Consumers purchasing short-term health insurance plans will soon see new duration limits
August 08 2024 - 11:42AM
On Sept. 1, a new federal rule will apply a four-month limit
on the duration of short-term health insurance plans — including
renewals — unless a state has stricter rules in
place. Healthinsurance.org is urging consumers to take note of
the new rule – which is significantly stricter than current
duration limits in most states – and to plan for replacement
coverage.
“The point of the new rule is to ensure short-term health plans
are only being used to cover short coverage gaps between other
health plans,” said Louise Norris, a health policy analyst
for healthinsurance.org. “But since that’s not how some
consumers are currently using these plans, it’s important to let
people know things are changing, and soon.”
As many as 1.5 million people were estimated by the
Congressional Budget Office to be enrolled annually in short-term
limited duration insurance plans as of 2019.
Here are three things for consumers to consider in light of the
new limits:
The limits affect initial plan terms and
renewals. The new federal rule, which will apply to plans
sold or issued on or after Sept. 1, 2024, will limit initial terms
to three months, and total duration – including renewals – to no
more than four months. After a four-month policy has expired, a
consumer will not be able to buy another short-term policy from the
same insurer within 12 months of the effective date of the first
policy. Since 2018, federal rules have allowed short-term health
plans to have initial terms of up to 364 days and a total duration
of up to 36 months with renewals, except where states adopted
tighter restrictions.
“This is going to be a big shift for a lot of people in states
across the country,” said Norris. “While these plans were never
intended to be long-term plans, some people have been relying on
them for extended periods of time in recent years. That won’t be an
option moving forward.”
The rule’s impact will vary by state. The new
federal rule is more restrictive than what is currently
allowed in most states. However, there are 17 states, and the
District of Columbia, where short-term health plans are either not
allowed or not offered by insurers, or where duration limits are
stricter than the new limits, so the rule doesn’t change anything
for those states. In Washington, D.C. and 14 of those states, there
are no short-term plans currently available for purchase. Three
states – Delaware, Maryland, and Oregon
— already limit short-term plans to three months in
duration.
“It’s in the states where this will be a big shift – like in
Florida, Texas and Pennsylvania – where consumers need to be made
aware of the pending rule change,” Norris said. “But anyone
enrolled in a short-term health plan, or planning to take advantage
of this insurance option, should make sure they understand how the
rules are changing.”
Consumers have options, if they plan ahead. The
timeline for the new short-term health plan rule allows consumers
to buy a short-term plan on or after Sept. 1 and potentially keep
it through the end of the year. They will then have an opportunity
to enroll in an Affordable Care Act (ACA) health plan through the
Marketplace for 2025.
Open enrollment for ACA-compliant individual health plans
has a limited enrollment window that starts Nov. 1 and runs through
Jan. 15 in most states. Consumers may be able to enroll in a
Marketplace plan immediately if they are eligible for
a special enrollment period.
“Whether you are enrolled in a short-term health plan before or
after the new rule comes into play in September, it’s important to
have a plan for enrolling in major medical coverage during the open
enrollment window,” explained Norris. “If you don’t time things
just right, you could end up with a gap in coverage until the next
open enrollment period rolls around the following year.”
Healthinsurance.org provides online resources for consumers
about individual and family health insurance. Healthinsurance.org,
owned by HealthInsurance.org, LLC, has been providing consumer
information about health insurance and health reform for over 25
years.
- Short-term health insurance availability and limits by
state
healthinsurance.org
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