Short-term health insurance in Alabama

Alabama defaults to the federal regulations for short-term health plans

Short-term health plans in Alabama

Alabama’s short-term health insurance regulations

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 apply in the state.

Short-term plans duration in Alabama

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. 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.

Although short-term health insurance in Alabama is allowed to follow the new 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 ACA-compliant coverage. The bulletin also notifies insurers that they must submit rates and forms via SERFF for the new short-term plans, 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 insurers offer short-term plans in Alabama?

According to the Alabama Department of Insurance, the following insurance companies offer short-term health insurance plans in the state as of 2020:

  • AdvantHealth (American Financial Security Life Insurance Company)
  • Aspen Insurance
  • Blue Cross Blue Shield of Alabama
  • Companion Life
  • Everest Reinsurance
  • Freedom Life Insurance
  • Golden Rule (UnitedHealthcare)
  • Independence American Insurance Company
  • National General (National Health Insurance Company)
  • Philadelphia American Life Insurance Company
  • Southern Guaranty Insurance Company
  • United States Fire Insurance Company

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 get 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. This normally means being under 65 years old (some insurers use 64 years) and in fairly good health.

Short-term health insurance typically include exclusions for pre-existing conditions, so for residents of the Cotton State who need medical care for ongoing or pre-existing conditions we advise you seek a medical insurance policy that will cover those needs.

If you need health insurance 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, 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 short-term health insurance in Alabama?

From Mobile to Birmingham, there are times when short-term health insurance could be the only realistic option for you, such as:

  • If you missed open enrollment for ACA-compliant individual market coverage (ie, Obamacare) or your employer’s healthcare plan, and do not have a qualifying 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 solution in this situation, but they caution that the plans are not the same sort of coverage that’s provided 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 people with income below the poverty level are not eligible for financial assistance with their health insurance in Alabama. People in the resulting coverage gap might be able to afford a short-term health plan, even if a full price (non-subsidized) an ACA-compliant plan would be far too costly.
  • 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 open enrollment period (November 1 – December 15), and keep that plan from January 1 until the month your Medicare takes effect.
  • If you’re not eligible for a premium subsidy for the ACA-compliant marketplace plans, the monthly premiums might be unaffordable. People ineligible for premium subsidies include:
    • Those who earn more than 400% of the poverty level (for 2021 coverage, that’s $51,040 for a single person; if your ACA-specific modified adjusted gross income is slightly above the subsidy-eligible threshold, there are steps you can take to reduce it).
    • Those who earn less than the poverty level ($12,760 for a single person in 2020) and are thus caught in the coverage gap that Alabama has created by refusing to accept federal funding to expand Medicaid.
    • People caught by the ACA’s family glitch.

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. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

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