Short-term health plans: 10 things to know
THE TRUMP ADMINISTRATION last week finalized a rule expanding access to short-term health plans. The CMS projected that 600,000 people will buy the skinny coverage next year. Of those, about 100,000 are currently uninsured and 200,000 will switch from an Affordable Care Act plan. Outside analysts say those estimates are far too low. Because healthy people are most likely to bolt from the exchanges, expansion of short-term plans will increase federal spending on ACA premium subsidies by $28.2 billion over 10 years, the CMS estimated.
1 STARTING IN OCTOBER, insurers can sell individual-market short-term health plans lasting as long as 364 days, up from 90 days, and can renew them for a maximum total duration of 36 months; insurers will decide whether to screen enrollees for medical conditions at the time of renewal.
2 THE PLANS DON’T HAVE TO COMPLY with Affordable Care Act rules including: coverage of essential benefits; prohibition against medical underwriting; limits on premium variations based on age, sex or health status; elimination of annual and lifetime benefit caps; annual limits on out-of-pocket costs; and the requirement that plans spend no more than 20% of premiums on administrative costs and profit.
3 MOST SHORT-TERM PLANS don’t cover maternity care, outpatient prescription drugs, substance abuse or mental health treatment, or they impose tight limits on these benefits. They can refuse to pay for treating conditions they consider pre-existing.
4 INSURERS MUST PROMINENTLY DISPLAY in the application and contract that the plan lacks many ACA protections. But major groups representing providers, insurers and consumers expect many patients to be surprised at coverage gaps and high out-ofpocket expenses.
5 PREMIUMS ARE MUCH CHEAPER than ACA plans, particularly for younger, healthier people— often 20% of the cost of the lowest-priced bronze plan on the local ACA exchange. They typically offer broader provider networks than ACA plans.
6 AS YOUNGER, HEALTHIER PEOPLE opt out of ACA markets, premiums will rise for people buying ACA-regulated plans. The CMS projected a 1% increase for exchange plans in 2019, while the Urban Institute predicted an 18% rate hike.
7 ENROLLEES WHO GET INJURED OR SICK are likely to return to the ACA’s guaranteed-issue market at open enrollment and buy a plan that covers their condition, further weakening the ACA market.
8 UNITEDHEALTHCARE’S Golden Rule Insurance, National General Insurance, IHC Group, American National, and some regional Blue Cross and Blue Shield plans sell short-term insurance; Aetna is considering entering the market.
9 FOUR STATES— Massachusetts, New Jersey, New York and Rhode Island— essentially bar sales of short-term plans, while others including California, Hawaii, Illinois, Maryland and Minnesota are considering or have passed restrictions on these plans.
10 BROKERS CAN MAKE about 20% commissions on shortterm plans, compared with 5% on ACA plans.