The Trump Administration just finalized a rule that allows consumers to purchase cheaper health insurance in October 2018. Short-term health plans don’t need to cover all the medical services that the Affordable Care Act requires for other policies. That makes short-term policies far less expensive than comprehensive insurance. With this new rule, consumers can purchase short-term plans that last for up to one year, with the option to renew their plan for up to three years.
Finally, freedom in health insurance
Short-term health insurance puts consumers in charge of their healthcare costs.
Qualified Consumers Can Save
Short-term medical plans are significantly cheaper than plans on state and federal exchanges
It’s no secret that plans currently offered on Exchanges (also called the state or federal Marketplace) are anything but “affordable” – and the outrageous costs won’t change any time soon. In a report issued last spring, California’s state health insurance exchange, Covered California, estimated that monthly premiums across the country could rise between 12 and 32 percent in 2019. It’s not the same story for short-term plans. A recent survey by the Kaiser Family Foundation found that short-term plans offered on eHealth and Agile Health Insurance – two of the largest private online marketplaces – had monthly premiums that were at least 20 percent less than the cheapest plans on the state or federal Marketplace. For adults between 30 and 50, switching from a Bronze ACA plan to a short-term plan yields an average premium savings of $352 per month, or more than $4,200 each year. For consumers facing the choice between keeping the lights on or paying for healthcare, short-term plans introduce much needed diversity and competitive rates into the marketplace.
Premiums & Coverage Caps: ACA Marketplace Plans vs. Short-Term Health Insurance Plans in Select Cities, 40-year-old Male
|City||Monthly Premium for Lowest Cost Bronze Marketplace Plan (unsubsidized)||Range of Monthly Premiums for Short-Term Plans||Range of Out-of-Pocket Cost-Sharing Maximums for Short-Term Plans||Range of Policy Coverage Caps for Short-Term Plans|
|Los Angeles, CA||$264||$141 – $566||$2,500 – $10,000||$750,000 –$2 million|
|Denver, CO||$338||$35 – $262||$2,000 – $20,000||$250,000 –$1.5 million|
|Miami, FL||$297||$46 – $983||$250 – $22,500||$250,000 –$2 million|
|Atlanta, GA||$371||$47 – $503||$1,000 – $22,500||$250,000 –$2 million|
|Chicago, IL||$305||$55 – $573||$250 – $22,500||$250,000 –$2 million|
|St. Louis, MO||$281||$38 – $423||$1,000 – $20,000||$250,000 –$2 million|
|Columbus, OH||$289||$25 – $305||$250 – $20,000||$250,000 –$2 million|
|Houston, TX||$270||$55 – $644||$250 – $22,500||$250,000 –$2 million|
|Virginia Beach, VA||$479||$44 – $583||$250 – $20,000||$250,000 –$2 million|
Only cover what you need
With short-term medical, consumers don’t pay for services they don’t need
Short-term plans are generally still considered major medical plans, since they cover more than just hospital stays or accidental injuries. But one reason why short-term plans cost so little is that they don’t cover the medical services that end up costing insurers the most money. The limited coverage has led many to refer to the plans as “skimpy.” However, with close to 4 million babies born in the U.S each year, at least 155 million American women aren’t utilizing the maternity benefits mandated for plans sold on the Exchange. And data from the 2015 National Survey on Drug Use and Health indicate that while 21.7 million Americans needed substance use treatment in the past year, roughly 270 million didn’t. Consumers know their own pattern of health needs, and should be permitted to choose health coverage accordingly.
Major Cost Savings
Lower premiums mean consumers can defer the cost of medical expenses
For many consumers across the nation, the two-year savings from reduced monthly premiums alone amounts to more than $10,000. Lower up-front costs give heathy consumers the opportunity to defer the cost of healthcare until they need it. Better yet, consumers may use their savings to pursue the healthier lifestyle choices that reduce the need for medical care in the first place.
Sign Up When You're Ready
Unlike plans on the exchange, short-term health insurance is offered year-round
Open enrollment is the annual period when consumers can buy health insurance on the state and federal marketplace. For coverage starting on January 1, 2019, open enrollment runs from November 1, 2018, to December 15, 2018. Unless a consumer plans on getting fired, pregnant, divorced, or moving to a new state in order to become eligible for a special enrollment, they won’t be able to buy most forms of health insurance Short-term insurance, on the other hand, is available year-round. It’s a viable option for consumers who decide they’re no longer willing to shoulder the risk of being uninsured and those who lose their coverage and don’t want to pay the outrageous premiums that come with plans on state and federal exchanges.
Competition = Good
Increased competition in the current healthcare industry is a good thing
Americans in 1,356 counties have no choice when it comes to buying health insurance on the Exchange, since just one company offers ACA insurance these counties. Roughly half of Americans have only one or two insurers participating on ACA Marketplace. As President Barack Obama noted in a 2009 address to Congress, “without competition, the price of insurance goes up and quality goes down.” Allowing short-term health plans to compete with those offered on state and federal exchanges not only gives consumers access to a greater variety of products, but also allows them to access less expensive options if they choose to.