Buying short-term health plans in California
- California no longer allows the sale of short-term plans.
- Prior to 2019, state regulations limited short-term plans to a term of 185 days.
- Regulators in California expressed concerns about the short-comings of short-term plans.
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 short-term plans are no longer 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, is still allowed.
Prior to 2019, California had its own limitations on short-term plans
California already had its own regulations for short-term health insurance plans, prior to the enactment of SB910. California’s pre-2019 regulations limited short-term plans to an initial term of no more than 185 days. One renewal was permitted, but it also could not exceed 185 days. These rules were in place in California prior to 2017, when the Obama Administration tightened the federal restrictions on short-term plans, limiting them to no more than three months and prohibiting renewals. The Trump Administration relaxed those rules as of October 2018, but state regulations continued to apply. So for the final quarter of 2018, short-term plans were once again available in California with terms of up to 185 days. But the last day to purchase those plans was December 31, 2018.
Regulators had long-standing 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 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.”
And ultimately, California decided to simply ban short-term plans altogether. Kaiser and Blue Shield of California were 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 sold short-term health insurance in 2018, but Anthem Blue Cross partnered with IHC to market short-term coverage in California prior to 2019.
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.