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When Short-Term Health Plans Make Sense for Clients

Outside of the annual open enrollment period, individual clients can only enroll in an ACA-qualified plan if they have a qualifying life event. For clients who don’t qualify for a Special Enrollment Period (SEP), a short-term health plan can be a good option. But there are other times when this innovative solution may be a good fit for clients as well.

Hospital Indemnity Plans Can Fill Big Gaps in Health Coverage

People buy health insurance to protect them in the event of a big medical claim. Unfortunately, with today’s rising deductibles and out-of-pocket limits, which will be $7,500 for HSA-qualified plans and $9,100 for non-HSA plans in 2023, despite its name, major medical health insurance alone isn’t enough for many people. Even with insurance protection, a huge percentage of Americans will have trouble paying their share of the bills.

Short-Term Plans Growing in Popularity

A recent survey by Pivot Health finds that enrollment in short-term health plans is increasing amid the COVID-19 health crisis. Interestingly, the majority of people purchasing short-term coverage are not moving from an ACA-qualified “Obamacare” plan; in contrast, 26% of purchasers were previously uninsured.

Expanded Short Term Plans Get Green Light from Federal Judge

On Friday, July 19, a federal district court judge in DC sided with the Trump administration in its defense of a rule expanding short-term, limited duration health insurance plans to twelve months with the option to renew the coverage for up to three years. The plans had been limited to three months under the Obama administration, which thought they could weaken the individual markets, but, as Modern Healthcare explains, Judge Richard J. Leon believed the potential benefits outweighed the potential harm. He writes in his decision that “Not only is any potential negative impact from the 2018 rule minimal, but its benefits are undeniable.”

One Long-Term or Two Short-Term Plans?

For those who qualify, short-term health plans can be a great alternative to ACA compliant individual plans, especially now that the individual mandate penalty has been reduced to zero. True, short-term plans do not cover preventive care or pre-existing conditions, and they are not guarantee issue like individual plans are, but they do offer much lower monthly premiums than individual plans.

Expanded Short Term Plans

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.

Short Term Plans May Soon Be Longer

On February 20, 2018, the Department of Health and Human Services issued proposed regulations that would extend the maximum coverage period for short-term plans from three months to twelve months. The rule change comes at the request of President Trump, whose October 12 executive order encouraged the Secretaries of the Treasury, Labor, and Health and Human Services to “consider proposing regulations or revising guidance, consistent with law, to expand the availability of STLDI” (short-term, limited-duration insurance).

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