Skyrocketing premiums and high deductibles have created a market for lower cost health insurance options. For healthy adults who have minimal medical needs, the lower premiums of short-term insurance plans can be tempting, but that price tag comes with trade offs.
Intended as temporary coverage for individuals between jobs, short-term health insurance has taken on a new life in the age of the affordability gap. This occurs when someone cannot afford coverage and does not qualify for premium subsidies or for Medicaid, or retirees too young for Medicare.
“Short-term health insurance is not for everyone. It is ideal for people who are looking for coverage for accidents and illnesses,” said Shaun Greene, SVP and Head of Business Operations at Agile Health Insurance, short-term plan brokers.
In a November 2018 statement, the New Hampshire Insurance Department (NHID) cautioned Granite Staters on this alternative option for coverage and to “fully understand what is and is not covered before enrolling in a plan.”
Short-term health plans are not required to comply with Affordable Care Act (ACA) mandates. This means plans do not have to include the 10 essential health benefits such as coverage for pre-existing conditions, prescriptions, mental health or even pregnancy. They can cap lifetime payments and are not bound to ACA regulations on setting premiums.
“Many people do not want or need all 10 of the essential health benefits, for instance, single males or post-menopausal females do not need or want maternity coverage,” added Greene, who sees the plans as a sensible route for those in need of coverage.
“If someone cannot afford an ACA plan or is outside of open enrollment, this is a great option to bridge them to the end of the year,” added Greene.
A 2017 executive order by the Trump administration eased federal regulations and allowed the plans to be sold from three months up to a 364-day period with the option to renew for up to 36 months of coverage; a move critics saw as a way to pull healthy enrollees from ACA compliant policies, potentially further increasing premiums for those policies.
Despite the executive action, all plans are subject to state regulations first, with some state’s restricting or banning sales entirely.
In New Hampshire, short-term plans can be purchased for up to six months, with an option to buy two more for up to 18 months of coverage in a two-year period, followed by a mandatory one-year waiting period before purchasing another plan.
Also in New Hampshire, each plan is considered new, not a renewal, which means any health conditions that occurred under the previous plan are now pre-existing conditions and can be used to increase premiums or deny coverage.
For consumers, the 12-month plan is in their best interests," said Greene. “If a New Hampshire consumer could buy a 12-month policy, they would not have to worry about these risks.”
As of December 31, 2017, there were 538 people covered under short-term plans in New Hampshire, updated enrollment numbers will be available in Spring 2019.
“Currently, there are short-term plans approved for sale in New Hampshire, but they are not being sold or marketed,” said Eireann Aspell, outreach coordinator at the New Hampshire Insurance Department.
A simple internet search will show many short-term options for Granite Staters, something Aspell also cautions consumers on.
“If someone is unsure about the insurance company or agent they are dealing with, they should stop before signing any paperwork or writing a check and call the Insurance Department at 1-800-852-3416 to confirm the company or agent is legitimate and licensed in the state.”