How Long Does Short Term Health Insurance Last?
A short term health insurance plan is a lower-cost alternative to plans that meet the guidelines for minimum essential coverage that are set forth in the Affordable Care Act. However, there are limitations to these plans, particularly in regard to the duration of a short term health plan. These plans are limited in both duration and renewability.
Duration of a Short Term Health Plan
Temporary health insurance is currently regulated by policies put into place by the Obama administration. In a final rule issued in 2016, the maximum duration of a short-term health insurance plan was set at less than three months. In other words, right now, these plans truly are designed to give you health coverage only for a short amount of time.
Typically, the shortest duration period for a temporary plan is one month. Some plans allow you to select a specific number of days for the policy to last. Other plans last up to three months, but some policies allow you to cancel before your contract ends, especially if you pay month to month instead of all at once.
A short term policy is sometimes helpful for people facing a gap in coverage. For example, switching jobs can cause you to lose employer-based coverage. You may have a waiting period before coverage at your new job can begin. A short term plan provides an option for healthcare coverage during the interim period.
Temporary health insurance also provides a safety net for people who want coverage but are not currently eligible to enroll in a standard major medical plan. The ACA only allows people to buy non-group major medical policies during open enrollment, which runs for about six weeks in the fall, unless you qualify for a special enrollment period based on significant life changes, like marriage or the loss of a job. The open enrollment period does not apply to short term plans, so you can sign up for them at any point during the year. A three-month coverage period may be enough to last you until the open enrollment period, at which time you can sign up for an ACA-compliant plan.
Obtaining New Coverage at the End of the Policy
The 2016 Obama administration rules for short-term plans specify that the plans are good only for the duration of the contract. At the end of the coverage period, it’s essentially as if you’ve never bought a plan with that company before. Obtaining new coverage means starting over completely with the application process. Because coverage is not guaranteed, the insurance company may deny your application, even if you just had a policy with them a few days before.
Even if your new temporary plan goes into effect as soon as the previous plan’s time runs out, you’re still starting over from scratch. Any medical issues that arose during the previous coverage period will now be counted as pre-existing conditions. Your deductible spending and out-of-pocket expenses also reset to zero.
Proposed Changes to Temporary Health Plan Regulations
On February 20, 2018, the Trump administration issued a proposed rule that would change current regulations about short term plans. If the proposed rule becomes the final rule, consumers will have expanded options when it comes to temporary health plans.
One of the main proposed changes to short term plans is that their maximum duration will increase from less than three months to less than 12 months. For consumers who are only using a short term plan until they can sign up for an ACA-compliant plan, this could be a particularly useful benefit. A three-month plan may or may not get you all the way to open enrollment and the effective start date of a new plan. With a 12-month policy in place instead, you’re sure to make it to an open enrollment period without facing a gap in your medical coverage.
The other main change included in the proposed rule is that consumers will have the option to re-enroll in temporary health plans. This may reduce gaps in coverage and offer some protection from losing coverage due to medical issues that arise.
If these proposed changes to short term health insurance rules are approved, the new regulations will go into effect 60 days after the final rule is issued. At that time, consumers may feel increased confidence about the ability of temporary health plans to meet their coverage needs.