Short-term health insurance in Texas

Texas short-term health insurance regulations

TDI confirmed that the state’s mandated benefits for individual major medical policies also apply to short-term health insurance plans. The mandated benefits can be found starting on page 5 of the state’s individual major medical checklist for insurers.

Short-term plans duration in Texas

Since 1997, Texas Department of Insurance (TDI) rules have defined short-term health insurance plans as coverage that ends within 12 months of the plan effective date.

That was the same as the federal definition that was in place through the end of 2016, but federal rules that took effect in 2017 limited short-term plans to three months. As of October 2, 2018, however, the Trump Administration’s relaxed rules again allow short-term medical plans to have initial terms of up to 364 days.

The TDI rule, allowing a short-term plan to have a term that ends within 12 months of the start date, applies in Texas, as it aligns with the new federal rules. And the Department confirmed that renewals are allowed in line with federal guidelines. The current federal rules for short-term plans allow for total policy duration, including renewals, of up to 36 months.

Insurers are not required to offer renewals though, so that is at the discretion of each insurer. Some of the insurers that offer short-term health insurance policies in Texas have chosen to make them renewable for up to three years of total duration, while others have shorter time limits.

Which insurers offer short-term plans in Texas?

As of 2020, there were at least nine providers of short-term health insurance in Texas:

• AdvantHealth
• Aspen
• Companion Life
• Everest Reinsurance
• Independence American Insurance Company
• National General
• Standard Security Life Insurance Company
• United Healthcare (Golden Rule)
• United Security Health and Casualty

Moda Health has a filing in SERFF for short-term plans in Texas (filing number ODSV-132261028), but the plans do not appear to be available for purchase online (Moda’s online offerings are limited to ACA-compliant plans in the northwestern U.S.).

Philadelphia American Life Insurance Company (NewEra) also has a filing in SERFF for short-term plans in Texas (filing number NELI-132347682), as does United States Fire Insurance Company (filing number CRUM-132354605). But the plans do not appear to be available for purchase online.

Who can get short-term health insurance in Texas

Short-term health insurance in Texas is available to individuals and families who can meet the underwriting guidelines set forth by insurers. Typically this includes being under 65 years old and in fairly good health.

Remember though, short-term health plans have far more limitations than ACA-compliant plans. They usually include blanket exclusions for pre-existing conditions, so if you anticipate needing ongoing medical care, short-term health insurance in Texas may not be the best option, despite the potentially lower cost. It’s also important to note that short-term health plans do not have to provide coverage for essential health benefits; it’s common to see short-term insurance policies that do not cover maternity care, prescription drugs, or mental health care. In general, short-term health plans are designed to cover unforeseen illnesses or injuries, and the plans almost always include caps on the amount that the insurance company will spend on a member’s care.

If you’re in need of health insurance coverage in the Lone Star State, you should first check if you’re eligible for a special enrollment period that would allow enrollment in an ACA-compliant major medical plan (ie, an Obamacare plan, which will cover essential health benefits and pre-existing conditions). There are a variety of qualifying life events that can trigger the special enrollment period and allow you to buy a plan through the health insurance marketplace exchange in Texas.  These marketplace plans 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 coverage for a few months before another policy takes effect.

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

From Amarillo to Brownsville, there may be times when a short-term health insurance plan is your only realistic option, such as:

• If you missed the open enrollment period for ACA-compliant (Obamacare) coverage and do not have a qualifying event that would trigger a special enrollment period.
• If you’re newly employed and have enrolled in your employer’s health plan but have a waiting period before it takes effect (if you also have a qualifying event, you can instead enroll in a health plan through the Texas marketplace while you wait for your new employer’s insurance coverage to start; if not, a short-term policy is probably your best bet).
• If you’ll soon be eligible for Medicare, and need coverage for just a short while until you reach age 65 and are enrolled in Medicare. Note that some short-term health insurance companies will only enroll applicants who are under the age of 64 or 64.5, as opposed to allowing enrollment all the way up to age 65. Also, be aware that while Medicare covers pre-existing conditions right away, Medigap insurers can require pre-existing condition waiting periods if an enrollee didn’t have coverage for their pre-existing conditions prior to enrolling in Medicare.
• If you’re not eligible for Medicaid (based on your monthly income) or a premium subsidy (based on your annual income) in the exchange, the monthly premiums for an ACA-compliant plan might be unaffordable.

People who are ineligible for premium subsidies include:

• Those 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 pinch above the subsidy-eligible threshold, there are steps you can take to reduce it).
• People ensnared in the ACA’s family glitch. This happens when employers provide affordable health coverage for workers, but the cost to add families to the policy is fully or mostly payroll deducted and unaffordable for the family — and yet the family is also ineligible for premium subsidies in 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.