Here’s the down-low on “short term” health insurance plans in California. Short term health insurance plans were used as an alternative to “Obamacare” (ACA) plans if someone needed coverage for a short period of time (previously less than 3 months, and more recently, less than 12 months).
People who missed the individual and family plan open enrollment could enroll in these plans at anytime throughout the year. Additionally, people who were trying to “bridge a gap” in coverage (example: going from an employer plan to an individual plan, or an employer plan to a NEW employer plan), could utilize these short term plans to cover themselves during that period of time.
Short term health insurance plans are able to exclude certain benefits that “Obamacare” plans are required to contain (these requirements are called “essential health benefits”). For example, a short term health insurance plan can exclude things like maternity, mental health benefits, and can also utilize pre-existing condition exclusions when underwriting the plan. For these reasons, short term health insurance plans have a tendency to be much less expensive than “Obamacare” plans.
Recently, the Trump Administration officially released HHS/DOL guidance that expanded access to these plans nationwide, allowing people to participate in them for up to three years (instead of under 12 months). Also, the federal tax reform bill passed in December of 2017 removed the requirement for individuals to have health insurance, or pay a tax penalty. For these two reasons, there was anticipated to be MUCH more participation in short term health insurance plans, nationwide.
However in 2018, California legislators recently passed S.B. 910, a bill that banned short term health insurance plans in the state ENTIRELY, starting on January 1st, 2019. The argument is that these short term plans are “junk plans” because they do not include the comprehensive “essential health benefits” that “Obamacare” plans ARE required to contain, as described previously in the blog post. Additionally, it’s the consensus that legislators would like to maintain participation in the state’s “Obamacare” (ACA) marketplace, in order to keep rates/premiums more stable.
Residents of California will have three choices in the individual marketplace in 2019:
- Participate in an Obamacare/ACA plan individually, or at Covered California.
- Find an alternative option to health insurance, like a health ministry plan, or an association health plan (if eligible).
- Go uninsured (because there is no tax penalty anymore).
For further assistance finding affordable options in the state of California, be sure to contact us. We’ll put a comprehensive consultation together for you, so you’re able to see what health plan options are available in your zip code. Our recommendation is always to not go uninsured, when it comes to your health.
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