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There’s a new law on the books, and it favors the consumer. Historically, Short Term Major Medical plan use enabled individuals to purchase insurance for relatively short duration of up to 12 months of continuous coverage. Many individuals would purchase these plans when they found themselves in between jobs, or for early retirees waiting to be eligible for Medicare. Once the Affordable Care Act was fully implemented, former President Obama signed an executive order to curtail their use by mandating a maximum coverage period of 3 months. This made these short term medical policies much less desirable because the individual would need to reapply for benefits every 90 days as opposed to the 12 month plans available before this order became effective.
“Normally ACA coverage has an open enrollment period followed by SEP (Special Enrollment Periods). Open enrollment usually begins the first day of November and ends in mid to late January. SEP periods would allow an individual to enroll in a qualified health plan based on some sort of “qualifying event”, such as a birth of a child, marriage, divorce, loss of credible coverage, such as COBRA expiration, or job termination. These SEP were designed to create a managed enrollment environment where individuals would not be allowed to enroll in qualified health coverage at any time, only when a qualifying event were to occur. This would disallow people from waiting until they get sick to purchase health insurance.” says Michael Steele of IHS Insurance Group.
The short term market, on the other hand, will not abide by these enrollment rules laid out by the ACA law. In place of enrollment time frames, insurance carriers will simply impose underwriting requirements. This means individuals wishing to obtain this type of health coverage will be required to answer NO to a series of health questions, and any preexisting conditions might not be coverage at all. These restrictions would basically limit the types of individuals enrolling in these plans to the younger, healthier crowd as an affordable alternative to higher priced Obama Care plans.
“The impact this ruling will have on the individual health insurance market in Texas and around other states in the country will likely be significant as health insurance carriers and the brokers who offer this alternative coverage could find this niche market more profitable and attractive as compared to the ACA marketplace. Additionally, many consumer who make too much money for any type of premium tax credits under ACA to lower the cost of health insurance, but find it hard to justify spending thousands of dollars per month on family coverage they may never use, might find the short term market to be much more attractive from a premium and benefit stand point.” says Steele
Another benefit to this short term market is in the carriers’ ability to offer more favorable PPO networks because policies can be medically underwritten. One of the unfortunate by products of the Affordable Care Act has been a significant reduction or elimination altogether of PPO networks. Here in Texas for example, under ACA there are currently NO PPO networks, only restrictive HMO networks. There is a large segment of the provider population that will not accept these HMO networks, causing disillusionment among many people who own ACA policies. This could all change for the better if carriers like United Health Care, Cigna, BCBS of Texas, Humana, and other carrier decide to offer open access PPO networks with their new short term medial plans. These PPO networks typically do not require referrals to see specialists and they also have out of network benefits. This means even if your provider happens to be out of network, the insurance carrier will still cover benefits, just at a reduced co insurance percentage.
Only time will tell what the Texas State Insurance Commissioner along with other states will adopt in terms of Short Term plan regulations. Stay tuned for more information on this hot topic in the weeks and months ahead and carriers begin to draft policy documents for approval with Texas Department of Insurance along with other states in the nation.
Release ID: 393329