Even though the plan doesn’t cover prescription drugs or guarantee future coverage if he or a family member gets injured or sick, LeBato loves the much cheaper monthly premium of his National General Insurance plan—about $700 versus nearly $1,500 for an ACA-compliant plan.
But the 35-year-old independent business IT consultant hates having to reapply every 90 days, due to an Obama administration rule that took effect last April limiting the duration of such plans in hopes of reducing attrition from the ACA marketplace.
He’s eagerly awaiting a federal rule expected to come out soon that would again allow consumers to buy these less-regulated plans for up to 364 days. President Donald Trump issued an executive order in October instructing HHS and other federal agencies to issue the rule within 60 days. At deadline, the rule was still under review at the Office of Management and Budget.
“I’m fairly young, my family is in pretty good health, and it made a lot of sense for me,” LeBato said. “I don’t think about pre-existing conditions. They’re covered on the (ACA) marketplace, and that’s where I would go if anything happened.”
Some experts estimate that 500,000 to 1 million customers across the country have purchased short-term individual-market plans, which do not have to comply with ACA market reform rules. Consumers are drawn by premiums that are much lower than for ACA-compliant plans. In addition, deductibles and coinsurance levels often are comparable to ACA plans, with a $5,000 deductible being common.
Short-term carriers charge less because they don’t have to sell plans to people with pre-existing conditions or cover such conditions after customers buy policies. They use medical underwriting questionnaires to screen people for pre-existing conditions such as diabetes and heart disease.
It’s expected that more people will select short-term plans if they are again sold for 364-day periods—particularly starting in 2019 when repeal of the penalty for not obtaining ACA-compliant insurance takes effect.