Are Short Term Insurance Plans “Junk”?
We hear a lot of talk in the news about short term insurance plans. Democrats were furious last year when the Trump Administration undid an Obama-Era regulation that limited these plans to three months maximum per policy. The short term health insurance plans now last for up to 12 months and, in some cases, may be renewed for up to 36 months. For many, this is a welcome decision that increased the availability of affordable insurance to people who cannot afford plans on the marketplace. So why is there a push to eliminate these plans?
There are two main reasons why some want to end these policies. Obamacare and coverage.
The Obamacare Factor
The Affordable Care Act (Obamacare) is one driving force to do away with short term plans. In fact, the ACA was a major reason for the Obama-Era decision to limit the duration of short term plans. The Affordable Care Act relies on healthy people paying into the plan to cover pre-existing conditions for others. However, people were purchasing short term plans due to the lower premiums. Because of this, the exchange suffered from a lack of healthy participation. The solution? Lower the short term plan duration from 11 months to 90 days. But how did that help the ACA?
Lowering the plan duration from 11 months to 90 days kept the short term plans from being a viable long-term solution. Because the plans ceased to be a long-term option, people were forced to go to the healthcare.gov marketplace. But when Trump brought the plans back to 12 months, this disrupted the equilibrium that was created by the Obama-Era rule. Because of this, Obamacare is a driving force behind lawmakers wanting to end short term plans. But there is also another reason.
Limits In Coverage
Short term health plans have limitations to their benefits. This is a more legitimate reason to buck against them. However, it is a reason that is largely overblown.
Short term insurance does not cover pre-existing conditions in most cases. But if you know this going into it, this is not a problem. You know that if you have a pre-existing condition you have other options. But lawmakers seem to think that consumers are not capable of understanding this point. They do not want the choice available. After the October ruling, however, some carriers have started to introduce plans that will cover these conditions after the first year. There are also a couple of carriers that will cover pre-existing conditions immediately but limit how much they will pay through the term.
There are also some limitations to short term plans with what they will or will not cover. For example, most of these plans will not cover pregnancy except for emergency situations. Many do not cover some surgeries that are not required. They do not cover prescription drugs in most cases. They also have a maximum benefit that they will pay in most cases.
So Why Would Anyone Want Short Term Plans?
This, of course, begs the question, “Why would I want one of this plans?” There are a few reasons why someone would opt to get a short term plan.
- Price – Short Term Plans are usually cheaper than the plans on the Marketplace.
- Doctor Options – Many of these plans have a PPO network. In other words, you can see any doctor.
- Short Term Solution – Some people truly need a short term solution. This is a great plan to get you through a gap in coverage.
There are other reasons someone may want a short term plan as well but these are the most common.