Buyer Beware
On August 1, 2018, the Departments of Health and Human Services, Labor, and Treasury (the tri-agencies) issued a final rule to dramatically expand access to short-term, limited-duration insurance coverage. The rule extended the maximum duration of short-term plans from three months to up to 12 months and allowed insurers to renew or extend short-term coverage for up to 36 months.
Short-term plans do not have to comply with the Affordable Care Act’s (ACA’s) market reforms. Short-term insurers can charge higher premiums based on health status, exclude coverage for preexisting 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.
Given these limitations—and the fact that short-term coverage is generally only available to consumers who can pass medical underwriting—short-term coverage is much less expensive than ACA-compliant coverage. Many customers who bought short term medical insurance believed it to be comprehensive, only to have their claims rejected or barely paid out.
The Office of the Insurance Commissioner in WA State put out a table highlighting plan differences. The link is below.
It’s important when choosing health insurance to understand the difference between “Affordable Care Act health insurance plans”, “Short-term limited duration medical plans”, “Health care sharing ministries”, and “Association Health Plans (AHPs).” This TABLE helps clarify the benefits offered with each type of coverage.
There are other articles at Bloomberg and other sites that outline the personal catastrophic repercussions of these junk policies.