Short-term, limited-duration health plans — also known as “junk” plans — are options for those facing a temporary gap in health coverage, like when someone is between jobs. In August, the Trump administration said it would not enforce Biden-era regulations of these kinds of plans. The pending expiration of ACA enhanced subsidies may also prompt members to look to these plans for cheaper coverage.
As the regulatory landscape around this coverage evolves, here are seven things to know about short-term plans, based on a KFF analysis published Oct. 15.
1. Short-term plans are not subject to certain rules because they are not classified as individual market insurance under federal law. Thus, these plans can deny coverage for people with preexisting conditions, base premiums on member characteristics, avoid implementing out-of-pocket maximums on patient cost-sharing and dodge federal requirements enforcing coverage of essential health benefits.
2. In 2018, the Trump administration extended the allowed duration of short-term plans to a year with renewals up to two years. The Biden administration had pulled that duration to three months, but allowed renewals of up to one month.
3. Five states do not allow the sale of short-term plans, while such plans are sold in 36.
4. Short-term plans usually have lower premiums than unsubsidized Bronze-level ACA plans. However, the vast majority of ACA marketplace enrollees get a premium tax credit.
5. Across 10 U.S. cities, the lowest-cost short-term policy premium for women was 6% to 19% higher than the lowest-cost premium for men.
6. Throughout assessed cities, maximum benefit limits are as low as $100,000 per policy term, unlike ACA-compliant plans that lack annual or lifetime limits.
7. KFF’s review of 200 short-term options found some big deviations from ACA-compliant plans. Only 60% cover mental health services, 60% cover substance abuse treatment and 52% cover prescriptions. Very few plans cover adult immunization coverage and maternity care.
