Short-term health plans in Delaware
- As of December 2018, state regulations limit short-term health insurance in Delaware to three months and prohibit renewal.
- Under the new regulations, short-term plans cannot be renewed or extended, and an insurer cannot issue a new policy to the same applicant more than once in a year. Successive back-to-back plans are also prohibited.
- Short-term health insurance in Delaware must have loss ratios of at least 60 percent.
- Several insurers stopped selling short-term coverage in late 2018, but had rejoined the state’s market under the new rules by mid-2019. By 2020, however, there were only a few insurers offering short-term plans in the state.
Short-term health insurance plans in Delaware limited to three month durations
State regulations for short-term health insurance in Delaware took effect on December 1, 2018, limiting short-term healthcare plans to three months in duration and prohibiting renewals.
Until December 1, 2018, the new federal regulations (which allow longer short-term plans) applied in the state, and there were plans available for purchase with 6-month and 12-month durations. But the Delaware Insurance Department placed new rate/form filings on hold until the state’s regulations were finalized.
The state’s new regulations, effective December 1 (and now permanently in force), limit short-term plans to three months and prohibit renewals. Insurers are also not allowed to offer successive back-to-back short-term plans to the same policyholder, and a new short-term plan can’t be sold to the same person more than once in a given year.
Delaware’s short-term health insurance regulations
Until October 2, 2018, federal regulations limited short-term health insurance plans to no more than three months in duration, and prohibited renewals. The Trump administration began allowing for much longer short-term plans as of October 2018, unless a state imposed its own restrictions.
Before the Trump administration relaxed the federal rules for short-term health insurance plans, Delaware did not have its own rules. But the Delaware Insurance Department noted in August 2018 that it was “conversing with other nearby states to inquire what regulations they have adopted” in terms of short-term health plans, and was beginning the process of drafting their own regulations.
New state regulations for short-term health insurance in Delaware were published in November 2018, and took effect on December 1, limiting short-term plans to three months in duration and prohibiting renewals. Delaware residents had a short window — from October 2 to November 30 — during which longer short-term plans were available for purchase. But those plans were no longer available after the end of November, and most of the insurers that would previously provide short-term plans in the state had stopped doing so by December 2018. Several of them had rejoined the state’s market by mid-2019, but market participation dwindled again by mid-late 2020.
The new regulations were issued as emergency regulations, effective until March 31, 2019. That gave the state time to draft and implement permanent regulations for short-term health plans, which it did in January 2019. At that point, the permanent regulations took the place of the emergency order, although the provisions are identical.
Additional state regulations for short-term health insurance in Delaware go beyond simply restricting the duration of the plans. Under the terms of the new regulations:
- Short-term plans must have loss ratios of at least 60 percent (ie, total covered medical benefits divided by total premiums must be at least 0.6)
- If an applicant is replacing other health coverage with a short-term policy, the insurer or agent must provide them with an extensive notice about the limitations of short-term medical plans and the ins and outs of replacing other coverage with a short-term plan.
ACA-compliant rate filings initially included a load for short-term plan expansion, but it was removed in a subsequent filing
Highmark Blue Cross Blue Shield of Delaware is the only insurer that offers ACA-compliant individual market plans in Delaware’s health insurance exchange. Highmark’s initial rate filing for 2019 noted that the carrier had “included a 1% load for expected adverse selection due to the Short Term Limited Durational Insurance market expansion based on a recently proposed HHS rule modifying federal requirements.” [since short-term healthcare plans really only work for relatively healthy applicants (pre-existing conditions aren’t covered and can result in an application being rejected), the risk pool for ACA-compliant plans was expected to worsen somewhat in 2019 if the state had allowed short-term plans to become a long-term substitute for ACA-compliant coverage.]
But a subsequent filing, submitted in July 2018, included a smaller overall rate increase, and the Delaware Insurance Department confirmed that the proposed premium increase due to the expansion of short-term plans was not included in the revised filing (and the Insurance Department ultimately approved an even smaller rate increase than Highmark had proposed in the revised filing). Ultimately, Delaware had sharply restricted short-term health plans by the time the 2019 plan year got underway.
Which insurers offer short-term plans in Delaware?
At least three insurers continue to offer short-term health insurance in Delaware with maximum terms of three months:
- UnitedHealthcare (Golden Rule)
- Companion Life
- Standard Life
There were several other insurers that had been offering short-term plans in Delaware as of mid-2018, but the number of insurers offering these plans has dwindled. For a while, in early 2019, Standard Life was the only insurer offering short-term plans in Delaware. Golden Rule/UnitedHealthcare had offered short-term plans as of October 2018, but had stopped doing so by November. Companion Life and Independence American Insurance Company also offered plans as of October, but their plans were no longer be available as of November (Independence American Insurance Company stopped offering plans in Delaware as of November 15). Everest, Everest Prime, and LifeShield were all still offering short-term plans in Delaware as of November, but their plans appeared to no longer be available as of December.
Some of those companies had started offering short-term plans again by mid-2019, after adjusting their policies to comply with the state’s new rules. But by late 2020, there appeared to be very few insurers offering short-term health plans in Delaware.
In 2016, Delaware’s Insurance Commissioner fined Companion Life $487,000 for “numerous violations of Delaware’s insurance code, including misrepresenting its limited benefit and short-term health insurance plans as compliant with the Affordable Care Act.” But Companion Life is one of the few companies still offering short-term health insurance in the state as of 2020.
Who can get short-term health insurance in Delaware
Short-term health insurance in Delaware can be purchased by residents who meet the underwriting guidelines of insurers. This means being under 65 years old (some insurers set the age limit at 64) and in fairly good health.
Short-term health plans typically include blanket exclusions for pre-existing conditions, so this type of coverage is not adequate for someone in Delaware who needs medical care for ongoing health concerns or who has a pre-existing condition. And short-term medical plans are not required to cover the ACA’s essential health benefits. The most commonly excluded services are maternity care, mental health and substance abuse treatment, and prescription drugs, but the specific details vary from one policy to another.
If you need health insurance in Delaware, check first to see if you can enroll in an ACA-compliant major medical plan. Open enrollment for these plans runs from November 1 to December 15 each year; during this window, nearly anyone can purchase an individual/family plan. Outside the open enrollment window, you may be eligible for a special enrollment period that would allow you to enroll in an ACA-compliant plan, if you experience a qualifying life event.
During open enrollment or a special enrollment period, you can buy a plan through the health insurance exchange in Delaware — with a premium subsidy if you’re eligible. Premium subsidies make the monthly premiums much less costly than they would otherwise be. They’re provided based on your total household income (an ACA-specific calculation) for the year, and do have to be reconciled on your tax return each year.
Marketplace plans are purchased on a month-to-month basis, so you can enroll even if you only need coverage for a few months before another policy takes effect — for example, if you’ll be enrolling in Medicare soon, or you’re newly employed and will have coverage under your employer’s plan after a waiting period is over.
When should I consider short-term health insurance in Delaware?
There are times when a short-term health insurance plan might be the only realistic option, such as:
- If you missed open enrollment for ACA-compliant individual market coverage (ie, Obamacare) or your employer’s healthcare plan, and do not have a qualifying event that would trigger a special enrollment period.
- You’ll soon be enrolled in Medicare and don’t have access to another source of coverage in the meantime.
- You’re newly employed and your employer has a waiting period of up to three months before you can join the group health plan.
- If you’re not eligible for Medicaid or a premium subsidy in the exchange, the monthly premiums for an ACA-compliant plan might simply be too costly. Those ineligible for premium subsidies include:
- Folks who earn more than 400% of the poverty level (for 2021 coverage, that amounts to $51,040 for a single person; if your ACA-specific modified adjusted gross income is a little above the subsidy cut-off, there are steps you can take to reduce it).
- People ensnared by the ACA’s family glitch.
- People who cannot enroll in a plan through the exchange/marketplace due to their immigration status (you have to be lawfully present in the US in order to be enrolled in a plan through the exchange; premium subsidies are only available through the exchange).
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.