Yesterday, President Trump issued a new executive order on health insurance. One of the aspects of this executive order was in regards to what are commonly know as Short Term plans.
A little back story first before we discuss what this executive order does; previous to the last 6 months, Short Term plans had been in existence for a long time. In Texas, you were able to acquire a Short Term plan for up to 360 days at a time. The intention of Short Term plans were to bridge a gap typically, whether that be a gap from one job/group plan to another, someone a few months from Medicare age, or just someone that accidentally let their insurance lapse and needed coverage until the start of the next year.
The Obama administration put in an executive order just before he left office that restricted the sale of short term plans to 90 days at a time, instead of up to 360 days. This change took effect on 4/1/17. Although I won’t pretend to know their thought process on why they did that, the insinuation is that they felt that too many people were using that coverage as an alternative to the more expensive plans that were created through the Affordable Care Act. Short Term plans where much cheaper, but like insurance from previous to 2010, they would underwrite for medical risk and not cover pre-existing conditions. For healthy people, especially people between 55 and 64, these type of plans were not only way cheaper than the ACA plans, but they had a PPO network that people desired.
What I mostly didn’t like about the 90 day restriction, as an agent, was that if I had a consumer that lost their plan in May (maybe they forgot to pay their premium, or they forgot to sign up for COBRA), then that consumer didn’t have many choices, and 90 days at a time isn’t a great choice. If they got sick during those 90 days, that would effect what they could get for the remainder of the year.
Now back to the current executive order. This new executive order appears to lift the 90 days restriction, and bring back the ability to sell Short Term plans for up to 364 days. As with any executive order, these things need to be hashed out by both Federal and State regulators, and then they will dictate some type of implementation date. So, as of today, agents can’t sign up people for these longer duration Short Term plans, but out of all the things that this executive order laid out, this is the one thing that will probably be implemented the quickest. I would suspect that most of the carriers that sell these type of plans will be pushing to try to have the ability to sell the longer duration product by November 1st when the open enrollment kicks off.