Buying short-term health plans in Pennsylvania
- Pennsylvania defaults to federal guidelines on short-term health plans.
- Plans can have initial terms of up to 364 days and total duration, including renewals, of up to 36 months.
- Bipartisan legislation has been introduced in 2020 that would limit short-term plans to 90-day terms.
- Pennsylvania’s insurance commissioner is outspoken about the drawbacks of short-term health plans.
- At least two insurers offer short-term plans in Pennsylvania as of 2020.
How long can short-term health plans last in Pennsylvania?
Pennsylvania does not have regulations pertaining to the length of time that a short-term health insurance plan can remain in force, so the state defaults to the federal guidelines. Until October 2018, federal rules limited short-term plans to three months in duration. But at that point, the Trump administration’s rules for short-term plans took effect, allowing for initial terms of up to 364 days and total duration, including renewal, of up to 36 months.
Legislation introduced in 2020 that would sharply limit short-term plans
HB2730, introduced in Pennsylvania’s House of Representatives in late July 2020, would impose strict limits on short-term health plans in the state. Measures like this tend to have more support from Democrats, and both chambers of Pennsylvania’s legislature have Republican majorities in 2020, so the bill’s future is uncertain. But HB2730 has at least some bipartisan support, with sponsorship from two Democrats and two Republicans. If the measure passes and is enacted, it would:
- Limit short-term plans to 90-day terms, and prevent them from extending past the end of the year in which they’re issued (so a plan issued at the start of November, for example, could only have a tw0-month term).
- Prohibit short-term plans from taking effect in the next calendar year. This would prohibit short-term plans from being purchased during the ACA’s open enrollment period for use in the coming year, and would help to avoid confusion between ACA-compliant plans and short-term plans (all ACA-compliant plans sold during open enrollment take effect in the coming year).
- Allow short-term plans to be renewable, but only in the year that they’re purchased; the renewal could not extend the plan into the coming year.
- Prevent a health insurer from issuing more than one short-term plan to a given enrollee each year, and prevent a health insurance agent/broker from selling more than one short-term plan to a given enrollee each year.
- Require short-term plans to include disclosure language clarifying that the plan should not be considered a substitute for comprehensive major medical coverage.
- Require short-term plans to clearly state their medical loss ratios, and contrast them with the minimum 80 percent medical loss ratio that’s required for ACA-compliant plans.
- Require short-term plan marketing materials to clearly describe how the benefits would work for at least six common medical condition scenarios.
- Require anyone selling a short-term policy to provide verbal disclosure of the benefits and limitations of the plan, and get written confirmation that the disclosure was made.
- Prohibit short-term insurers from using post-claims underwriting; benefits determinations when claims are filed would be based on the enrollee’s application answers (unless the insurer can prove that the enrollee’s application was intentionally fraudulent), and could not involve an additional review of medical records after the claim is filed.
Insurance commissioner is outspoken about the drawbacks of short-term health insurance
Pennsylvania’s Insurance Commissioner, Jessica Altman, was outspoken in her opposition to the Trump administration’s rule change for short-term health plans. Altman submitted comments to HHS in April 2018, when the proposed rule was under consideration, making it clear that the expansion of short-term plans would be detrimental to consumers and to the ACA-compliant risk pool.
In August 2018, when the new rules were finalized, Altman stated that she was “disappointed and extremely concerned,” noting that the final rule to expand short-term plans “opens the door further to confusion, uncertainty, market instability, and even deceptive marketing.”
Later in August, Altman announced that short-term health insurance carriers in Pennsylvania would need to re-file their products with the Pennsylvania Insurance Department. This will allow regulators to verify that the plans are in compliance with the new rules, including the provision requiring a disclosure notice about what the plans do and do not cover.
The Pennsylvania Insurance Department has also created a brochure designed to warn consumers about the potential drawbacks of short-term plans, highlighting the fact that short-term plans are not required to cover the ACA’s essential health benefits, are not subject to medical loss ratio requirements, can cap lifetime and annual benefit amounts, and do not cover pre-existing conditions.
In 2019, Commissioner Altman testified before the U.S. House Energy and Commerce Committee’s Subcommittee on Health to clarify the downfalls of short-term health insurance plans, and noted that over the past two years, the state had suspended the licenses of eight insurance agents/brokers who had misrepresented short-term plans to their clients.
At least two insurers offer short-term plans in Pennsylvania
- Independence American Insurance Company
- UnitedHealthcare (Golden Rule)
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.