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OVERRULED! Trump Healthcare Executive Order Targets Obama-Era Short Term Health Insurance Ruling

OVERRULED! Trump Healthcare Executive Order Targets Obama-Era Short Term Health Insurance Ruling

Posted Oct 12, 2017 by Jenifer Dorsey

Temporary plans exceeding 3 months could once again become popular Obamacare alternative

Update: President Trump on Oct. 12, 2017, signed an executive order that allows short term health insurance policies to extend beyond the three-month limit set last year under the Obama administration.Trump referenced the doubling of health insurance premiums under the Affordable Care Act (ACA) as a key reason for action. The president noted that short term medical coverage is often less expensive than ACA plans and generally have broader access to physicians and hospitals.

The full text of this healthcare-focused executive order has not yet been released, and the specific rules resulting from it remain unclear at this time. Media outlets including The Washington Post report that Trump seeks to extend short term insurance limits to nearly a year.[1] We do not yet know when changes will become effective and how soon these longer temporary insurance plans could become available. For instance, will they be ready in time for 2018 Obamacare open enrollment, which starts Nov. 1, just three weeks from now?

We will continue to provide details and updates about short term medical insurance legislation as we learn more today and in the days that follow. The executive order is subject to public commentary but is likely to move ahead.

 

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What does Trump’s executive order on healthcare mean for current short term policyholders?

Your current short term policy remains as-is. If your current policy ends before new rules take effect and you find you still need short term coverage, you can reapply for a new policy, subject to state laws.

Text from our original article is provided below. It was posted Nov. 9, 2016, following the Obama administration’s ruling, and the information provided details the short term insurance rules currently in place. The Trump executive order will change these rules and extend the cap on short term health insurance plans at some point in the future.

Federal Ruling Impacts Short Term Health Insurance

Three months. That is the maximum length of time Americans can go without health insurance and not face a tax penalty, unless they qualify for an exemption. It is also the federal government’s current limit for short term health insurance policies.

The U.S. Department of the Treasury, Department of Labor, and Department of Health and Human Services on October 31, 2016, publically released final regulations regarding the definition of short term health plans (called short-term limited-duration insurance in the rule; often called short term medical or STM).[2] Previously, depending on state laws and the coverage a person selected, short term policies could last anywhere from 30 days to six months, sometimes even a full year. Effective December 30, 2016, plan duration became capped at 90 days.[3] Furthermore, the rule mandates that both the policy and application must prominently state that the short term plan is not minimum essential coverage and a penalty may be owed.[4]

Why did Obama crack down on short term health insurance plans?

The departments listed above created regulations to prevent short term plans from being sold as a type of primary coverage and prohibit people from using them outside of their intended purpose.[5]  Because STM is not subject to the Affordable Care Act, it is not required to include essential health benefits or preventive services and does not fulfill the ACA’s individual mandate. Applicants may also be denied coverage based on health history. These plans are not intended to replace major medical insurance.

If temporary health insurance isn’t minimum essential coverage, why would anyone buy it?

It’s all in the name. Short term plans were designed as a temporary solution for people in between Obamacare plans or employer-sponsored coverage). For instance, if someone were in a waiting period after starting a new job, that person could apply for a short term plan to obtain some level of coverage until their job-based coverage becomes effective. Sure, that person could just wait, but they would be entirely responsible for any medical bills incurred.

 

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People often choose short term health plans when uninsured because they can help with a range of medical expenses incurred due to unexpected injuries and illnesses (a few plans include some preventive care), and they typically cost a fraction of major medical (i.e., Obamacare) premiums. Plus, short term plans can be customized in terms of policy length, as mentioned above, as well as deductible, coinsurance and other options.

How do I know if I am purchasing a short term insurance plan?

Short term plans are only sold in the private market, they are not available through state-based or federally facilitated health insurance exchanges. The words “short term” should be in the plan name.

Under the federal regulations, as mentioned earlier, both the policy and application must prominently state that the short term plan is not minimum essential coverage and a penalty may be owed. The language consumers should look for is as follows[6]:

THIS IS NOT QUALIFYING HEALTH COVERAGE (“MINIMUM ESSENTIAL COVERAGE”) THAT SATISFIES THE HEALTH COVERAGE REQUIREMENT OF THE AFFORDABLE CARE ACT. IF YOU DON’T HAVE MINIMUM ESSENTIAL COVERAGE, YOU MAY OWE AN ADDITIONAL PAYMENT WITH YOUR TAXES.

If you are uncertain whether or not you are purchasing an ACA-compliant plan that qualifies as minimum essential coverage, make sure to verify before you enroll. If you are buying a short term plan, make sure you understand how it works. Speak with a health insurance producer (i.e., agent or broker) or call the insurance company’s member services department with questions.

 

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Do you need temporary coverage right now? Call the number at the top of your screen to speak with a producer about plans available through healthedeals.com, or get a quick quote on your own.

 

Originally posted Nov. 9, 2016. Updated Oct. 12, 2017.


Legal Disclaimers

[1] Goldstein, Amy. “Trump Signs Order to Eliminate ACA Insurance Rules, Undermine Marketplaces.” The Washington Post. Oct. 12, 2017.  https://www.washingtonpost.com/national/health-science/trump-to-sign-executive-order-to-gut-aca-insurance-rules-and-undermine-marketplaces/2017/10/11/40abf774-ae97-11e7-9e58-e6288544af98_story.html

[2] Federal Register. “Excepted Benefits; Lifetime and Annual Limits; and Short-Term, Limited-Duration Insurance.” October 31, 2016. https://www.federalregister.gov/documents/2016/10/31/2016-26162/excepted-benefits-lifetime-and-annual-limits-and-short-term-limited-duration-insurance

[3] Ibid.

[4] Ibid.

[5] Ibid.

[6] Ibid.