Word from Washington: New Rules on Short-term Insurance

New federal rules, released Aug. 1, 2018, roll back limits on short-term health plans. Short-term plans are primarily designed to bridge gaps in coverage that can occur, e.g., when an individual is transitioning between jobs.

As such, these plans don’t have to meet Affordable Care Act standards. They can deny coverage and/or can charge higher premiums based on an applicant’s health status; don’t have to cover essential health benefits such as prescription drugs, can put dollar limits on covered benefits, and don’t have to cap patient out-of-pocket spending. For all these reasons, under previous federal rules, short-term plans did not qualify as true health coverage and were only allowed to last for periods of three months or less.
Under the new federal rules, short-term plans can now last for up to 364 days, and can also be renewed for up to three years. HFA and literally thousands of other commenters argued against this expansion of short-term plans. Commenters noted that the change in federal rules would: disadvantage people with pre-existing conditions; allow the sale of health plans that don’t cover people’s needs, leaving many under-insured and under-protected; and destabilize the individual insurance market by drawing healthy people out of the risk pool, driving up premiums for people who remain in the market for comprehensive insurance.

HFA and other patient advocacy groups have expressed dismay over the federal government’s expansion of short-term health insurance plans, and urge states to act to protect patients and stabilize their insurance marketplaces. You can read the coalition’s statement here.

HFA will continue to monitor and update you regarding state responses to the federal rule change.