Buying short-term health plans in Iowa
- In Iowa, short-term plans can have initial durations of up to 364 days and renewals up to 36 months.
- The Iowa Insurance Division proposed significant new rules for short-term plans longer than three months, but the state’s rules committee did not approve them.
- Under the rules the Division proposed, short-term plans that last more than 90 days would have had to cover pre-existing conditions, cover numerous essential health benefits, and comply with limits on out-of-pocket costs and benefit caps.
- Some consumer protections would have been required on all short-term plans, even with terms of up to 90 days.
- Iowa also considered a guaranteed renewability requirement, but that ultimately wasn’t part of the state’s proposed rules.
- The Iowa Insurance Division is working to draft new proposed rules for short-term plans.
- At least eight insurers offer short-term plans in Iowa.
Iowa is defaulting to the new federal rules for short-term plan duration
Iowa’s Insurance Commissioner, Doug Ommen and Iowa Governor Kim Reynolds expressed support for the Trump Administration’s new regulations for short-term plans, which only limit such plans to initial terms of less than one full year and total duration of up to 36 months (as opposed to the Obama Administration rule that limited short-term plans to three months in 2017 and most of 2018).
Iowa Insurance Division proposed strict rules for short-term plans of more than 90 days, but the state rule committee rejected them
Iowa regulators have clarified that short-term plans in the state can follow the new federal rules in terms of how long they can last, with initial terms of up to 364 days, and total duration, including renewals, of up to 36 months.
But the Iowa Division of Insurance proposed extensive coverage requirements, which were slated to take effect in September 2018, for short-term plans that last more than 90 days. The state’s Administrative Rules Review Committee did not approve the proposed rules, however, so they ultimately did not take effect. The Division of Insurance confirmed in mid-October that they’re working with stakeholders to draft new rules, but did not yet have a timeframe for when the new proposed rules might be completed.
Commissioner Ommen noted earlier in 2018 that the state was considering regulations to ensure that short-term plans provide comprehensive (“fulsome”) coverage and allow at least one guaranteed renewal. In September 2018, the Iowa Insurance Department published proposed regulations that would have required short-term plans in Iowa to comply with the following requirements, but only if they had terms in excess of 90 days:
- Plans would not have been allowed to have benefit caps of less than $1,000,000.
- The deductible could not have been more than $10,000 (the plan could have had a separate prescription drug deductible of up to $10,000)
- The coinsurance that the member pays could not have been more than 40 percent, and total coinsurance charges could not have exceeded $15,000 per year.
- Coverage for various services would have been required, including:
- Mental health and substance use disorder treatment
- Ambulatory/outpatient care
- Preventive care (including but not limited to vaccines, mammograms, paps, and PSA tests)
- Prescription drugs (including coverage for at least one drug in each US Pharmacopeia category and class)
- Medically necessary durable medical equipment
- All other state mandate benefits under Iowa Code Chapter 514C.
- The plans would not have been allowed to exclude pre-existing conditions.
The Insurance Divisions proposed some consumer protections that would have applied to all short-term plans, including those with terms of up to 90 days
Under the terms of the proposed rules (which were not approved by the rules committee), post-claims underwriting would have been prohibited for short-term plans in Iowa. In other words, the insurer would not have been allowed to go back and look at the person’s medical records after they had a claim in order to find pre-existing conditions and rescind the coverage. Instead, medical underwriting would have been limited to only the time period before the policy took effect. And rescission would only have been allowed if the insurer could show that the insured “knowingly and intentionally misrepresented material facts relating to the insured’s health.” (this is the same as the rescission rules that apply to ACA-compliant plans, but short-term plans are not regulated by the ACA).
State hinted that one guaranteed renewal might be required, but that was not part of the state’s initial proposed regulations
In Ommen’s letter to CMS earlier in 2018, he noted that Iowa might opt to make at least one guaranteed renewal mandatory for short-term plans, to prevent an enrollee from ending up uninsured if they develop a pre-existing condition while covered under a short-term plan. The termination of a short-term plan is not a qualifying event, so it would not allow a person to purchase a new, ACA-compliant plan (ie, a plan that covers pre-existing conditions and can’t reject an applicant based on medical history).
But although the Insurance Division proposed numerous other requirements for short-term plans that last more than 90 days, guaranteed renewability was not part of the new regulations.
It’s unclear if that will be a provision included in the new rules that the Insurance Division is drafting (after the initial proposed rules were not approved), but for the time being, in keeping with the new federal rules, an insurer can offer guaranteed renewability, but is not required to do so.
Which insurers offer short-term plans in Iowa?
- Companion Life
- Everest Prime
- Golden Rule (UnitedHealthcare)
- Independence American Life
- National General
- Standard Life
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.