Short-term health plans in North Dakota
- North Dakota limits the duration of short-term health insurance plans to no more than 12 months for individual plans, and no more than 36 months (including renewals) for association short-term plans (this is new under legislation enacted in 2021).
- Legislation enacted in 2019 requires short-term plan insurers to offer renewal (but with total plan duration still capped at 12 months for individual short-term plans).
- The state also requires insurance producers or insurance companies to record phone calls to prospective enrollees and maintain them on file for a year after the plan terminates. Various other marketing regulations are in place, along with a loss ratio requirement
- State regulators have warned consumers about the shortcomings of short-term health insurance in North Dakota.
- One insurer offers short-term health insurance in North Dakota.
Legislation enacted in 2021 allows for longer short-term plans, and different rules for association short-term plans
North Dakota enacted S.B.2073 in 2021. This legislation allows for longer short-term plans in the state, albeit with various requirements in terms of how the plans can be rated and the benefits that must be covered. S.B.2073 creates two different sets of rules — one for individual short-term health plans, and another for association short-term plans (Virginia is an example of another state where different rules have applied to short-term plans depending on whether they’re issued in the individual market or association market).
Before North Dakota enacted S.B.2073, short-term plans in the state were limited to initial terms of 185 days, and total duration, including renewal, of no more than 12 months. But under the state’s new rules:
- Individual short-term health plans can have initial terms of up to 12 months, but the total duration, including renewals, is also capped at 12 months. Insurers have to allow the plan to be renewed at the member’s discretion (without any additional medical underwriting), as long as total duration does not exceed 12 months.
- Association short-term health plans can follow federal rules, with total duration, including renewals, of up to 36 months. But association health plans also have to follow various state requirements:
- Rates can only be based on zip code, tobacco use, age, family size, and gender (note that ACA-compliant plans cannot be rated based on gender)
- Association short-term plans must include various essential health benefits, including inpatient and outpatient care, emergency services, maternity and newborn care, mental health/substance abuse care, prescription drug coverage, lab services, rehabilitative/habilitative services, and preventive care (in most states, it’s common for short-term plans to not cover or minimally cover several of these, including preventive care, maternity care, prescription drugs, and mental health care, to North Dakota’s coverage requirements for association short-term health plans are quite robust).
Previous legislation (S.B. 2118), enacted in North Dakota in 2019, clarified some of the state’s existing rules, including, at that time, an initial term limit of six months. But the legislation also required short-term health insurers to allow a member to renew their coverage with no additional medical underwriting, although the total duration of the plan, including renewal, could not exceed 12 months (under federal rules, insurers that offer short-term plans can offer renewals with total duration of up to 36 months, but are not required to offer renewals at all).
Marketing requirements and other state regulations
ND 2118 requires that all short-term plans sold in the state must be sold by a licensed insurance producer, which is in line with rules that were already in place in North Dakota. But another provision of the 2019 law goes well beyond most states’ requirements: The initial marketing call that an insurance producer makes to a potential client about a short-term policy must be recorded and maintained on file by the insurance producer or the insurance company, for at least a year after the policy terminates (this is still in North Dakota’s statute as of 2021; 2021’s S.B.2073 did not change it).
North Dakota requires short-term plan applications to ask the consumer whether they have comprehensive major medical coverage in force, whether they understand that the short-term plan is NOT a comprehensive major medical policy, and why they are purchasing the short-term plan.
Short-term health insurance in North Dakota is also required to have a medical loss ratio (claim amounts divided by premium amounts) of at least 55%, which means that at least 55% of premium revenue has to be spent on medical claims (ACA-compliant individual market plans must have loss ratios of at least 80%).
The North Dakota Insurance Department clarified that insurers offering short-term plans had to refile updated plans with the department in order to continue marketing short-term products under the new rules that were implemented in 2019.
Which insurers offer short-term plans in North Dakota?
As of October 2018, there were several insurance carriers offering short-term plans in North Dakota. But plan availability had dwindled considerably by 2019. As of 2021, at least two insurers offer short-term plans in North Dakota:
- Companion Life
- The North River Insurance Company
National General was offering plans in the state as of 2020, but it’s not clear whether their plans are still for sale in 2021, after S.B.2073 was enacted.
Who can get short-term health insurance in North Dakota?
Short-term health insurance in North Dakota is available to an individual (and their families) who can pass the underwriting guidelines of insurers. In general, this means being under 65 years old (some insurers put the age limit at 64 years) and in fairly good health.
Short-term health plans typically include blanket exclusions for pre-existing conditions, so short-term plans are not adequate for someone who needs medical care for ongoing or pre-existing conditions. You will likely be better served by a policy that provides comprehensive benefits.
If you’re in need of health insurance coverage in North Dakota, your first step should be to see whether you’re eligible for a special enrollment period that would allow you to enroll in an ACA-compliant (Obamacare) major medical plan. 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 North Dakota (note that in 2021, people do not need a qualifying event in order to enroll an ACA-compliant plan through the exchange, as long as they enroll by August 15, 2021). These plans are purchased on a month-to-month basis, so you can enroll in a plan even if you only need coverage for a few months before another policy takes effect (with a premium subsidy if you meet eligibility criteria; note that subsidies are larger in 2021 due to the American Rescue Plan).
When should I consider short-term health insurance in North Dakota?
The North Dakota Insurance Department published a document in 2017 to warn consumers about the drawbacks of short-term coverage, limited benefit plans, and discount medical plans. In terms of when a consumer should purchase short-term coverage, the North Dakota Insurance Department said “almost never.”
Excluding coverage for pre-existing conditions can make short-term policies appear more affordable than ACA-compliant policies. However, that upfront affordability can quickly be wiped out by out-of-pocket expenses (like monthly premiums and deductibles) or any costs for a healthcare service for an uncovered condition. That said, there may be situations in which it makes sense to use a short-term plan, such as:
- If you missed open enrollment for ACA-compliant coverage and do not have a qualifying event that would trigger a special enrollment period (again, enrollment is open in 2021 through August 15, without the normal qualifying event requirements).
- 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 much more affordable (but less comprehensive) stopgap than COBRA or an ACA-compliant plan.
- If you will soon be eligible for Medicare.
- If you’re not eligible for Medicaid or a premium subsidy in the exchange, an ACA-compliant plan might be unaffordable. People caught in the ACA’s family glitch are an example of how a person might not be eligible for subsidies and yet still not able to enroll in affordable comprehensive coverage (The American Rescue Plan did not address the family glitch, although the Biden administration may be able to address it administratively).
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.