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What If They Roll Back the Short-Term Health Time Limit?

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A unit of Health Insurance Innovations Inc., a short-term health insurance distributor, is fighting back against the idea that short-term health insurance is junk insurance.

Under former President Barack Obama, officials tried to protect individual major medical issuers against competition from cheaper, much more lightly regulated short-term health insurance policies by cutting the maximum benefits period for a short-term health insurance policy to 90 days. Before, in some states, the maximum benefits period was 364 days.

Short-term health insurance falls outside the scope of the Affordable Care Act underwriting and benefits rules. The new restriction, which took effect in April 2017, was supposed to keep people from using short-term health insurance as an alternative to ACA-compliant major medical coverage.

Now, under President Donald Trump, federal agencies have proposed eliminating the 90-day time limit. Consumer groups say the agencies want to encourage consumers to replace solid major medical coverage with flimsy short-term health coverage.

Bruce Telkamp, the chief executive officer of Agile Health Insurance, Health Insurance Innovations’ retail website, has put out a commentary rejecting the idea that short-term health coverage is bad coverage. Telkamp relies mainly on previously published data to make his case, but he also provides some newly published data about short-term health insurance based on Agile’s  own records.

Telkamp reports, based on Agile data, that, before the 90-day limit came along, the average effective term for a short-term health insurance policy was 6.7 months.

About 9% of the customers used short-term health coverage for more than a year, by replacing one short-term health insurance policy with another one.

Short-term health coverage fills coverage gaps, and “the most common gap is job loss,” Telkamp writes.

Given that the typical length of unemployment lasts more than six months, the needs of the unemployed were “much better served by the historic 364-day term limit rather than the three-month restriction,” Telkamp writes.

— Read 7 Facts About the New Short-Term Health Draft Regulations on ThinkAdvisor.

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