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Short-Term Health Plans Have Limitations

In a recent executive order, the Trump Administration has proposed new regulations to encourage a much wider use of short-term health plans.  These plans have limited duration and are generally a cheaper alternative to individual market, ACA compliant plans. However, cheaper does not always translate to better.  A recent analysis from the Kaiser Family Foundation found that these plans have gaps and offer less or limited services.

The Foundation’s analysis examined specific short-term insurance products that are available in 45 states and the District of Columbia through two insurance partners – eHealth or Agile Health Insurance.

In general, the Kaiser Foundation analysis found:

  • 43 percent do not cover mental health services;
  • 62 percent do not cover substance abuse treatment;
  • 71 percent do not cover outpatient prescription drugs; and
  • None of the plans cover maternity care.

The study found that these short-term health plans have premiums that are up to 20% lower than the lowest ACA compliant individual marketplace plans (bronze) within each of the states analyzed.

There are concerns that healthier people may move to these shorter, cheaper plans leaving those with more complicated health conditions in the ACA plans. This would have the knock-on effect of raising the premiums for those that remain in the ACA plans.  While qualified low income people may be able to take advantage of tax credits to help offset the higher premiums, most middle-income families would not be entitled to any tax relief.  This would most likely result in higher premiums for this group.

It is also expected that the repeal of the individual mandate that was voted in as a rider on the 2017 Holiday Tax Cut will boost enrollment in these short-term plans as the penalty will no longer apply.

There is a tremendous amount of activity in the marketplace these days where a change in one component of health care has huge impacts on other areas. Please contact us if you have any questions about this change.  We will help walk you through the changes and what impact it may have on your business.

Additional Resources on Short-term Health Care Plans:

Kaiser Family Foundation

Health Insurance.org

Statnews.com

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