healthinsurance.org outlines three key things to know before the federal rules go into effect on September 1st.
Availability and limitations of short-term health insurance in each state
Federal rules that take effect on September 1 impose new duration limits on short-term insurance, but as this map shows, some states have stricter rules and others don't offer short-term insurance at all. Source: healthinsurance.org
MINNEAPOLIS, Minnesota, Aug. 08, 2024 (GLOBE NEWSWIRE) — Starting September 1, new federal rules will impose a four-month limit on the term (including renewals) of short-term health insurance plans unless a state has stricter rules. Healthinsurance.org urges consumers to be aware of the new rules, which are significantly stricter than most states' current term limits, and to plan for alternative insurance.
“The point of the new rules is to ensure that short-term health insurance plans are only used to fill short coverage gaps between other health insurance plans,” says Louise Norris, a health policy analyst at healthinsurance.org. “But some consumers don't currently use these plans that way, so it's important to let people know that that will soon change.”
The Congressional Budget Office estimated that as of 2019, as many as 1.5 million people enrolled in short-term, limited-duration insurance plans annually.
In light of the new restrictions, here are three things consumers should consider:
The limitations affect initial plan terms and renewals. New federal regulations, applicable to plans sold or issued after September 1, 2024, limit the initial term to three months and the total term, including renewals, to four months. Once the four-month policy expires, consumers cannot purchase another short-term policy from the same insurer within 12 months of the effective date of the original policy. Since 2018, federal regulations have allowed short-term health insurance plans to have an initial term of up to 364 days and a total term, including renewals, of up to 36 months, unless a state has adopted stricter limitations.
“This will be a big change for many people in states across the country,” Norris said. “These plans were not originally intended as long-term plans, but in recent years, some people have relied on them for long periods of time. Going forward, that will no longer be an option.”
The rule's impact varies 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 insurance is either not allowed or offered by insurers or has duration limits that are more restrictive than the new limits, so the rule makes no changes in those states. Washington, DC, and 14 of these states currently have no short-term plans available for purchase. Three states already limit the duration of short-term plans to three months: Delaware, Maryland, and Oregon.
The story continues
“In states where big changes are expected, such as Florida, Texas and Pennsylvania, consumers need to be aware of upcoming rule changes,” Norris said, “but anyone who has short-term health insurance or is considering taking advantage of this insurance option needs to understand how the rules are changing.”
With advance planning, consumers have options. Under the new short-term health insurance timeline, consumers may be able to purchase short-term insurance after September 1 and keep it through the end of the year. They will then have the opportunity to enroll in ACA health insurance through the 2025 Marketplace.
Open enrollment for ACA-compliant individual health insurance plans has a limited enrollment period in most states that runs from November 1 to January 15. Consumers may be able to enroll in a Marketplace plan immediately if they qualify for a special enrollment period.
“Whether you have short-term health insurance or not, it's important to make a plan to enroll in major health insurance during open enrollment, whether that's before or after the new rules go into effect in September,” Norris explains. “If you don't time it right, you could find yourself without insurance until the next open enrollment period the following year.”
Healthinsurance.org provides consumers with online resources about individual and family health insurance. Healthinsurance.org is owned by HealthInsurance.org, LLC and has been providing consumers with information about health insurance and health care reform for over 25 years.
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