Changes finalized to short-term "junk" healthcare policies

Debuted (and reported on our Insights page) in the summer of 2023, the Biden administration has finalized plans to reign in short-term health insurance plans. What can we expect to see in the future?

The purpose of this final rule was to limit the reach of short-term healthcare plans. Extended during former administrations, these plans were meant to cover a person for short stints of time while between more standardized Affordable Care Act-compliant plans. A person job hunting or someone a few months shy of Medicare eligibility might sign up for something like this instead of forking over COBRA premiums or going without coverage. As it was, these plans could be renewed over and over again—up to 36 months in total.

Sounds good, but some advocates have taken to calling these plans “junk insurance.” They’re not available on the Marketplace and are therefore not beholden to the same rules as those sold on the Marketplace. This, on the positive side, allows for cheaper premiums. But, what is usually unclear is how many holes are actually in the coverage. Many of these plans do not offer every essential health benefit, nor do they cover any preexisting conditions, both of which are required on the Marketplace.

Once this rule goes into effect, short-term health care plans will be limited to three months with one month of extension available. Consumers will no longer be able to daisy chain these plans together to hold short-term plans for years.

And for those still in need of a short-term plan, they will find the coverage more transparent upon application. Limits imposed on the plans must be included in a disclaimer, including what services are covered in the plan and how much of that service will be covered. Plans must also provide the consumer with information on locating more comprehensive coverage.

The Biden administration would argue that Affordable Care Act coverage is more popular anyway—45 million people in total, with a record-breaking 21 million in 2024, have signed up for coverage with the Marketplace. However, while the 1-3 million Americans currently covered by short-term plans will not have their current coverage disrupted, they will have to turn somewhere else once that coverage runs out.