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Availability of short-term health insurance in Alabama
In Alabama, federal regulations allow the sale of short-term health plans with initial durations up to 364 days
Alabama does not impose its own limits on the duration of short-term health insurance, so the federal rules apply. This means short-term health plans in Alabama can have an initial term up to 364 days with the option to renew for a total duration up to 36 months.
But the federal government proposed a rule change in 2023 that would sharply limit the duration of short-term plans. If finalized, it would cap the duration of short-term coverage at no more than four months, including renewals.
Numerous insurance companies sell short-term health insurance plans in Alabama.
Frequently asked questions about short-term health insurance in Alabama
Is short-term health insurance available for purchase in Alabama?
Yes. There are several insurers approved to offer short-term health insurance in Alabama, and the majority of them are actively marketing their policies as of 2024.
Which short-term plan durations are permitted under Alabama rules?
Prior to October 2, 2018, federal rules limited short-term health plans to three months in duration, and prohibited renewal. But the Trump Administration relaxed those rules.
Insurers are now allowed to offer short-term plans with initial terms up to 364 days and the option to renew for a total duration of up to 36 months. A bulletin published by the Alabama Department of Insurance in October 2018 confirms that the new federal rules are applicable to short-term health insurance in Alabama, as the state does not have its own stricter limits (states can impose stricter limits on short-term plans, but otherwise the federal rules are used). But insurers also have the option to offer shorter maximum terms and to prohibit renewal. Some are choosing to offer plans with terms of up to six months, while others are offering 364-day policies with renewals that allow the coverage to last for up to three years.
The Biden administration has proposed a federal rule change that would limit short-term health plans to maximum durations of no more than four months. If finalized, plans in Alabama would have to start following those rules. (States would be able to have stricter limits, but not more lenient limits.)
Although short-term health insurance in Alabama is allowed to follow the Trump administration’s 2018 federal regulations, the state’s bulletin reminds consumers that short-term plans are not considered minimum essential coverage, and that the termination of a short-term plan will not grant a person a special enrollment period for Affordable Care Act (ACA)-compliant coverage. The bulletin also notifies insurers that they must submit short-term plan rates and forms for review by state regulators, and reminds agents and brokers that short-term plans are not intended to be a replacement for regular health insurance, but are instead designed to fill in short gaps in coverage.
The Alabama Department of Insurance also has a general information page about short-term health plans, with a side-by-side comparison of the coverage requirements for ACA-compliant plans versus short-term medical plans.
Which insurance companies offer short-term health coverage in Alabama?
The Alabama Department of Insurance lists the insurance companies that are approved to offer short-term health insurance plans in the state.
However, some of the insurance companies on the Alabama DOI list do not appear to be actively marketing their plans as of 2024.
The available plans have different deductibles, benefit maximums, term limits, provider networks, and exclusions. It’s important to carefully consider the details of each plan before selecting one.
Who can buy short-term health insurance in Alabama?
Short-term health insurance in Alabama can be purchased by residents who can meet the underwriting guidelines of insurers.
Short-term health insurance typically includes exclusions for pre-existing conditions, so residents of the Cotton State who need medical care for ongoing or pre-existing conditions may wish to seek a medical insurance policy that will cover those needs.
If you need health insurance in Alabama outside of the annual open enrollment period for ACA-compliant coverage (November 1 through January 15 in Alabama), your first step should be to check if you’re eligible for a special enrollment period that would allow you to purchase an ACA-compliant major medical plan.
There are a variety of qualifying life events that trigger a special enrollment period. The Marketplace plans are purchased on a month-to-month basis – meaning you can terminate the coverage at any time – so you can enroll even if you only need coverage for a few months before another policy takes effect (with a premium subsidy if you’re eligible).
When should I consider buying short-term health insurance in Alabama?
From Mobile to Birmingham, there may be times when it’s impossible to enroll in an ACA-compliant health plan. In those scenarios, a short-term health insurance could be an appropriate option for you, such as:
- If you missed open enrollment for ACA-compliant individual health plans or your employer’s healthcare plan, and do not have a qualifying life event that would trigger a special enrollment period.
- You’ve lost coverage from an employer and can’t afford COBRA or an ACA-compliant plan in the Marketplace to bridge the gap until you’re employed again at a job that will provide health benefits. The Alabama Department of Insurance notes that short-term plans are a potential temporary solutionin this situation, but they caution that the plans are not the same sort of coverage that’s provided by ACA-compliant plans available through HealthCare.gov.
- Because Alabama is one of the dwindling minority of states where Medicaid still has not been expanded under the ACA, most adults with income below the poverty level are not eligible for financial assistance with their health insurance in Alabama. People in the resulting coverage gapmight be able to afford temporary coverage.
- You’ll soon be enrolled in Medicare, don’t have other coverage in place until then, and do not qualify for a special enrollment period that would allow you to purchase an ACA-compliant plan to cover you until your Medicare takes effect. But if your Medicare coverage won’t take effect until after the start of the next year, you can switch to an ACA-compliant plan through HealthCare.gov during the fall/winter open enrollment period (November 1 – January 15 in Alabama), and keep that plan from January 1 until the month your Medicare takes effect.
- The average full-price (unsubsidized) cost of Marketplace coverage in Alabama was $746/month in 2023.1 Most Marketplace enrollees were eligible for subsidies that covered the majority of this cost. But if you’re not eligible for a premium subsidy in the Marketplace, the affordability of a Marketplace plan will depend on your budget. People ineligible for premium subsidies include:
- Those who earn too much money to qualify for an ACA subsidy. Subsidy eligibility is based on how the cost of the second-lowest-cost Silver plan compares with an applicant’s household income. The percentage of income that you’re expected to pay for that plan varies depending on your income, but won’t be more than 8.5% of your household income.2 If the second-lowest-cost Silver plan is already considered affordable (as a percentage of your household income) without a subsidy, then you’re not eligible for a subsidy.
- Those who earn less than the poverty level ($14,580 for a single person in 20243) and are thus caught in the coverage gap that Alabama has created by refusing to accept federal funding to expand Medicaid.
- People who are not lawfully present in the U.S. and thus not eligible to enroll in a plan through the Marketplace.
How does Alabama regulate short-term health insurance?
Alabama does not have state-specific regulations for short-term health insurance plans, so the state defaults to the federal regulations. Because Alabama does not limit short-term coverage, the Trump Administration’s regulations currently apply in the state.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.
Footnotes
- “Effectuated Enrollment: Early 2023 Snapshot and Full Year 2022 Average” CMS.gov, March 14, 2023 ⤶
- “26 CFR 601.105: Examination of returns and claims for refund, credit, or abatement; determination of correct tax liability.” IRS.gov, Accessed Feb. 29, 2024 ⤶
- “2023 Poverty Guidelines: 48 Contiguous States (all states except Alaska and Hawaii)” HHS.gov, Accessed Feb. 29, 2024 ⤶