The Department of Health and Human Services is about to undo an Obama-era regulation that prevented insurance companies from offering medium-term health insurance plans. College students and recent graduates will see the greatest benefit.
It is currently illegal for insurance companies to offer temporary insurance coverage lasting longer than three months. There are many reasons why people may want longer insurance coverage without a permanent plan. Perhaps you’re taking a semester off from college, skipping college to go straight to the workforce, or taking more than 90 days to find a job with benefits. If you’re lucky enough to get a job with benefits right after graduation, those benefits usually won’t kick in on day one. You would need insurance coverage, lest you get stuck with the $695 Obamacare penalty for the uninsured.
That’s where short-term insurance comes in. It costs very little — an average of $109 a month for short-term plans, compared to an average of $378 a month for an individual Obamacare plan. Short-term coverage does not cover pre-existing conditions, preventive services, or maternity care, but does provide assistance in the event of medical emergencies. These plans are an attractive option for those with good health and little cash.
It’s no surprise young adults are by far the biggest consumers of short-term insurance. Last year, 60 percent of applicants for these plans were between the ages of 18 and 34.
Now, you can buy short-term insurance that lasts up to three months. But once your 90 days are up, you’re uninsured — and legally barred from buying an insurance plan on the exchange. That’s right, the end of your insurance plan is not a “qualifying life event” that allows you to buy more insurance. Instead, the government mandates that you wait until the next open enrollment period, which leaves people uninsured for months at a time.
The goal of Obamacare was to get more people paying into the system, so that risk is distributed across a wider group. Instead, this aspect of the law prevents people from buying insurance when they want it.
Also Read: Student health insurance hinges upon Obamacare’s fate
When Health and Human Services expands short-term insurance plans to up to one year, the agency will give people the freedom to avoid the coverage gap and give insurance companies the freedom to offer insurance plans that more people actually want to buy. Anyone insured under a year-long plan will, by definition, be insured up to and throughout the open enrollment period.
Health and Human Services is accepting comments from the public on this proposed rule change until April 23. President Trump has publicly voiced his support for the proposal, as has HHS Secretary Alex Azar.
Angela Morabito (@AngelaLMorabito) writes about politics, media, ethics, and culture. She holds both a Bachelor’s and Master’s degree from Georgetown University and has appeared on “On the Record with Greta van Susteren” as well as “Cavuto: Coast to Coast.”
