Biden Rolls Back Trump-Era Expansion of Short-Term Health Insurance Plans
The rule also requires health insurance companies to be more transparent about health plans
The Biden administration announced March 28 it finalized a rule to roll back a Trump-era regulation that extended short-term health insurance plans, cracking down on what some refer to as “junk plans.”
The rule, first introduced in July, places tighter restrictions on the plans.
Short-term health plans, which generally were designed to fill temporary gaps in coverage when an individual is transitioning from one source of coverage to another, were expanded in 2018 by President Donald Trump and touted as a cheaper alternative to the Affordable Care Act (ACA). That expansion allowed those plans to be offered for up to three years. Critics said this has misled consumers into thinking they were buying comprehensive health insurance, even though they often didn’t have coverage for pre-existing medical conditions.
The final rule limits the duration of the insurance plans to three months, with the option of a one-month extension. Significantly, it also requires that the plans provide consumers with clear explanations of their benefits and inform them of how to find more comprehensive coverage.
“HHS is cracking down on junk insurance plans to help consumers make informed choices and avoid mistakenly paying for a plan that does not provide them the coverage or protection they expect,” said Health and Human Services Secretary Xavier Becerra.
However, some Republicans are critical of the short-term health plan final rule, including Education and the Workforce Committee Chairwoman Virginia Foxx (R-NC), who said in a statement: “Short-term health insurance and other nontraditional coverage arrangements provide patients with more portability, options, and flexibility than other insurance options available through the ACA individual market. I remain opposed to any efforts by this administration to limit affordable coverage options or otherwise force Americans to be without insurance.”
SHRM Online rounded up additional articles on the topic.
Not Subject to ACA
Unlike most health insurance plans, short-term plans are not subject to consumer protections under the ACA, including guaranteeing coverage for people with pre-existing conditions.
They are also free from the law’s requirement that plans offer a minimum set of benefits, like prescription drug coverage and maternity care.
Democrats refer to the short-term, limited-duration plans as “junk” insurance, and the Obama-era policy was meant to ensure that healthy consumers could not use that option to sidestep the ACA’s marketplaces, leaving a sicker pool of customers enrolling in the comprehensive plans offered under the health law.
More Transparency
The Biden administration’s final rules require health insurers to be clear and upfront about the plans consumers buy. Short-term plans, as well as "fixed indemnity" insurance policies that provide a fixed cash payment for a healthcare event, will have to include a clear, easy-to-understand consumer notice on marketing, application, enrollment and re-enrollment materials.
The final rules increase transparency while helping to ensure that consumers do not mistakenly enroll in these types of insurance plans as substitutes for comprehensive coverage, according to the Centers for Medicare & Medicaid Services.
Political Battle
The move is in part an effort by President Biden to distinguish his approach to health care with that of Trump, who is the presumptive Republican presidential nominee. During his administration, Trump extended the duration of short-term health insurance plans, in part, in an effort to weaken the ACA.
Overall, the White House contends that Biden is trying to reduce costs for consumers.
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