HHS Reverses Short Term Health Insurance Duration Rule


August 1, 2018

On Wednesday, August 1st, HHS (The Department of Health & Human Services) announced that it is changing the three-month duration limitation imposed on short term health insurance by President Obama, to allow people to have these plans for 364 days (essentially an year-long plan) and to allow for two renewals, for a total of 3 years of coverage.

These new short term plans will go into effect on October 1st, which means that when the 2019 Open Enrollment Period rolls around on November 1st and families are making decisions about their health insurance options for the 2019 calendar year, they will not only have Obamacare plans to choose from, but also short term health insurance plans.

Short term health insurance plans are similar to major medical (ACA) plans in that they provide medical and hospital coverage for people who have satisfied the plan’s deductible requirements. After reaching the deductible requirements, the insured person will owe a copay or coinsurance payment to the medical provider and the plan will cover the rest. Short term health insurance plans have an underwriting requirement, which is illegal under the Obamacare law. This means that carriers can review a person’s medical history and decide whether to insure the person or not. Oftentimes, people with pre-existing conditions or those who are pregnant, will be denied coverage under a short term health plan.

There are a couple short term health insurance plans out that they will insure you even with a pre-existing condition though. IHC has a short term health insurance plan that will cover medical bills related to pre-existing conditions up to $25,000 and National General Accident & Health has a short term health insurance plan that will give you cover even with pre-existing conditions, but will not cover any bills related to those conditions.

Under the ACA (Obamacare) law, short term health insurance plans were not considered qualifying coverage to avoid the individual mandate tax penalty because these plans did not cover pre-existing conditions and provide the ten essential health benefits. This meant that anyone who chose to have a short term health plan instead of an ACA plan would be penalized when they filed their tax returns for that year. In December 2017, Congress passed a new tax bill that stripped away the individual mandate requirement by reducing the penalty for being uninsured to $0. This means that there’s penalty for choosing to be insured by a short term health insurance plan starting on January 1, 2019.

People with a complicated medical history or women who are or want to get pregnant should enroll in an ACA plan when the 2019 Open Enrollment Period starts on November 1st. People who are healthier and who are concerned about the price of healthcare can now consider short term health insurance plans in addition to ACA plans.