Buying short-term health plans in New Jersey
- Long-standing New Jersey law does not allow short-term health plans to be sold in the state.
- New Jersey requires all plans to provide full-year coverage, comprehensive benefits, and be guaranteed-issue and guaranteed-renewable.
- New Jersey will continue to prohibit the sale of short-term plans, so the new federal rules do not apply in the state.
- New Jersey regulators have cautioned that expanding short-term plans in other states will ultimately be detrimental for consumers.
Sale of short-term plans is prohibited in NJ
The sale of short-term health insurance plans has, for all intents and purposes, been prohibited in New Jersey since 1993. New Jersey statute 17B:27A-3 governs individual health insurance plans, and does not allow short-term limited duration plans to be sold to New Jersey residents.
The statute requires all plans sold to individuals in New Jersey to provide full-year coverage, “comprehensive benefits that exceed the requirements of the Affordable Care Act” and must be guaranteed issue and guaranteed renewable. These terms are not compatible with short-term plans, so short-term coverage is essentially prohibited in the state.
The ban will continue
In April 2018, after the Trump Administration had proposed new rules to change the federal definition of “short-term, limited duration” (rules that have since been finalized), the New Jersey Department of Banking and Insurance submitted comments noting that short-term plans have not been sold in New Jersey for 25 years, and clarifying that the state’s ban on short-term plans would continue, regardless of any changes at the federal level.
New Jersey’s acting insurance commissioner also cautioned that expanding access to short-term plans in other states would ultimately be detrimental to consumers. The comments noted that the coverage offered by short-term plans is inferior to the coverage offered in the ACA-compliant market (and in New Jersey’s state-regulated market), results in adverse selection for more comprehensive plans, and could ultimately lead to insurers withdrawing from the ACA-compliant market in states that allow short-term health insurance plans.
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.