Golden Rule Short Term Health Insurance Plans are now only 3 month Terms.

New Health Insurance Law Limits Short-Term Plans to 3-Month Terms with 1-Month Extension: What It Means for Consumers and the Healthcare System

In recent years, short-term health insurance plans have become a popular alternative for individuals seeking affordable, temporary coverage. These plans, initially designed as a bridge for those in between jobs or transitioning to long-term coverage, have been favored for their lower premiums and flexibility. However, with the recent passage of a new law capping these plans to a maximum of three months with the possibility of a one-month extension, significant changes are on the horizon. This new legislation aims to address concerns about the quality of coverage offered by short-term plans while still allowing some flexibility for consumers. Let’s delve into what this law entails, the reasons behind it, and its potential impact on consumers and the broader healthcare system.

What Are Short-Term Health Insurance Plans?

Short-term health insurance plans, also known as temporary health plans, are designed to provide coverage for individuals who need insurance for a limited period. These plans typically offer fewer benefits than long-term, comprehensive health plans and are often purchased by people who are between jobs, waiting for employer-sponsored insurance to begin, or missed the open enrollment period for marketplace coverage.

Short-term plans generally do not need to adhere to the same regulations as plans sold on the Affordable Care Act (ACA) marketplace. This means they often do not cover essential health benefits such as maternity care, prescription drugs, mental health services, or preventive care. Additionally, they can deny coverage or charge higher premiums based on pre-existing conditions.

Due to these factors, short-term plans are often much cheaper than ACA-compliant plans, making them attractive to certain consumers. However, critics argue that these plans leave individuals vulnerable, as they may not provide adequate coverage when medical needs arise.

The New Law: Key Provisions

Starting September 1st, 2024 under the new law, Golden Rule & other short-term health insurance plans are limited to an initial coverage period of no more than three months. Once that period ends, the consumer can apply for a one-month extension, bringing the maximum possible coverage period to four months. After this, individuals must either find more permanent insurance or go without coverage.

Previously, regulations varied by state, with some allowing short-term plans to last up to 364 days and be renewed for a total duration of up to three years. This new federal law standardizes the maximum term for short-term plans nationwide, reducing the maximum duration significantly.

Why Was This Law Passed?

The new law was introduced in response to concerns from consumer advocacy groups, healthcare providers, and policymakers about the increasing reliance on short-term health insurance plans. Critics have long argued that these plans offer insufficient protection, leaving consumers at risk for high medical bills if they fall seriously ill or need extensive medical care.

The rise of short-term plans was seen by some as undermining the ACA’s goal of expanding access to comprehensive, affordable health insurance. With lower premiums and fewer benefits, these plans attracted healthier individuals who might otherwise have purchased ACA-compliant plans. This, in turn, could lead to higher premiums in the marketplace, as insurers are left covering a sicker pool of enrollees.

In 2018, the Trump administration relaxed restrictions on short-term health insurance, allowing them to be sold for up to a year and renewed for up to three years. Proponents of this policy argued that it gave consumers more affordable options and flexibility in their insurance choices. However, the new administration, alongside consumer protection groups, moved to limit these plans again, citing the need for stronger protections against inadequate coverage and surprise medical bills.

The Potential Impact on Consumers

Pros:

1. Protection from Inadequate Coverage: By capping the duration of short-term health insurance plans, the new law encourages individuals to transition to more comprehensive, ACA-compliant plans sooner. This ensures that consumers are covered for essential health benefits and are less likely to face financial ruin due to uncovered medical expenses.
2. Reduction in Confusion: One of the criticisms of short-term plans is that consumers often misunderstand the limitations of their coverage. The new law could lead to fewer people being caught off guard by the gaps in their insurance, as it discourages prolonged reliance on temporary plans that offer minimal protection.
3. Stabilization of ACA Marketplace: The reduced reliance on short-term plans could result in more people enrolling in ACA marketplace plans, which could help stabilize premiums in the ACA markets. By encouraging healthier individuals to participate in the ACA pool, insurers could see a more balanced risk profile among enrollees, potentially leading to lower premiums for everyone.

Cons:

1. Fewer Affordable Options: For some individuals, especially those who do not qualify for ACA subsidies, the short-term plans offered a cheaper alternative to full coverage. The new law will limit these options, and some consumers may struggle to find affordable, long-term insurance.
2. Potential Gaps in Coverage: Limiting short-term plans to three months with only a one-month extension could leave some individuals without insurance while they transition to more permanent coverage. For example, someone who loses their job mid-year might find it difficult to enroll in an ACA plan outside of the open enrollment period and may face a gap in coverage after their short-term plan expires.
3. Increased Pressure on Medicaid and Charity Care: With fewer people able to afford short-term plans, there could be an increase in individuals relying on Medicaid or charity care for medical needs, especially if they do not qualify for marketplace subsidies or cannot afford comprehensive insurance.

The Broader Impact on the Healthcare System

This law represents a step toward reinforcing the original goals of the ACA by pushing consumers toward more comprehensive health insurance options. By limiting the availability and duration of short-term plans, policymakers hope to encourage healthier individuals to enroll in ACA-compliant plans, which could improve the risk pool and reduce premiums.

However, there are concerns that the law may also have unintended consequences, such as increasing the number of uninsured individuals or pushing people toward alternative options like healthcare sharing ministries, which offer less regulation and fewer consumer protections than even short-term plans. Golden Rule has been selling tens of thousands of short term plans since 2018 that allowed consumers to keep their health insurance for up to 3 years. Now these Golden Rule Short Term Plans can only be sold for a 3 month period. No consumer should be buying health insurance plans where the deductible will re set every 3 months. Permanent coverage through private health insurance will allow clients the ability to keep their plans long term.

What’s Next for Consumers?

For those who rely on short-term health insurance as a stopgap measure, it will be crucial to explore alternative options well in advance of their coverage expiring. Open enrollment for ACA plans will be the best time for many to secure more permanent coverage, though individuals facing job loss or other qualifying life events may be eligible for special enrollment periods throughout the year.

Consumers should also carefully review the coverage details of any insurance plan they consider, including whether it meets their healthcare needs and covers essential benefits. While short-term plans can offer temporary relief, they are not a long-term solution, and the new law underscores the importance of securing comprehensive, stable coverage.

My Private Health Insurance

The new law limiting short-term health insurance plans to a three-month maximum, with a possible one-month extension, is a significant shift in the health insurance landscape. My Private Health Insurance will still give clients the ability to obtain private health coverage on a permanent basis. There are still private health insurance plans with a United Health Care Choice Plus PPO that will give clients the protection they need for as long as they want to keep the policy. While it aims to protect consumers from inadequate coverage and reduce market instability, it also raises concerns about affordability and access to temporary coverage. As the healthcare system continues to evolve, both consumers and policymakers will need to navigate these changes carefully to ensure that individuals have access to the coverage they need at a price they can afford.