The Biden administration issued proposed rules July 7 that aimed to crack down on "junk" short-term health insurance plans.
The proposal includes limiting short-term plans to three months — or a maximum of four months, if extended. The Obama administration imposed a three-month limit on the short-term plans, but the Trump administration changed the rules to allow people to stay on the plans for a year and renew coverage for up to three years. The Biden administration's proposal would also require short-term plans to provide consumers with a clear disclaimer that explains the limits of their benefits.
The proposal was welcomed by the Association for Community Affiliated Plans, which filed a lawsuit in 2018 attempting to stop the Trump administration's expansion.
"Short-term plans were created to fill in brief gaps in coverage for workers as they moved between jobs," ACAP CEO Margaret Murray said in a statement. "They were never designed to work as comprehensive coverage — as the last few years have proven. We're glad to see that they are prohibited from masquerading as actual health insurance."
The American Hospital Association said it was pleased with the Biden administration's proposal.
"Short-term, limited-duration health plans often cover fewer benefits and provide fewer protections, like ensuring coverage of pre-existing conditions," AHA Executive Vice President Stacey Hughes said in a statement shared with Becker's. "This rule, if finalized, will go a long way in protecting patients from unexpected coverage denials. We look forward to commenting on this proposed rule with our ideas to achieve this important goal."
Thirty-seven patient groups, including the American Cancer Society Cancer Action Network, National Health Council, the AIDS Institute and the National Patient Advocate Foundation, also applauded the decision in a joint statement.
"This proposed rule would offer safeguards against short-term health plans, which have proliferated following a 2018 federal rule change that many of our organizations opposed," the groups said in the statement, adding they look forward to reviewing the proposed rule and commenting.