Availability of short-term health insurance in Iowa

Yes. As of 2024, at least three insurers offer short-term plans in Iowa.

Iowa allows short-term health plans to follow federal duration limits. This means plans issued or sold before September 2024 can have initial terms of up to three months, and total duration, including renewals, of up to four months. But starting in September 2024, new federal rules will apply, capping initial terms at three months and total duration at four months.

The Iowa Insurance Division published a bulletin in 2024¹  that explains the rule change and what Iowa consumers need to know about it, especially if they’ve been relying on short-term health insurance as an alternative to ACA-compliant coverage.

States can have rules for short-term health insurance policies that are stricter than the federal rules, but not more lenient. Here’s how Iowa regulates short-term health insurance:

Along with the longer allowable term limits, Iowa’s rules (effective as of January 2020) impose a variety of restrictions on short-term health insurance in Iowa:

• Benefit maximums must be at least $500,000 for each policy term (for perspective, it’s fairly rare to see short-term plans with benefit caps below this amount; Indiana enacted legislation in 2019 to require benefit caps of at least $2 million on short-term plans; ACA-compliant plans do not have benefit caps).
• A variety of services must be covered, including inpatient care, outpatient care, and prescription drugs (this is important, as it’s common for short-term insurance to not cover outpatient prescription drugs at all)
• Out-of-pocket costs must be capped at no more than $30,000. The limit is lower for plans with terms shorter than four months. And for plans that have separate out-of-pocket limits for medical care and prescription drugs, the total out-of-pocket limits cannot exceed $20,000 and $10,000, respectively.
• Pre-existing condition exclusion periods cannot exceed the length of the initial term, and if the plan is renewable, it must be guaranteed renewable (which means pre-existing conditions would be covered in the subsequent terms, but insurers are not required to make their plans renewable).
• Preventive care must be covered after 180 days, although it can be subject to the deductible and other cost-sharing (unlike ACA-compliant plans, which must cover certain preventive care in full, as soon as the plan is in effect).

The Iowa Insurance Division had initially proposed stricter standards, but those were not accepted by the Administrative Rules Committee. The rules that ultimately took effect in 2020 were a compromise – they do impose a variety of requirements that aren’t found in other states, but they’re more lenient than the rules the Iowa Insurance Division had initially proposed.

Commissioner Ommen had noted in 2018 that the state was considering regulations to ensure that short-term plans provide comprehensive (“fulsome”) coverage and allow at least one guaranteed renewal. But the proposal to require short-term policies to allow at least one guaranteed-issue renewal was not included in the rules that Iowa implemented in 2020.

State regulators clarified in September 2018 that short-term health insurance in Iowa would be allowed to follow new federal rules regarding plan duration.

However, those federal limits will change in 2024 under new Biden administration rules for short-term health plans. Short-term plans issued or sold on or after September 1, 2024 will be limited to total durations of no more than four months, including renewals.

Iowa does not impose stricter duration limits, so the Iowa Insurance Division has confirmed that the federal limits will apply in Iowa.¹

But the new federal rules only limit the length of time a short-term policy can be in effect; they do not impose any particular benefit requirements for these plans. Iowa does have its own rules for other aspects of short-term health insurance coverage, and those  or otherwiseIowa does have some other requirements for short-term health insurance, which have been in effect since 2020.²

By early 2020, the Iowa Insurance Division announced that a total of five insurers had been approved to offer short-term plans that were compliant with the state’s new rules, with terms of up to 364 days.

However, the Iowa Insurance Division’s page that listed the approved carriers is no longer active, and the Division has published a bulletin informing Iowa residents about the changes applicable to new short-term health plans starting in September 2024.¹

Short-term health insurance in Iowa can be purchased by applicants who can meet the underwriting guidelines the insurers use.

Most short-term policies can be purchased by applicants who are younger than 65 and who do not have a medical condition that would result in an automatically declined application.³ But the specific eligibility requirements vary from one insurance company to another.

Short-term health insurance plans usually do not cover pre-existing conditions, and they often use post-claims underwriting. This means that if a claim is filed, the insurer can go through the person’s medical records to make sure the claim isn’t related to a pre-existing medical condition.⁴

Short-term health plans also generally exclude coverage for some of the ACA’s essential health benefits (most commonly, maternity care, prescription drugs, and mental health care),³ and impose dollar limits on the coverage they do provide. It’s important to double-check all of the plan information before purchasing a short-term policy, to make sure that you understand the limitations of the plan.

If you need health insurance coverage in Iowa, you can enroll in an ACA-compliant major medical plan through the Iowa Marketplace (HealthCare.gov) during the annual open enrollment period that runs from November 1 through January 15.

Outside of that window, you can enroll if you qualify for a special enrollment period. There are a variety of qualifying life events that will trigger a special enrollment period and allow you to buy a plan through the health insurance exchange in Iowa.

The Iowa Insurance Division has reminded consumers that the termination of a short-term health plan will not trigger a special enrollment period for an individual/family plan (although it will trigger a special enrollment period for an employer-sponsored plan, if you’re eligible for one).¹

The plans available in the Marketplace are purchased on a month-to-month basis, so you can enroll in one (with a premium subsidy if you’re eligible) even if you’re only going to need it for a few months before another policy takes effect.

Sometimes a short-term health insurance plan might be the least costly and most realistic option for stop-gap help paying for healthcare. For example:

• If you missed open enrollment for ACA-compliant coverage and do not have a qualifying event that would trigger a special enrollment period.
• If you are newly employed and have a waiting period until you can be covered by your new employer’s health insurance plan; short-term insurance may provide a more affordable (but less comprehensive) stopgap than COBRA or an ACA-compliant plan.
• If you will soon be eligible for Medicare and don’t have access to any other coverage in the meantime.
• If you’re not eligible for Medicaid or a premium subsidy in the exchange, an ACA-compliant plan might be unaffordable.

Some examples of who are ineligible for premium subsidies:

• People who are ineligible to enroll in a marketplace plan due to lack of a lawful immigration status.
• People who earn too much money to qualify for subsidies (the American Rescue Plan and Inflation Reduction Act have eliminated the “subsidy cliff” through 2025).