Trump Era Rule That Expanded Duration Of Short-Term Health Plans In Democrats’ Crosshairs

Trump era rule that expanded duration of short-term health plans in  Democrats' crosshairs | Fierce Healthcare

Source: Fierce Healthcare, by Robert King

Democratic lawmakers and advocacy groups are making a push to convince the Biden administration to nix a controversial Trump-era rule that expanded the duration of short-term health plans.

 

A collection of more than 40 House Democrats wrote to Department Health and Human Services (HHS) Secretary Xavier Becerra earlier this week calling for the agency to pull the rule. The action comes after more than 20 advocacy groups wrote to Becerra back in January asking for the rule to be nixed or modified.

“Junk plans pose clear risks to consumers, undermine the strength of the Affordable Care Act and are incompatible with the goal of making affordable, high-quality health insurance accessible to all Americans,” the letter, led by Rep. Cindy Axne, D-Iowa, told Becerra.

Advocates say urgency has been rising to get the administration to reverse the rule, which was finalized in 2018 and lengthened the duration of short-term plans from three months to a year.

A major concern is the potential end of the COVID-19 public health emergency (PHE), which was extended until July. Once the PHE goes away, states will be able to disenroll ineligible Medicaid beneficiaries and extra COBRA subsidies will go away.

“The second that the PHE is allowed to end all of those people are suddenly uninsured and the worry is that if we don’t do something now a lot of those people continue to stay uninsured or will buy a short-term plan that doesn’t meet their needs,” said Caitlin Donovan, senior director of the National Patient Advocate Foundation, one of the groups pressing the administration to act.

 

Donovan said she was confident the rule will eventually be rescinded, as it has not been popular.

The Trump administration finalized the regulation in 2018 for short-term limited duration plans that can bypass requirements under the Affordable Care Act (ACA) to cover preexisting conditions and essential health benefits. The rule said that the 12-month plans can be renewed for up to 36 months.

HHS at the time said the plans were necessary to give consumers options as premiums on the ACA’s exchanges were too high. However, the insurance industry and consumer advocates charged the plans offer skimpy coverage and can deceive consumers that they are getting more robust benefits.

“Individuals that unwittingly purchase a short-term plan that are later diagnosed with a chronic or acute condition may find themselves seriously uninsured as short-term plans typically exclude coverage of key services such as prescription drugs and mental health services, among others,” the letter, led by the National Patient Advocate Foundation and more than 20 other groups, said.

 

The letter has proposed several changes to the initial 2018 rule, chief among them to restore the original three-month limit for the plans.

Other recommended changes include:

  • * Halting sales of short-term plans during the ACA open enrollment. Advocates pointed to studies that indicate the plans can be “aggressively and deceptively marketed to consumers.”
  • * Limit sales of plans via internet and phones to help clamp down on deceptive marketing tactics.
  • * Improve disclosure of the types of risks associated with short-term health plans, including by telling the consumer the plan is not comprehensive.

The Biden administration has been in favor of getting rid of the rule or making changes, referencing it in the latest Unified Agenda that outlines regulatory priorities for the coming year.

So far, HHS has not released any regulations on the issue, and the Centers for Medicare & Medicaid Services did not return a request for comment as of press time.

Short-Term Cash Incentives Are Popular

The vast majority of employers use incentive-based pay to recruit, motivate, and reward employees, according to a study by WorldatWork and Vivient Consulting. According to the Center on Executive Compensation. The following are key findings:

Private, for-profit Organizations:

  • Short-term incentives decreased slightly among these employers to 94% in 2015 from 97% 2013.
  • Long-term incentives also decreased slightly to 53% from 56%.
  • In 2015, almost 75% of privately held companies with a short-term incentive plan offered at least three programs.
  • Annual Incentive Plans (AIPs), the most prevalent short-term incentive plan at private companies, are offered to employees at the exempt, salaried level and above at most employers.

At the 75th percentile, the majority of private companies increased their short-term incentive budgets to 12% of operating profit in 2015. They forecast an increase to 14% of operating profit for 2016..

Nonprofit/Government Organizations:

  • In 2015, more than 75% of nonprofit and government employers offered three or fewer short-term incentive plans.
  • While government incentive-pay budgets remain modest, nonprofit budgets have increased significantly. Nonprofit, short-term incentive budgets are starting to approach the levels reported by the private, for-profit employers.
  • More than 80% of nonprofit and government employers say their AIPs are effective at achieving their objectives.
  • 65% of the nonprofit/government employers with AIPs say the programs are used to reward employees while 62% use the incentives to focus employees on organizational goals.

When to Consider Term Health Insurance

Term health insurance premiums average 66% lower than unsubsidized premiums for Obamacare bronze plans, according to a study by AgileHealthInsurance. The reasons behind the premium differences include the broader mandatory benefits of Obamacare plans and the lack of coverage for pre-existing conditions for term health insurance.

“Consumers who don’t qualify for significant Obamacare subsidies or can’t get insurance outside the enrollment period should definitely investigate term health insurance. For millions of people, term health insurance can represent a more affordable option than Obamacare or a bridge to next year’s Obamacare enrollment period,” said Bruce Telkamp, CEO of AgileHealthInsurance.

The following are ideal profiles for people who purchase term health insurance:

  • People under 65 in good health.
  • People who need health insurance for a specific period (e.g. an interval in between jobs)
  • A young adult who can no longer be insured through their parents’ health plan.
  • People who need health insurance outside of the Affordable Care Act’s enrollment period, but who don’t qualify for a Special Enrollment Period.
  • Retirees in good health who no longer have employer-provided health insurance but are too young to enroll in the Medicare program.

Term health insurance cannot be longer than 364 days in any state. In some states, policies are limited to a maximum term of six months.

The study compared the average premiums among term health insurance and unsubsidized entry-level Obamacare health plans. When comparing premiums for nonsmoking men and women ages 30, 40, and 50, all ages saw major pricing advantages in term health insurance. Thirty year-old applicants had premium quotes over 70% lower while 50-year old applicants had premium quotes over 50% lower.

The dramatic savings in premiums should be viewed in light of three considerations: Obamacare premiums can be significantly reduced for those who qualify for subsidies; term health insurance premium savings should be adjusted down for the cost of the fine for not having health insurance compliant with Obamacare standards; and people with poor health can be rejected for term health insurance coverage.

People with certain chronic conditions or poor health would not be served well by a term health insurance product. Additionally, people who have had a significant health event or medical condition in the past two years also are advised to seek other forms of health insurance because pre-existing medical conditions are not covered by term health insurance.

When the coverage period for a term health insurance policy ends, an enrollee may be eligible to apply for a new term health insurance plan or seek other health insurance coverage, such as coverage provided by an employer or coverage provided by an Affordable Care Act health plan. Negative changes in health status can result in the application being rejected. But they can still purchase Affordable Care Act coverage.

Affordable Care Act plans typically have broader benefits. All health plans that comply with the Affordable Care Act must have “10 Essential Health Benefits.” Term health insurance plans don’t have a standardized set of benefits and typically offer what would be described as “major medical coverage,” which covers healthcare costs in the event of serious medical issues, though normal doctor visits for routine illnesses and injuries are typically covered. Affordable Care Act plans don’t deny care for pre-existing conditions nor do they reject insurance applicants based on health problems

Short-Term Health Insurance Finds Its Place

More consumers will be turning to the short-term insurance to address temporary lapses in coverage as the exchanges experience technical glitches, according to a report by HealthPocket. Jeff Smedsrud, president of Healthcare.com said, “Short-term medical plan may make sense for some people facing a health insurance coverage lapse for a limited period of time, but these consumers should understand the restrictions and the rules of these plans before enrolling.” For more information, visit HealthPocket.com.

Last Updated 06/29/2022

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