New rules finalized on short-term health plans

President Joe Biden announced new steps Thursday to protect consumers who buy short-term health insurance plans that critics say amount to junk.

A new rule finalized by the Democratic president’s administration will limit these plans to three months. And the plans can only be renewed for a maximum of four months, instead of up to the three years that were allowed under Biden’s predecessor, Republican Donald Trump.

The Biden administration is also requiring short-term plans to provide consumers with clear explanations of the limits of their benefits.

The White House said the rule is part of Biden’s efforts to reduce costs for consumers, which he has been promoting extensively as he seeks reelection in November.

“The president really believes the American people do not want to be taken for suckers, and junk insurance takes them for suckers,” Neera Tanden, Biden’s domestic policy adviser, said during a call with reporters.

Short-term insurance is meant to be temporary, providing a safety net for consumers as they transition between jobs, for example, or retire before they are eligible for Medicare.

But short-terms plans — critics call them “junk insurance” — too often mislead consumers into thinking they were buying comprehensive health coverage, Tanden said.

Tanden said Trump and other Republican officials undermined the Affordable Care Act by allowing insurance companies to exploit loopholes and sell short-term plans that often leave consumers surprised by thousands of dollars in medical bills.