High Value Health Care

Consumers protected from inadequate “short-term” insurance plans

This week, the federal government issued a new rule to protect patients with short-term insurance plans, enforcing their temporary nature.

Scott Graham | Unsplash.com

Short-term insurance plans are supposed to be temporary – to cover patients after losing a job and their insurance, or during a job hunt. But rules passed in 2018 allowed these plans to provide coverage for up to 364 days – and be renewed for an additional 3 years. President Biden just announced a change to that timeframe because “short-term” insurance plans leave many people without the comprehensive insurance coverage they really need. 

Many people who sign up for these lower priced, short-term insurance plans are unaware that the plans don’t offer  important patient protections. For example, short-term plans can deny coverage or charge higher prices for patients with pre-existing conditions. Comprehensive insurance plans offered on state and federal Marketplaces have these protections in place.

These short-term plans seem to be cheaper, as well, but that’s because they typically offer limited coverage for essential preventive care and services, including maternity care, cancer screenings, and prescription drugs. They also have higher deductibles and out-of-pocket maximums; Kaiser Family Foundation found that in 2018, short-term plans commonly had out-of-pocket maximums as high as $20,000. This means patients are actually paying more. One study found that a person in a short-term plan suddenly diagnosed with breast cancer could pay more than five times what they would pay while enrolled in an ACA plan.

This week, the federal government issued a new rule to protect patients with short-term plans. It enforces the temporary nature of these plans by limiting their duration to up to four months. It also closes a loophole that allowed insurers to ‘stack’ their policies to evade duration limits. New requirements under the rule make it easier for patients to understand the difference between short-term and more comprehensive plans by disclosing more information in  marketing and enrollment materials.

With these new protections in place at the federal level, patients should see less predatory insurance marketing. They will also be able to make more informed decisions about enrolling in plans that do not offer comprehensive coverage in the short-term.

Maribeth Guarino

Former High Value Health Care, Advocate, U.S. PIRG Education Fund

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