Health Care

Kaitlyn Finley | January 24, 2019

More choices, more savings: Short-term health insurance

Kaitlyn Finley

Faced with ever-rising health insurance premiums, more Americans are searching for alternatives that won’t break their budget. Thanks to regulatory action by the Trump administration last August, people in certain states may now take full advantage of a more affordable category of health insurance—short-term, limited-duration medical insurance (also called short-term insurance).

Unlike traditional health insurance plans, these flexible short-term plans are not subject to restrictive Obamacare regulations under federal law. As a result, short-term plans’ premiums can be up to 70 to 80 percent cheaper than certain silver and bronze plans on Obamacare Exchanges.

In addition to cost-savings, consumers may enroll in these plans any time during the year, which may help those who missed the Obamacare enrollment deadline. A recent survey of 1,000 short-term insurance beneficiaries by eHealth found that 51 percent of people would have been uninsured if they did not have access to short-term plans. Overall, recipients of these plans are generally satisfied with their coverage under these plans. eHealth’s survey found 78 percent of people who accessed medical services stated they were happy with the coverage under their short-term plan.

Under current federal regulation, these plans can offer initial coverage for up to 364 days and may be renewable for up to 36 months. In an effort to force more people to purchase Obamacare plans, the Obama administration limited their coverage to three months without the option to renew. The three-month coverage period hindered people who needed flexible health insurance coverage for interim periods, for possibly up to four to twelve months.  For instance, individuals that were still job searching or waiting for open enrollment after their initial three-month period ended were left uninsured with no options.

Although the Trump administration greatly reduced federal regulations for this category of insurance, many states still impose stronger restrictions on short-term plans. For example, state regulations in Maryland, Oregon, and Hawaii limit coverage to 90 days. As of January 1 this year, California has prohibited the sale of short-term plans entirely. Currently, Oklahoma law limits short-term plans to six months with no option to renew.

Short-term plans are not designed to be a permanent replacement for major medical insurance, however, states should not ban these plans or arbitrarily suppress coverage duration. Consumers should have the ability to review all options and choose the best available insurance plan that fits their coverage needs on their schedule.

Kaitlyn Finley Policy Research Fellow

Kaitlyn Finley

Policy Research Fellow

Kaitlyn Finley currently serves as a policy research fellow for OCPA with a focus on healthcare and welfare policy. Kaitlyn graduated from the University of Science and Arts of Oklahoma in 2018 with a Bachelor of Arts in Political Science. Previously, she served as a summer intern at OCPA and spent time in Washington D.C. interning for the Heritage Foundation and the U.S. Senate Committee on Environment and Public Works.

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