cover entire categories of benefits (such as substance use disorder treatment or prescription drugs), rescind coverage, and require higher out-of-pocket cost-sharing than under the ACA.

Individuals who enroll in short term insurance may face significant benefit gaps and high out-of-pocket costs if they become sick. Since short term plans do not have to comply with the ACA’s market reforms, insurers in most states can:

• Refuse to offer a policy to an individual with a pre-existing condition

• Exclude coverage for pre-existing conditions

• Charge higher monthly premiums based on health status and other factors such as age or gender

• Impose annual or lifetime dollar limits on care

• Opt not to cover entire categories of benefits (such as mental health services, prescription drugs, or maternity care)

• Retroactively cancel coverage once care is needed, and/or

• Impose much higher out-of-pocket costs than under the ACA

What are short term policies for, then?

Short term coverage is designed to fill a temporary gap in coverage. A consumer might enroll in a short term plan when they are, for instance, between jobs or otherwise need individual coverage outside of the open enrollment period (and do not qualify for a special enrollment period). Short term policies have been the source of confusion for consumers. Because these policies can mimic (or are deceptively marketed as) major medical coverage, consumers may be unaware until after they are sick that they enrolled in a policy that will not cover certain medical needs. In response, a number of state insurance departments have issued alerts or warnings to inform consumers about the limitations of short term plans and deceptive marketing practices.

In Conclusion

Recent changes in the law have enabled the proliferation of short term health insurance plans that allow insurers to exclude coverage for pre-existing conditions and encourage insurers to stretch the limits for what they define as a pre-existing condition. We know the number of short term policies are increasing, and some lawmakers and influencers are making it a priority to safeguard those with pre-existing conditions to ensure they are protected. As laws change, make sure you and your family have what you need.

Be cautious and call Johnstone Carroll if you get denied. If your claim has been denied by your short term insurance company, you need sound legal advice. At Johnstone Carroll, our attorneys have extensive experience with short term health insurance policies and will help you get the claim coverage you deserve.

FREE Consultation with an Attorney

We offer you a free consultation to review your policy and any supporting documentation. We will advise you based on your specific situation. Call us directly at 205-383-1809 or fill out our online contact form.

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