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Short-term health insurance in Pennsylvania

Pennsylvania defaults to the federal rules for plan duration, but Insurance Department strongly cautions residents about short-term health insurance plans

Short-term health plans in Pennsylvania

Legislation introduced (again) to limit short-term health insurance in Pennsylvania

HB695 introduced in Pennsylvania’s House of Representatives in February 2021, would impose strict limits on short-term health plans in the state (the bill was previously introduced as HB2730 in July 2020, but failed to advance in the 2020 legislative session). Measures like this tend to have more support from Democrats, and both chambers of Pennsylvania’s legislature have Republican majorities in 2021, so the bill’s future is uncertain. But HB695 thus far has only two sponsors, and both are Republicans (HB2730 had the same two Republican sponsors, plus two Democratic sponsors). 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.

Short-term plan duration in Pennsylvania

Short-term health insurance in Pennsylvania does not have regulations pertaining to the length of time that a policy can remain in force, so the state defaults to the federal guidelines. Until October 2018, federal rules limited short-term plan duration to three months. 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.

Insurance commissioner is outspoken about the drawbacks of short-term health insurance

Pennsylvania 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 carriers of short-term health insurance 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.

Which insurers offer short-term plans in Pennsylvania?

As of early 2021, there were at least two providers of short-term health insurance in Pennsylvania:

  • Independence American Insurance Company
  • UnitedHealthcare (Golden Rule)

Who can buy short-term health insurance in Pennsylvania?

Short-term health insurance in Pennsylvania is available to residents (individuals or families) who meet insurers’ underwriting guidelines. Typically, this means being under 65 years old (some insurers put the age limit at 64 years) and in fairly good health.

Short-term health medical insurance plans typically include blanket exclusions for pre-existing conditions, so they are not adequate for someone who is in need of medical care and seeking a policy that will cover those needs.

If you’re in need of health insurance coverage in the Keystone State, 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 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 Pennsylvania.

(Note that Pennie, the state’s health insurance exchange, is offering a one-time COVID-related enrollment window in 2021, which continues through May 15, 2021. A qualifying event is not necessary in order to use this enrollment window, but will once again be necessary after May 15, 2021, until open enrollment starts again on November 1, 2021).

ACA plans are purchased on a month-to-month basis, so an eligible individual can enroll (with a premium subsidy if eligible) even if coverage is only needed for a few months before another policy takes effect.

When should I consider short-term health insurance in Pennsylvania?

Excluding coverage for pre-existing conditions can make short-term policies appear more affordable than ACA-compliant (Obamacare) policies. However, that upfront affordability disappears if you end up paying out of pocket for healthcare services related to an uncovered condition. That said, there may be situations when enrolling in a short-term plan might be an attractive option, 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 (as noted above, there’s a special opportunity, through May 15, 2021, to enroll in a plan through Pennie, even if you don’t have a qualifying event).
  • 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 is typically a much more affordable (but less comprehensive) stopgap than COBRA or an ACA-compliant plan. 
  • If you will soon be eligible for Medicare and just need a few months of coverage to bridge the gap (note that you may then be subject to a pre-existing condition waiting period if you enroll in a Medigap plan, as your prior short-term plan might not be considered creditable coverage by the Medigap insurer). 
  • 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:

An insurance agent or broker can provide information on the availability of various coverage options and help you evaluate the affordability of those options. Some things to keep in mind are the allowable plan durations (some insurers cap their plans at shorter durations than the maximum the state allows), whether the insurer offers guaranteed renewability, and the specific benefits the plan covers.

Pay attention to things such as whether the plan covers outpatient prescription drugs (most short-term health insurance plans do not, but some do), and whether it imposes specific dollar limitations on any specific type of service (such as inpatient care, surgery, etc.) and the overall policy benefit maximum.

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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