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Short-term health insurance in Virginia

Virginia's newly-blue legislature is considering legislation that would sharply limit short-term plans in Virginia as of mid-2020

Buying short-term health plans in Virginia

Short-term plans in Virginia are currently available with total duration up to 36 months

Long-standing regulations in Virginia clarify that various state rules and regulations (including guaranteed renewability and coverage of pre-existing conditions) do not apply to short-term health insurance plans as long as they are nonrenewable and have a duration of not more than six months.

But short-term plans that are issued via out-of-state associations (which includes all of the currently available short-term plans in the state) can be renewable for up to 36 months. The state has regulations that require short-term plans issued by an in-state insurer to be guaranteed renewable up to 36 months if the plan has an initial term of more than six months and/or if the insurer uses medical underwriting (virtually all short-term insurers use medical underwriting). But again, all of the currently available plans are issued by associations based outside of Virginia, so those plans can use medical underwriting even though they have longer durations.

Lawmakers in both chambers of Virginia’s legislature have passed stricter rules for short-term plans

Under the terms of legislation that’s under consideration in Virginia in 2020, the state’s rules for short-term plans could become stricter. And the legislation indicates that it would apply to “any entity that is authorized to sell, offer, or provide a short-term limited-duration medical plan,” which would presumably mean in-state insurers as well as out-of-state associations.

Virginia has a Democratic trifecta as of 2020, with a Democratic governor as well as a Democratic majority in the Senate and House of Delegates following the 2019 election.

A bill under consideration in 2020 in Virginia, SB95, would require all state-regulated plans, including short-term health insurance plans, to cover preventive care (as defined under the ACA and implementation regulations in effect as of 2019) with no cost-sharing. SB95 passed the Senate in January 2020, by a vote of 21-19. It is now under consideration in the House of Delegates.

Limiting short-term health plans is a goal among progressive lawmakers, as the plans are not subject to the ACA’s regulations and are thus lower quality than ACA-compliant coverage. To that end, SB404 and HB1037 are under consideration in Virginia’s legislature in 2020. Both bills would:

  • Limit short-term plans to just three months in duration.
  • Prohibit renewals (as is already the case for short-term plans in Virginia).
  • Prohibit the sale of a short-term plan if it would result in a person having short-term coverage for more than three months in any 12-month period.
  • Prohibit the sale of short-term plans during the ACA’s annual open enrollment period (November 1 to December 15; Washington and Maine have enacted similar rules).
  • Require short-term plans to have medical loss ratios of at least 85 percent, and rebate consumers if medical loss ratios fall below that level.

If enacted, the legislation would take effect in July 2020. HB1037 passed the House, by a vote of 57 to 43, in early February, and has been sent to the Senate. SB404 had a tie vote (20 to 20) in the Senate, but it passed when the Chair voted in favor of it. So SB404 is now with the House.

Lawmakers approved more lenient rules for short-term plans in 2018 and 2019, but Governor Northam vetoed the bills

Throughout most of 2017 and 2018, federal regulations limited short-term health insurance plans to no more than three months in duration, and prohibited renewals. New federal regulations for short-term plans took effect in late 2018 (allowing initial terms of up to 364 days and total duration, including renewal, of up to 36 months), but they are clear in noting that states may impose tighter regulations.

Lawmakers in Virginia passed legislation in 2018 that would have allowed short-term plans to have terms of up to 364 days (without the state’s current caveats for plans issued by in-state insurers) but Governor Ralph Northam vetoed it in an effort to protect consumers and the ACA-compliant risk pool.

Similar legislation (SB1240) passed in Virginia in 2019, but Northam vetoed it as well and lawmakers didn’t have enough votes to override the veto.

Which insurers offer short-term plans in Virginia?

According to the Virginia Bureau of Insurance, there are eight entities that offer short-term plans in Virginia, all of which are out-of-state group association policies (which means the association can charge additional monthly fees — which are typically nominal — and the state’s rules regarding medical underwriting and renewability don’t apply):

  • Aspen American Insurance Company
  • Companion Life Insurance Company
  • Everest Reinsurance Company
  • Golden Rule (UnitedHealthcare)
  • LifeShield National Insurance Company
  • National General (National Health Insurance Company)
  • Standard Security Life Insurance Company of NY
  • Standard Life and Accident Insurance Company

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.