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In 2018, the healthcare landscape has been shaken up, without congress even repealing the ACA. Since the beginning of this year, the Trump administration has reestablished both short-term medical plans and association health plans in the US market. Each of these plan options give consumers more choices and flexibility for obtaining healthcare coverage.
For that reason, we’d like to help our clients explore the pros and cons of each solution. These plans, when used correctly, can be another tool for you in the fight against the rising costs of health insurance.
Short-Term Health Plans
Short-term health plans are insurance policies that offer limited coverage with less expensive premiums. On August 1, 2018 President Trump announced an expansion of these short-term policies. With the new rules, he has redefined limited duration insurance.
In such, short-term medical plans can extend to 12 months at a time. And, people can renew their short-term coverage for up to 36 months. Consumers can only extend their policy for the same amount of time as the original length of coverage. For example, if you bought a twelve-month policy, you may renew that policy for 12 months at a time, three consecutive times, without a break in coverage.
This determination was based on the model created by the Consolidated Omnibus Budget Reconciliation (COBRA) Act and with it.
Association Health Plans
In June of this year, the Trump administration also announced a rule that expands the consumer availability of association health plans (AHPs). These plans allow small businesses, including individuals who are self-employed, to band together and purchase insurance. These kinds of insurance plans have existed for years but, until now, there were more restrictions on commonality that allowed small groups to form an association plan.
The new regulation, which takes effect in September 2018, will allow more association plans to enter the market. Because of these recent laws, more small businesses will be able to form and join association health plans, just by being connected geographically or simply by simple professional interest. The plans can also be offered across state boundaries.
Through this recent change to regulation, providing members with insurance can now be the primary purpose of an association.
Pro’s and Con’s to Consider
The expansion of short-term health insurance could lead to a multitude of effects, both positive and negative. The Trump administration believes the growth of these policies will transform the healthcare system because those individuals unable to afford health insurance under the current ACA, can now afford coverage. Historically short term medical plans may be as much as 50 to 80 percent cheaper than the plans available on the Federally Facilitated Marketplace (ie. the exchange).
It’s expected that with longer policy terms the benefits included in short-term plans will also improve with increases to coverage limits and more possibly even more copays. If this is correct, the idea of short term medical insurance “only” covering individuals for a catastrophic health event may no longer be the case. Ultimately this means the broadened timeframes create a more useful product for those in need of health insurance but can’t afford traditional ACA marketplace policies.
The clearest disadvantage of short-term policies is they don’t have to meet ACA requirements for “minimum essential coverage,” and can deny coverage based on pre-existing medical conditions. This lack of ACA requirements means short-term plans don’t necessarily have to provide coverage for things like maternity care or mental illness. Most short-term plans also do not cover preventative care at 100%, like ACA compliant plans do.
Short term health plans will provide a viable solution for many people, but may only work well for a specific population without pre-existing conditions. For this reason, it’s important that you utilize an experienced and knowledgeable health insurance adviser to help you determine if these policies are right for you.
Like short-term insurance, association health plans will offer both positives and negatives.
Some would say that the most positive point of interest related to association health plans is they will provide more affordable healthcare plan options for small employers and self-employed individuals than what can currently be found on the Marketplace. But also, unlike short-term policies, association health plans do have to follow certain ACA guidelines. For example, they can’t screen applicants based on personal claims experience or charge higher rates to individuals with pre-existing conditions. Similarly, association health plans can’t have bans on lifetime or annual limits for services covered.
Still, association health plans don’t have to follow the ACA’s minimal requirements for covered health benefits. So, these plans don’t have to cover mental health care, emergency services, newborn care, or prescription drugs. Furthermore, the new rules allow plans to charge different rates based on gender, age, and location.
Again, this new plan option would be very beneficial to certain individuals with limited healthcare needs and for other individuals, it might be wise to go with a more traditional health plan.
The point of both regulations appears to be creating expanded tools for those looking for insurance but can’t afford traditional health plans. Still, before you utilize these either of these policies, make sure you look at both the advantages and disadvantages of each. Short-term and association health plans may change the healthcare landscape, but that change may not be for you.
At Summerlin Benefits Consulting, we will help you evaluate your options and determine what will best fit your coverage needs, as well as your budget.