The Obama administration wants to limit consumers' use of short-term insurance plans, which a growing number of Americans have been buying in response to the Affordable Care Act's requirements to have health coverage.
This week, the U.S. Department of Health and Human Services proposed limiting short-term health policies to a term of three months. Currently, short-term policies can be issued for a term of up to one year.
In announcing the proposal, HHS said it was strengthening the risk pool of participants in the health insurance marketplace by tightening the rules on short-term plans. Abuses in the use of short-term plans, HHS said, "exploit gaps in current rules to use medical underwriting to keep some of the healthiest consumers out of the Affordable Care Act's single risk pool."
Short-term limited duration coverage is health care coverage issued for a short period of time. Because short-term limited duration plans are designed to fill only very short coverage gaps, this coverage is not subject to any of the key rules governing the ACA’s single risk pool. These plans can be priced based on health status (medically underwritten), can discriminate against consumers with pre-existing conditions, and do not have to cover essential health benefits. Some issuers are now offering short-term limited duration plans to consumers as their primary form of health coverage for periods that last nearly 12 months, allowing them to target only the healthiest consumers while avoiding consumer protections.
By keeping these consumers out of the ACA single risk pool, such abuses of limited duration coverage increase costs for everyone else, and they could have a greater impact over time if allowed to become more widespread, HHS said in a news release.
Under the new rules, short-term policies may be offered only for less than three months, and coverage cannot be renewed at the end of the three month period. The proposed rule also improves transparency for consumers by requiring issuers to provide notice to consumers that the coverage is not minimum essential coverage, does not satisfy the health coverage requirement of the ACA, and will not prevent the consumer from owing a tax penalty.
The short-term insurance rule was one in a series of actions HHS said it is taking during the month of June in regard to the ACA. Other actions include:
- Beginning full implementation of the Special Enrollment Confirmation Process, which ensures that eligible individuals continue to have access to coverage through Special Enrollment Periods (SEPs), but prevents people from misusing the system to enroll in coverage only if they get sick.
- Continuing the efforts to reduce data-matching issues (DMIs). HHS said its outreach, education, and operational improvements have contributed to a sharp reduction in total data matching issues. The agency also reported a nearly 40 percent increase in the amount of documents submitted to help resolve income and citizenship and immigration data matching issues. Improving the resolution of DMIs benefits the risk pool because it keeps eligible consumers, often younger and healthier consumers less motivated to overcome obstacles such as extra paperwork, from losing coverage mid-year, HHS said.
Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at susan.rupe@innfeedback.com.
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I wouldn’t think the Federal Government has the authority to regulate a product that does not comply nor have anything to do with the ACA. It is disclosed that these plans do not meet ACA standards so a penalty will occur. Is it not better for consumers to have some coverage rather than going without any form of coverage. Insurance has always been regulated by the states this is just power grab by the Federal Government.
The interest of Obama and HHS here has nothing to do with providing Americans with affordable coverage. It’s about control and saving face. Apparently they didn’t screw enough Americans the first time around so they are going back for a second bite!
Bingo. The market responds to federal overreach in health insurance, and the Feds call it “abuse” and seek to squash any and all non-conformity.
If the HHS and President think this is some big conspiracy they are wrong. Many people don’t qualify for a subsidy or they just did not apply for coverage. Short Term policies can be a vehicle for them to get good coverage at an actually affordable rate.
The government allows employers to give up to a 30% credit for employees who participate in a wellness program. Why not allow healthy individuals to get a 30% discount? I know everyone thinks this is unfair but the reality is if we did this more health people would buy into the program.
All this new rule will do is have people who would be willing to buy insurance be uninsured.
With the projected rate change for 2017 to be between 30 to 60 % and the fact that short term policies offer better network opportunities, short term looks like it could solve some of the problems for the middle class that don’t qualify for premium reductions.
With family insurance reaching the same or more than a mortgage payment, I see many more of this group of people choosing to forgo insurance all together. A short term policy would at least give them some protection.
The ACA created this pricing problem and now they want to push middle class America into the category of uninsured. Keep in mind the people that are making these decisions are all on government insurance and are completely out of touch with the real world that most of us have to face.
I agree with you Marylin.Also,maybe I’m alittle harsh but maybe we should charge people for Heath insurance by the amount they earn monthly this way it’s not a mortgage payment or another high rent!But then again the rich wouldn’t like this !Just like The flat tax rate.Everyones entitled to live a quality life !
These comments are right on! When will Americans see that our current Administration operates as a monopoly, not a democracy?
The Executive Branch and Congress should be subject to the same regulations and options as the rest of Americans.
There is a simple solution to solve this complicated issue by extending the premium reduction household income FPL from between100%~400% to 100%~600%, this make premium affordable to more middle income jousehold to encourage them to enroll and gain coverage
If these short term polices actually covered what they would imply they cover, HHS wouldn’t have a problem. If you search online for complaints stacked by state department of insurance; you’ll find that the Short Term Medical policies have caused more harm than good. An insurance policy is a contract between an insured and an insurer. Unfortunately, these Short Term Medical contracts have been written to precisely to EXCLUDE and cover nothing. Instead, these agreements (policies) give the illusion and false sense that an individual is purchasing health insurance coverage.
The state of Montana, along with about another 23 states have filed suit against companies like Health Insurance Innovations (HIIQ) that exploit consumers by using old insurance schemes that circumvent the state and federal laws. What’s really disgusting, is that it is all for greed purposes. It has been reported by the state of Montana, and many other states, consumers who purchased these plans were misrepresented by these companies who offer these short term medical plans on what they actually cover. Furthermore, the amount of unpaid claims arising from these so called “medical plans” have been far greater than what the state department and the federal government have been able to quantify. Simply put, the only people that haven’t filed a complaint against these “short term medical plans” are the people who never actually had to use them.
The scheme is made possible by creating an association for a class of people. When these people subscribe to this “association”, they get benefits of joining this association, one of which happens to be medical insurance. They usually refer to these customers as “Members” as opposed to policyholders. This is the loophole that is used to finagle this scam.
Short term medical plans are simply a way for TPA’s (Third Party Administrators) and few insurance companies to sell worthless paper (Insurance contracts) and make tons of money, while leaving the public with millions in unpaid medical bills.
Hii does have a bad reputation and a giant list of complaints, but that doesn’t mean you do away with the concept of Short-Term coverage all together. In a few states (New Mexico, Cali, and couple others) Hii is unfortunately the only short-term issuer I believe. However, in the large majority of states, United Health care offers these plans. I’ve had their Short-term coverage before and was very satisfied, pre-negotiated rate alone rook off almost 80% of my bill. They do cover pretty much everything but nothing related to PRE-EXISTING CONDITIONS. Don’t critisize STM just based on one company, stay away from Hii if possible but United Healthcare is a creditable company who offers plans that pay. Blue Cross and Blue Shield used to offer STM but no longer does as of now. Lot of terrible agents out there who can be very misleading, consumer has to know what they’re buying and ask the right questions. Take action against the company or agent you talked to, not Short-Term Medical as a whole.
Looks like the faith based health plans are looking better and better everyday.
I am a licensed insurance broker who works on-exchange (marketplace) and off-exchange, and I really hope these restrictions on Short-Term plans don’t get put in play. They are trying even more so to force people into the ACA plans, which can have ridiculous premiums. This will only result in more people going completely uninsured and taking the tax penalty. If the consumer is healthy and qualifies for short-term coverage, AND will be paying less overall even with taking the penalty, THEN LET THEM. Today I quoted a self-employed family of 4 $1,300/month for a plan with an individual deductible of $6,500. This was the cheapest ACA plan available in there area, and far from a rare situation. I deal with it all the time, and the crazy thing is premiums are about to go up even further for 2017. If you are self-employed or don’t have employer coverage available and have a descent income, you’re screwed. Also, short-term plans are usually PPO’s and have the best networks you can find. Which is another benefit compared to ACA plans, Dr’s are more and more refusing to take them. Our government can’t uphold their end of the bargain and pay the insurance companies the tax subsidies they’re owed, and the consumers are paying the price because of it. If you have employer benefits don’t take them for granted! Our system is a mess!