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Guidance Finalized Allowing Extended Duration of Short-Term Medical Coverage

The Trump administration has finalized guidance to extend short-term medical coverage options, creating an opportunity for you to offer a more competitive option to your clients.

The new ruling will give consumers the opportunity to purchase this level of coverage in increments of up to 364 days (or 12 months). It also allows this type of insurance to be renewable for up to 36 months.

This move reverses guidance that limited short-term medical plans to a maximum of 3 months coverage.

However, “states remain free to adopt a definition with a shorter maximum initial contract term or shorter maximum duration (including renewals and extensions) for a policy to meet their specific market needs,” according to the final rule documentation.

While carriers may choose to not cover certain types of services including maternity and mental healthcare, short-term medical plans routinely cost less than major medical plans. In the wake of ACA, major medical premiums have skyrocketed as much as 105% 1. Almost 1/5 of the country’s economy is spent on healthcare, a “far larger share than in any other large, wealthy country in the world,” and the price of healthcare services is “pushing up the nation’s health spending over time” 2. Consumers are certainly feeling the impact: the average cost of deductibles has increased over 295% while wages have only increased by 29% 3. Short-term medical plan may make better financial sense for healthier consumers, those who are priced out of ACA coverage, and those who need an affordable option during a period of transition.

This guidance is expected to lead to increased short-term medical enrollment, which may lead to even lower premiums due to a healthier pool of enrollees who don’t need a comprehensive spectrum of benefits.

Here are some important points to remember:

1. You’ll be able to provide a more secure bridge for your clients who are in between plans.

Before this guidance, short-term medical plans were only available for 90 days. Now you can enroll your clients in coverage for up to 364 days and provide them with the option to renew it for up to 36 months.

This level of coverage may fit the needs of your clients who are:

  • Transitioning between jobs
  • Waiting for employer insurance to begin
  • Graduating from college
  • Rolling off parents’ coverage
  • Waiting for Medicare coverage to become effective

Also, you can enroll your clients in plans that offer next-day coverage is available.

2. You’ll be able to sell these extended duration plans in October. 

The new rule is set to take effect just before the 2019 Open Enrollment Period that will run from November 1, 2018 – December 15, 2018.

3. You’ll have an additional tool in your portfolio that provides a wide range of benefits.

Short-term medical plans do not offer minimum essential benefits as defined by ACA, but they can offer benefits and features such as:

  • Wellness options
  • Benefits paid like traditional major medical plans
  • Flexible options for coverage cost and length
  • Open network of physicians, specialists, and hospitals
  • Lower rates than traditional health plans
  • Competitive individual and family coverage
  • Coverage of certain pre-existing conditions
  • Low copay options
  • Variety of deductible and coinsurance options
  • Ability to cancel at any time without penalty

While ACA plans have created “unstable risk pools and unaffordable premiums,” short-term medical plans will offer healthy consumers an affordable option and may motivate those who would have opted to remain uninsured to select a coverage option that makes sense for their budget and their lifestyle4.

 

We work with highly rated carrier partners that provide competitive, quality options for short-term medical coverage.
Expand your book of business with this level of coverage and meet your clients where they are in their healthcare and lifestyle realities.

 

Learn more by:

 

Click here to view the final rule in full courtesy of the CMS. Stay tuned for more updates.

 

Health Insurance Innovations, Inc. is a leading developer and administrator of affordable, web-based individual health insurance plans and ancillary products. We help consumers address their health insurance needs by offering access to a number of products offered by various insurance carriers.

For agent use only – not for use with the general public.

 

Sources:

1: “HHS Secretary: Short-term health insurance plans are an affordable option.” Alex Azar. https://www.cnn.com/2018/02/23/opinions/short-term-health-insurance-opinion-azar/index.html

2: “Why Are Healthcare Prices So High, and What Can Be Done About Them?” Kaiser Family Foundation. https://www.kff.org/health-costs/event/may-9-forum-why-are-healthcare-prices-so-high-and-what-can-be-done-about-them/

3: “Increases in Cost-Sharing Payments Continue to Outpace Wage Growth.” Kaiser Family Foundation. https://www.healthsystemtracker.org/brief/increases-in-cost-sharing-payments-have-far-outpaced-wage-growth/#item-start

4: “Should States Allow Insurers to Offer Bare-Bones Health Plans With Fewer Mandated Benefits?” Doug Badger. https://www.wsj.com/articles/should-states-allow-insurers-to-offer-bare-bones-health-plans-with-fewer-mandated-benefits-1529892240

 

Final Rule Makes Short-Term Medical Insurance Renewable for Up to 36 Months

The Trump administration has issued a final rule that will allow short-term, limited-duration insurance to be purchased in increments of up to 364 days (or 12 months).

The final rule will also allow this type of insurance to be renewable with a maximum duration of up to 36 months. However, “States remain free to adopt a definition with a shorter maximum initial contract term or shorter maximum duration (including renewals and extensions) for a policy to meet their specific market needs,” according to the final rule documentation.

These new term limits will go into effect in October according to CNBC. This comes just before the 2019 Open Enrollment Period which will run from November 1 to December 15, 2018.

This follows a proposed ruling by the Department of Health and Human Services, the Department of the Treasury and the Department of Labor published for public commentary back in February of 2018. Much in line with the Trump administration’s concerns over the rising costs of health coverage today, this final ruling is expected to increase consumer choice, competition, and affordability in the individual health insurance market.

The Centers for Medicare & Medicaid Services (CMS) projects that approximately 600,000 people will enroll in short-term limited-duration plans in 2019.

Click here to view the final rule in full courtesy of the CMS. Stay tuned for updates on how this change will affect Health Insurance Innovations (HIIQ), contracted agents, brokers and the American public at large.