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Short-term health insurance in California

California no longer allows the sale of short-term plans

Short-term health plans in California

California law bans the sale or renewal of short-term plans as of 2019

Lawmakers in California passed a bill in 2018 (SB910) that prohibits the sale or renewal of short-term health insurance plans in California as of January 1, 2019. The legislation was sent to Governor Jerry Brown on August 21, 2018, and he signed it in late September. So short-term plans are no longer available for purchase or renewal anywhere in California.

The sale of other non-ACA-compliant plans — such as fixed indemnity products, critical illness plans, and health care sharing ministry plans — is still allowed, and these sorts of coverage are offered by a variety of companies. The monthly premiums for these plans tend to be less costly than ACA-compliant coverage for people who aren’t eligible for premium tax credits through Covered California (the health insurance exchange in California), but they also have a long list of drawbacks in terms of the limitations on the benefits and coverage they provide.

California’s short-term health insurance regulations

There were fewer than 10,000 short-term plans in effect in California at the end of 2017 – as opposed to 1.4 million people covered under ACA-compliant healthcare coverage purchased through Covered California. These plans were sometimes used to fill in gaps between other policies — in the months prior to enrolling in Medicare, for example, or just after a person became newly employed and was waiting for the new employer’s health plan to take effect.

Regulators in California addressed short-term plans – and their shortcomings – on several occasions. In October 2017, immediately after President Trump issued an executive order directing federal agencies to expand access to short-term plans, California Insurance Commissioner, Dave Jones, issued a press release stating that “increased sale of short-term policies that don’t cover essential health care needs or comply with most rules that apply to health insurance will harm consumers and create health insurance market instability.”

In February 2018, the Trump administration proposed new rules for short-term plans (essentially rolling back the restrictions that the Obama Administration had implemented). The new rules were finalized in August 2018.

But in April 2018, Commissioner Jones sent a letter to the Trump administration, calling the proposed expansion of short-term plans “an attack on the integrity of the nation’s health insurance markets.” Jones expressed his strong opposition to the proposed regulations, stating that “although touted as being an affordable alternative to ACA-compliant coverage, these [short-term] policies return us to a race to the bottom rather than providing a meaningful alternative.”

And ultimately, California decided to simply ban short-term healthcare plans altogether. Kaiser and Blue Shield of California were among the health insurers that supported SB910, calling for a ban on short-term health insurance in California. Notably, however, Anthem Blue Cross was the only major California health insurer to oppose the measure. None of those insurance companies directly offered short-term health insurance in 2018, but Anthem Blue Cross partnered with IHC to market short-term coverage in California prior to 2019.

Short-term plans duration in California

California already had its own regulations for short-term health insurance plans, prior to the enactment of SB910. California’s pre-2019 regulations limited short-term plans to an initial term of no more than 185 days. One renewal was permitted, but it also could not exceed 185 days. These rules were in place in California prior to 2017, when the Obama administration tightened the federal restrictions on short-term plans, limiting them to no more than three months and prohibiting renewals.

The Trump administration relaxed those rules as of October 2018, but state regulations continued to apply. So for the final quarter of 2018, short-term plans were once again available in California with terms of up to 185 days. But the last day to purchase those plans was December 31, 2018.

Which insurers offer short-term plans in California

There are currently no insurance companies selling short-term health insurance in California, as the state government has banned their sale.

How can I get short-term health insurance in California, and when should I consider it?

Since short-term health plans are not available in California, we advise you to check whether you’re eligible for a special enrollment period which allows you to enroll in an ACA-compliant major medical plan.

Multiple qualifying life events can trigger a special enrollment period for you, thus allowing you to buy a plan through the health insurance marketplace in California. The marketplace plans are sold on a month-to-month basis, so you can enroll and use the coverage even if you only need a few months of coverage before another policy — like Medicare or an employer’s plan — takes effect. If you qualify for a special enrollment period, you can select from any of the plans that offer service in your area.

And if you’re eligible, you can get financial assistance via a premium subsidy, including the additional state-funded subsidies that California offers. The subsidies can make ACA-compliant coverage much less costly — in some cases, even more affordable than short-term health insurance would have been if it were still available.

Based on your income you may also qualify for health insurance in California under expanded Medicaid coverage (Medi-Cal). Medi-Cal is a government-run health program that provides coverage for nearly 12 million California residents. In 2010, when the Affordable Care Act was enacted, Medicaid expansion was a cornerstone effort to expand access to healthcare for as many people as possible.  You may qualify for Medicaid if you have a household income up to 133 percent of poverty (138 percent with the 5 percent income disregard).

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 Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

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