Buying short-term health plans in California
- California has enacted legislation that prohibits the sale of short-term plans starting in 2019.
- California already had its own short-term health plan regulations.
- Prior to 2019, state regulations limit short-term plans to a term of 185 days.
- Regulators in California expressed concerns about the short-comings of short-term plans.
- At least two insurers offer short-term plans in California.
California law bans the sale or renewal of short-term plans as of 2019
Lawmakers in California passed a bill in 2018 (SB910) that prohibits the sale or renewal of short-term plans in California as of January 1, 2019. The legislation was sent to Governor Jerry Brown on August 21, 2018, and he signed it in late September. So after the end of 2018, short-term plans will no longer be available for purchase or renewal anywhere in California. The sale of other non-ACA-compliant plans, such as fixed indemnity products and critical illness plans, will continue to be allowed.
How long can short-term plans last in California?
The Trump Administration’s new rules for short-term plans are clear in noting that states may continue to impose tighter regulations than the new federal rules. So short-term plans in California are not available with initial terms in excess of 185 days, even now that the new federal rules are in effect. And starting January 1, 2019, short-term plans will cease to be available altogether in California.
Regulators voice concerns about short-term plans
There were fewer than 10,000 short-term plans in effect in California at the end of 2017 – as opposed to 1.4 million people with ACA-compliant coverage purchased through Covered California, the state’s health insurance exchange.
Regulators in California have addressed short-term plans – and their shortcomings – on several occasions. In October 2017, immediately after President Trump issued an executive order directing federal agencies to expand access to short-term plans, California Insurance Commissioner, Dave Jones, issued a press release stating that “increased sale of short-term policies that don’t cover essential health care needs or comply with most rules that apply to health insurance will harm consumers and create health insurance market instability.”
In February 2018, the Trump Administration proposed new rules for short-term plans (essentially rolling back the restrictions that the Obama Administration had implemented). The new rules were finalized in August 2018.
But in April 2018, Commissioner Jones sent a letter to the Trump Administration, calling the proposed expansion of short-term plans “an attack on the integrity of the nation’s health insurance markets.” Jones expressed his strong opposition to the proposed regulations, stating that “although touted as being an affordable alternative to ACA-compliant coverage, these [short-term] policies return us to a race to the bottom rather than providing a meaningful alternative.”
Which insurers offer short-term plans in California?
Kaiser and Blue Shield of California are among the health insurers that supported SB910, calling for a ban on short-term health plans. Notably, however, Anthem Blue Cross was the only major California health insurer to oppose the measure. None of those insurers directly sell short-term health insurance, but Anthem Blue Cross partners with IHC to market short-term coverage in California. Because SB910 has been enacted, that product will no longer be available after the end of 2018.
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.