- HHS has finalized a rule that requires short-term health insurance plans to last less than three months – down from up to 12 months of coverage. Short-term plans on or after April 1, 2017 will be affected.
- The new restriction is aimed at strengthening the ACA risk pool and improving transparency.
- Unless otherwise exempt, Americans that purchase short-term plans will have to pay the individual penalty as they won't have ACA-compliant coverage and insurers must notify their customers under the new rule.
The open enrollment period has officially begun but the ACA marketplace has been under public scrutiny. Several health insurance giants have been dropping their ACA offerings, at least some of which cited substantial financial losses as ACA enrollment has been significantly lower than had been previously anticipated.
Public Citizen recently reported, on the other hand, the top five health insurance companies in the country -- Aetna, Anthem, Cigna, Humana, and Unitedhealth -- have collectively profited more than $65.5 billion since the ACA was implemented.
Though HHS is intending to strengthen the risk pool by having goals like increased enrollment of younger and typically healthier adults. States with the most improved payments for risk scores have seen their monthly per-claim per-person costs dip by 5%, on average, and the per-person cost of medical care has been reduced by 0.1%.
However, insurance prices on the ACA marketplace are set to significantly increase and some consumers will be facing an insurer monopoly. This in turn may cause short-term plans to be more viable options for those who want to weigh the pros and cons before deciding on whether to purchase more expensive, longer-lasting coverage. In 2015, 147,000 people applied for short-term plans on eHealth.com, The Wall Street Journal reported.