Restriction on Short Term Health Insurance Removed

Posted on Posted in Health Insurance

Under Obamacare, short term health insurance policies had a maximum of three months validity. This restriction was imposed late last year but came into effect in April this year. There has been vehement opposition to this regulation ever since.

However, the new administration seems determined to reverse the three-month restriction on short term health insurance policies. The executive order has been signed in this regard and is supposed to come into effect early next year after the official process is completed.

Earlier, the maximum period for which a person could keep his short-term insurance policy was 364 days. The states could exercise their discretion regarding the length of such policies but within the 364 days period. This had been limited to a period of three months as per the regulations of Obamacare. The reversal of this means that the short-term health insurance policies can again have a maximum of one-year validity. The states can still decide about shortening it, but most states generally go with the one-year period. This also makes sense when you consider the fact that a person must wait for one year if he misses his open enrollment period without valid reason. That person can buy a short-term insurance plan for one year to get coverage.

The three-month restriction was causing serious problems for people who had missed the open enrollment period or cannot buy regular health insurance for some reason, like, lack of legal status in the country, failure to qualify for Medicaid etc.Short-term health insurance is very beneficial for individuals and families who are in a transition period and cannot buy a long-term insurance.

Hence opposition to this restriction had become very strong coming from several organizations related to insurance and several state insurance departments and insurance lobbyists. With the removal of the three-month restriction short-term insurance policies can again be used to serve its intended purposes. However, short term health insurance policies are still a temporary type of health insurance and are subject to medical underwriting. So, they are not guaranteed for approval and pre-existing conditions are not covered.