Open enrollment for 2016 has ended. For most people, that means the opportunity to purchase individual health insurance will be very limited for the rest of the year. But there are still coverage options available.
Native Americans can enroll year-round, as can people who qualify for Medicaid. And applicants who experience a qualifying event gain access to a special open enrollment window to shop for plans in the exchange (or off-exchange, in most cases) with premium subsidies available in the exchange for eligible enrollees (note that HHS is stepping up enforcement of special enrollment period eligibility verification in 2016; if you experience a qualifying event, be prepared to provide proof of it when you enroll)
But without a qualifying event, health insurance is not available outside of general open enrollment, on or off-exchange. (Nevada is an exception: off-exchange plans in Nevada are available for purchase year-round, but the carrier can impose a 90-day waiting period before coverage takes effect).
Unfortunately, this fact has caught many people by surprise over the last couple years. And so far, the first three open enrollment periods have all had different start and end dates, which further adds to the confusion. The first open enrollment period was six months long; the second and third were both three months, but the dates were different. For 2017, HHS will stay with the same dates that were used for 2016 – November 1 to January 31.
Millions of Americans already secured coverage for 2016 during the open enrollment period, and many more will obtain coverage later in the year during a special enrollment period triggered by a qualifying event.
But for those who haven’t yet enrolled and aren’t expecting a qualifying event, the options for the rest of 2016 will be limited to policies that are not regulated by the ACA. This includes short-term health insurance, some limited-benefit plans, accident supplements, critical/specific-illness policies, dental/vision plans, and medical discount plans.
Closest thing to ‘real’ insurance
Some of these policies are a good supplement to regular major medical health insurance. But most of them are not a good option to serve as stand-alone medical coverage – except short-term health insurance.
Short-term coverage is the closest thing you can get to “real” health insurance if you find yourself needing to purchase a policy outside of open enrollment without a qualifying event. Most short-term plans last from one to six months, although in some states, short-term plans are available with a duration of 364 days. (The definition of a short-term plan is currently a duration of fewer than 12 months.) They are not renewable, but many states and carriers allow consumers to purchase two consecutive short-term policies.
In June 2016, HHS proposed regulations that would limit short-term coverage in an effort aimed at “curbing abuse” of short-term plans. The proposed rules would limit short-term coverage to no more than three months, with no option to renew coverage. HHS notes that the plans are exempt from having to comply with ACA regulations specifically because they’re supposed to only be used to fill gaps in coverage — but instead, people have been using them for up to a year at a time, which effectively removes healthy people from the ACA-compliant risk pool, destabilizing it over the long-run.
But for now, for people who are healthy and don’t have pre-existing conditions, short-term policies function basically the same way many health insurance policies used to before the ACA’s reforms were introduced. And compared with the premiums for ACA-compliant individual major medical plans, short-term policies are far less expensive.
Although premium subsidies are not available for short-term plans, the retail prices on these policies are very affordable. However, if your income makes you eligible for the Obamacare premium subsidies, it’s essential that you enroll through your state’s exchange during open enrollment; otherwise, you’re missing out on comprehensive health insurance and a tax credit. If you’re eligible for subsidies and you didn’t enroll for 2016, make sure you enroll when the 2017 open enrollment period begins in the fall.
Some short-term plans have provider networks, but others allow you to use any provider you choose. Unlike ACA-compliant plans, short-term policies have benefit maximums. But the limits tend to be more reasonable than the infamous “mini-med” plans that barely covered a few nights in the hospital.
Lifetime maximums of $750,000 to $2 million are common on short-term plans. While this is not as good as regular individual insurance plans that no longer have annual or lifetime benefit caps, it’s roughly similar to a lot of the plans that were available just a few years ago in the individual market.
Ease of application
The application process is very simple for short-term policies. Once you select a plan, the online application is much shorter than it is for standard individual health insurance, and coverage can be effective as early as the next day.
There are no income-related questions (since short-term policies are not eligible for any of the ACA’s premium subsidies), and the medical history section is generally quite short – no where near as onerous as the pre-2014 individual health insurance applications were.
Keep in mind that although the medical history section generally only addresses the most serious conditions in order to determine whether or not the applicant is eligible for coverage, short-term plans all have blanket disclaimers stating that no pre-existing conditions are covered.
To be clear, short-term plans are not as good as the ACA-regulated policies that you can purchase during open enrollment or during a special enrollment period. Short-term insurance is not regulated by the ACA, so it doesn’t have to follow the new rules:
The plans still have benefit maximums, they are not required to cover the ten essential benefits. (Most often, short-term plans don’t cover maternity, preventive care, or mental health/addiction treatment), they do not have to limit out-of-pocket maximums, and they do not cover pre-existing conditions. They also still use medical underwriting, so coverage is not guaranteed issue.
And the plans are not renewable. In most states, you have the option to apply for a new policy after the first one ends, but you’ll be going through the application process as a new enrollee, and any health conditions that developed while you were covered by the first policy would be considered pre-existing conditions under the second policy.
Although loss of existing minimum essential coverage is a qualifying event that triggers a special open enrollment period for ACA-compliant plans, short-term policies are not considered minimum essential coverage, so the loss of short-term coverage is not a qualifying event.
In addition, since short-term health insurance is not considered minimum essential coverage, you’ll still be on the hook for the ACA’s shared responsibility penalty if you rely on a short-term plan for your coverage. There’s an exemption from the penalty if you only have a short gap in coverage that lasts no more than two months (you could have a short-term plan during that two months and would not be subject to the penalty).
Be aware that the penalty has risen again for 2016. For this year, it’s the greater of: $695 per uninsured adult (half that amount for a child), up to $2,085 for a household, OR 2.5 percent of household income above the tax filing threshold. The penalty is prorated for the number of months you’re uninsured or covered by a policy that’s not minimum essential coverage (like a short-term plan).
Although short-term plans do not provide the level of coverage or consumer protections that the new ACA-compliant plans offer, obtaining a short-term policy is better than remaining uninsured. Given the very limited range of options available outside of open enrollment, a short-term policy may be your best choice for the rest of 2016 if you you didn’t enroll in a plan during open enrollment.