Buying a short-term health plan in Washington, DC
- DC has enacted emergency legislation that limits short-term plans to three months and prohibits renewals.
- New legislation also prevents short-term plans from excluding pre-existing conditions or basing eligibility on medical history.
- Permanent legislation to limit short-term plans was signed into law in January 2019; takes effect after the emergency legislation expires in March.
- DC’s short-term market has dropped from six insurers to just one after the new rules took effect.
For a few months in late 2018, the new federal rules for short-term plans applied in DC
Prior to 2017, the DC Department of Insurance, Securities, and Banking (DISB) posted a memo clarifying that short-term health insurance plans had to last less than 365 days, and were not regulated by the ACA. Starting in 2017, however, federal regulations (enacted by the Obama Administration in 2016) began to limit short-term health plans to no more than three months, and prohibited renewal. But the Trump Administration relaxed those rules, and for several weeks in late 2018, until DC enacted new legislation, the new federal rules applied, allowing insurers to offer longer short-term plans.
In May 2018, when it was clear that the Trump Administration was planning to roll back the Obama-era restrictions on short-term plans, DC’s Standing Advisory Board unanimously recommended that the DC City Council implement rules to limit short-term health insurance plans to three months in duration and prohibit renewals. Without legislative action to limit the duration of short-term plans, an Urban Institute analysis had estimated that the expansion of short-term plans under the new federal rules would reduce the size of DC’s ACA-compliant market by 30.5 percent.
DC has enacted legislation that limits short-term plans to three months and bans renewals
At the October 2018 board meeting for DC’s health insurance exchange, the board noted (at 19:12 in the audio recording of the meeting) that DC City Councilmember Vincent Gray had introduced legislation (Bill 22-1001) that would limit short-term plans to three months and prohibit renewals. The Board noted that they supported the legislation.
Another piece of legislation, Bill B22-1020, was introduced after Gray’s legislation, and included additional provisions beyond those originally called for in Gray’s three-page bill. It’s notable that the text of B22-1020, in addition to limiting short-term plans to three months and prohibiting renewals, also prevents short-term plans from excluding coverage for pre-existing conditions or rejecting applicants based on pre-existing conditions (those provisions have since been added to Bill 22-1001 as well).
Ultimately, B22-1020 was signed into law on December 10. It is an emergency bill, so while it took effect immediately, it will only be in effect for 90 days. But that gave the City Council time to enact B22-1001, which is a permanent version of the same type of restrictions on short-term health insurance.
B22-1001 was approved by City Council and signed by Mayor Bowser in January 2019. It permanently limits short-term plans to three months, prevents renewals, prevents the sale of a short-term plan to a person whom the insurer had covered with another short-term plan within the previous nine months, and prevents the insurer from excluding any pre-existing conditions for which the applicant sought treatment in the prior 12 months. And such conditions cannot be used by the insurer to reject an application.
In addition to limiting short-term plans, both pieces of legislation also place limits on association health plans sold in DC.
There are several other states that limit short-term plans to three months and prohibit renewals. But the provision in B22-1020 blocking pre-existing condition exclusions could end up making the DC market unattractive for short-term insurers, as has been the case in other states that have similar regulations. As of December 13, three days after the emergency legislation had been enacted, there were still at least six insurers selling short-term plans in DC, with terms of up to a year. But by late January, that had dwindled to just one insurer.
Short-term health insurance: DC regulations
DISB reviews rate filings for short-term plans, just as they review filings for ACA-compliant major medical plans. In July 2016, the following notice was posted on pending short-term rate filings, indicating that the filings were being rejected for the time being:
“It was decided just late yesterday afternoon that DISB WILL NO LONGER approve any STM policies until such time that the new federal regulation (that has a ` 3- month max. term coverage with no renewal allowed’ provision ) passes sometime next year (hopefully) —– ( see link site —– http://federalregister.gov/a/2016-13583) —– (this newly adopted DISB rule pertains to those STM policies that are sold to the DC general population only —- & excludes those that are sold as Student Policies with specific target market which can also be filed as a `Blanket Student Health Benefit TOI’ coverage type in SERFF ).” The new federal legislation has not been enacted yet.
That proposed federal regulation was finalized in late 2016, and took effect in 2017, limiting short-term plans to no more than three months in duration, nationwide. But those rules were rolled back as of October 2018, under the terms of the Trump Administration’s new rules.
Because DC didn’t have its own rules in place at that point, longer short-term plans were available in the District starting in early October 2018. The emergency legislation took effect December 10, and enforcement began soon thereafter. As of January 2019, the only short-term plans for sale in DC are limited to three months in duration.
Because DC’s legislation does not require short-term plans to cover essential health benefits, the plans that are still for sale in 2019 continue to have many of the usual gaps in coverage, with exclusions for things like prescription drugs, maternity care, and mental health care.
Which insurers offer short-term plans in DC?
As of January 2019, National General appears to be the only insurer offering short-term plans in the District.
Companion Life, Everest, Everest Prime, LifeShield, and Standard Life were all offering plans in DC as of December 2018, but their plans were no longer available for purchase as of January 2019. Some of those plans were still being offered with terms of up to a year as of mid-December 2018. DC’s emergency legislation to limit short-term plans took effect immediately when it was enacted on December 10, but there’s sometimes a delay in implementation and enforcement for new insurance rules.
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.