As President Donald Trump and congressional Democrats remain in a stalemate over extending premium tax credits under the Affordable Care Act, some consumers may consider purchasing short-term, limited-duration plans to fill the coverage gap. The administration announced that it would not prioritize enforcement actions for violations of consumer protections for short-term plans.
“Taken together, these changes could lead more consumers to purchase less-expensive and less-comprehensive coverage, such as short-term plans, instead of a more comprehensive ACA plan this open enrollment season,” according to a new report from KFF.
KFF analyzed short-term policies sold on the websites of nine large insurers in a major city in each state where these plans are available. These insurers offer 30 distinct products, with a total of approximately 200 different plans.
Here are the key takeaways from the research:
- Short-term plans are sold in 36 states. Five states prohibit their sale, and in nine states and the District of Columbia, short-term plans are not outright prohibited but are not available because of more-extensive state regulations.
- Premiums for the lowest-cost short-term plans can be two-thirds or less of the price of the lowest-cost unsubsidized bronze plans sold on the ACA Marketplace in the same area. However, the vast majority of Marketplace enrollees receive premium tax credits, which can effectively result in similarly priced or even less-expensive Marketplace plans.
- Short-term plans tend to have lower premiums because they are medically underwritten and have pre-existing condition exclusions. For example, an individual with cancer or obesity or who is pregnant is likely to be declined.
- Short-term plan deductibles for an individual in select U.S. cities range from $500 to $25,000, compared to $0 to $9,200 for bronze Marketplace plans. Silver and gold plans have lower deductibles but also higher premiums. Unlike ACA-compliant plans, most short-term plans do not have out-of-pocket maximums or apply these maximums only to certain expenses.
- Among all short-term products reviewed, 40% do not cover mental health services, 40% do not cover substance abuse treatment, 48% do not cover outpatient prescription drugs and almost all exclude coverage for adult immunizations (94%) and maternity care (98%). All ACA-compliant plans must cover these services.
- Even when short-term plans do cover these and other benefits, limitations and exclusions usually apply that would not be permitted under ACA-compliant plans. These include separate benefit limits, limits on the number of primary care visits the plan will cover and limits on the number of days the plan will cover inpatient hospital care.
“Because short-term plans provide less-comprehensive coverage and fewer consumer protections than ACA-compliant plans, people who buy short-term policies in order to reduce their monthly premiums risk that if they do need medical care, they could be left with significant medical bills,” the report concluded.
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