Short-term Health Insurance Programs Offer Viable Alternatives for Patients

Many national surveys show that increasing health insurance costs have come as a result of the long-term effects of the Affordable Care Act.  Unfortunately, this has left many people in the United States in need of low-cost health insurance alternatives and these trends are likely to continue, given the rising number of mergers in the healthcare industry over the last year.  For these reasons, experts have suggested that short-term health programs could continue to grow in popularity amongst patients and families in regions where insurance options have become cost-prohibitive.

New legislation has the potential to strengthen those trends after U.S. President Donald Trump approved an executive order to change critical aspects in the potential timeline for these short-term health insurance plans.  Under these new rules, health plan consumers that are not interested in using ACA-compliant insurance will now have the ability to extend the duration in their short-term health programs.  

Of course, it should be understood that some states have additional restrictions on short-term health insurance plans, which could complicate the difficult task of locating affordable coverage.  However, the regulations enacted last October have added a great deal of flexibility for consumers and patients in many areas throughout the United States.

Ultimately, these recent changes in the timeline rules could lead to a substantial rise in the popularity of short-term health programs and drastically alter industry trends in healthcare.  Thus, it is important to assess the major changes in the legislation so that we can better understand the effects they might have on the wider healthcare industry.  

Perhaps the most critical difference is that the term limit on initial policies has been lengthened to 364 days (just under one year).  Previously, the Obama Administration enacted restrictions on short-term health insurance policies which capped durations at 90 days.  Under the rules of the Affordable Care Act, the rule changes from 2017 limited time durations which could be made available to patients while reversing prior regulations enabling the purchase of short-term health insurance policies of 364 days.  The most recent actions (from October 2018) under the Trump administration have simply removed these time limitations and reverted to the guidelines which existed prior to 2017.

Renewal Periods for Short-term Health Plans 

Additionally, the recent legislation allows short-term health insurance policies to be renewed once the initial term has completed (for a period of up to 36 months).  After this initial period finishes, consumers are able to buy another short-term health insurance policy.  

As a result, the recently enacted legislative rule changes have created a total coverage period of 36 months.  After this period, if additional coverage is required, the consumer would then need to purchase an entirely new health insurance policy.  Now that these restrictions have been removed, industry experts have revised their long-term forecasts and the Department of Health and Human Services has explained that the number of short-term health insurance policies may grow by 600,000 during the current year.  

For consumers in several demographics, these changes could help to offset the rising costs which have been associated with ACA-compliant health insurance policies.  According to Agile Insurance, the average cost of health insurance for a family of four has risen above $1,900 per month and these numbers are expected to rise in 2020.

Finally, last year’s rule changes require specific disclosures to be included for consumers that might be interested in purchasing short-term health plans.  These requirements within the legislation help ensure patients understand some of the differences between short-term policies and more traditional options for health insurance coverage.  Health Insurance Innovations, Inc. (NASDAQ: HIIQ) is one company that has defined many of the advantages present in these types of policies. The verification systems designed by Health Insurance Innovations ensure improved transparency for patients at the point of sale and the company’s methods have been modeled by many of the larger entities within the industry.

Specifically, Health Insurance Innovations installs initiatives that require sales agents to outline all relevant details included in coverage programs via extensive verification scripts for consumers.  For example, in cases where a patient selects an insurance plan that isn’t covered under the ACA, Health Insurance Innovations requires sales representatives to make this clear in the initial product descriptions.

Dan Garavuso, Vice President of Compliance for Health Insurance Innovations, recently said:

“We provide a huge range of insurance policies catering to customers’ full range of healthcare needs – from dental care and vision through to emergency treatment. We maintain a verification script for each product, so in total, we manage nearly 50 scripts, each around thirty pages long.”

When initially introduced, these new processes of verification might appear to be overly extensive.  However, it should be clear that the recent requirements in legislation are designed to enact safeguards for consumers which heighten transparency levels and increase the broader standards in patient care.  Mr. Garavuso added further comments which highlight many of the challenges health insurance companies might face structuring the best approach in meeting regulatory compliance standards:

“Here comes the challenge: What do you do when things change and you need to update the scripts? If an insurer alters their terms and conditions, you might have a handful of documents to update. But if state or federal regulations change, we need to verify that each product script is compliant and accurate, and ensure that the language is consistent across all affected policies.”

Given all of these important factors, it is easy to see that recent legislative rule changes have improved healthcare standards for patients and helped specific companies to lead the way in defining the best strategic approaches for the industry.  Short-term healthcare policies add a significant level of flexibility and increase the number of pricing options currently available to consumers. All of these efforts are designed to raise the industry’s level of transparency for patients and these events could raise the popularity of short-term health insurance programs in the years ahead.