Federal Agencies Lift Short Term Duration Limits

364-Day Short Term Medical Plans Now Available
Jenifer Dorsey
March 28th, 2019 September 5th, 2018 |
Read time: 7 minutes

You will soon have another option when it comes to Affordable Care Act (ACA) (also called Obamacare) alternatives. On Aug. 1, 2018, the Departments of Health and Human Services, Labor and the Treasury issued a final rule lifting Obama-era limits on short term health insurance plans.1

The final rule is effective and applicable 60 days after publication in the Federal Registrar, which means starting in October 2018 short term policies can:

  • Have an initial policy duration of less than 12 months (instead of 90 days)
  • Be renewable for a combined maximum duration of 36 months total coverage.2

The final rule also requires all short term policies to include a notice explaining the policy they are purchasing.3

In a press release, Health and Human Services Secretary Alex Azar said:

Under the Affordable Care Act, Americans have seen insurance premiums rise and choices dwindle.

President Trump is bringing more affordable insurance options back to the market, including through allowing the renewal of short term plans. These plans aren’t for everyone, but they can provide a much more affordable option for millions of the forgotten men and women left out by the current system.4

6 ways the short term medical change could impact you

Below, we’ve highlighted 6 things to know about the short term medical (STM) news, including how these changes could result in lower premium payments for you.

1.    You’ll have an affordable Obamacare alternative

While STM plans are not considered minimum essential coverage, they do provide another health benefits option for those who are exempt from the individual mandate or choose to pay the tax penalty.

Short term health insurance can be a lower-cost option than major medical because they include limited benefits and do not fulfill ACA requirements. Short term policies include benefits help pay for unexpected medical care resulting from accidents and illnesses. Because they usually exclude preexisting conditions, they tend to be an option for healthy individuals who want some financial protection from high claims.

Short term plans:

  • Can be quickly obtained year-round
  • Cover a range of healthcare services, including emergency room treatment, hospital room and board, doctor office visits and more
  • Come in many plan designs to fit your budget and healthcare needs
  • May or may not require you to use network providers
  • Are accepted by most healthcare providers

2.    You may be able to get an STM plan that lasts up to a year

Prior to 2016, short term health plans were available for as long as 364 days (depending on state laws). The final rule lifts the current 90-day limit in some states and, as explained by HHS, reverts “to the previous definition of short term, limited-duration insurance which permits coverage for nearly a full 12 months.”5

Find out what the duration limits are in your state.

3.    You may be able to reduce your health insurance premium

As mentioned above, short term plan premiums may be lower than major medical (i.e., Obamacare plan) premiums because they have limited coverage. As CMS pointed out in a press release announcing the final rule6:

The average monthly premium for an individual in the fourth quarter of 2016 for a short term, limited-duration policy was approximately $124, compared with $393 for an unsubsidized individual market plan.

The Departments of Labor and Health and Human Services (HHS) issued the proposed rule in February 2018, citing a lack of consumer options and the rising cost of insurance as the reason for lifting STM policy limitations.7

“Americans need more choices in health insurance so they can find coverage that meets their needs,” said Health and Human Services Secretary Alex Azar. “The status quo is failing too many Americans who face skyrocketing costs and fewer and fewer choices. The Trump Administration is taking action so individuals and families have access to quality, affordable healthcare that works for them.”

4.    You could still owe an Obamacare penalty (for now)

The ACA’s individual mandate requiring most people to have health insurance remains in effect. If you are not exempt and have short term medical instead of minimum essential coverage, you could still owe a tax penalty. In 2019, the tax penalty will be repealed.

5.    You can’t buy extended short term health insurance yet

The rule may be final, but it becomes effective and applicable within 60 days of publication.8 That means longer plans may become available in October, just ahead of 2019 open enrollment for major medical insurance.

6.    Short term plans are available today (and may be effective as soon as tomorrow)

You don’t have to wait to buy short term health insurance. You can enroll in just a few minutes, right now. The application is subject to acceptance by the carrier.

Next-day coverage is available, and the policies that are currently available last from 30 days to 3 months. You may be able to apply for a new policy after 3 months, depending on state laws where you live.

If you need a health plan to cover an unexpected accident or illness, you can get an STM quote in seconds.

Read the full CMS Fact Sheet: Short Term, Limited-Duration Insurance Final Rule.

More on Short Term Health Plans

What’s the difference between STM and Obamacare?

What is short term medical insurance? Find out!

What does short term health insurance cover? Learn more.


Begin Coverage in 3 Easy Steps!

Step 1: Get a quote within seconds
Step 2: Compare multiple plans
Step 3: Finish application online
Originally Published On March 1st, 2018
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