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Biden administration cracks down on short-term health plans


New rule aims to protect consumers by limiting coverage and mandating transparent language in plan descriptions

picture of health insurance application forms ©Annap-stock.adobe.com


The Biden administration is placing new restrictions on the use and marketing of short-term health insurance plans by reducing their duration and requiring sellers to be clearer about what the plans cover.

On March 28 the Labor, Treasury and Health and Human Services (HHS) departments jointly announced a regulation limiting coverage under short-term plans to three months, with an option for a one-month extension. Under the Trump administration such plans could be in effect for about a year, with a renewal option for up to three more years.

In addition, the rule requires that descriptions of such plans use “concise and easy-to-understand language that will be meaningful to consumers” and must be displayed prominently on the first page of the policy and be part of any marketing, application and enrollment materials.

Known officially as “short-term, limited-duration insurance,” these plans were designed to provide coverage during periods when an individual is transitioning from one source of insurance to another. Many critics refer to them as “junk insurance,” because while they usually cost less than standard insurance plans, they aren’t required to offer a minimum set of benefits such as prescription drug coverage or maternity care. And unlike plans sold on the Healthcare.gov or state health insurance marketplaces, they don’t guarantee coverage for people with pre-existing conditions.

“HHS is cracking down on junk insurance plans to help consumers make informed choices and avoid mistakenly paying for a plan that does not provide them the coverage or protection they expect,” HHS Secretary Xavier Becerra said in a statement. “We want everyone to have the peace of mind that comes with having coverage that includes the protections and benefits they expect.”

Physician groups praised the rule’s adoption. “For too long, companies have used deceptive marketing to trick people into buying health plans that discriminate based on pre-existing conditions while providing little or no coverage,” American Medical Association President Jesse M. Ehrenfeld, MD, MPH, said in a statement. “The changes laid out in today’s rule will lessen risk to consumers, promote transparency, expand patient protections and help to stabilize the market.”

Omar T. Atiq, MD, MACP, president of the American College of Physicians, said the college “applauds the Biden Administration’s final rule on short-term limited duration insurance plans and other non-comprehensive coverage. We are encouraged that the final rule seeks to ensure patients are able to make an informed decision when shopping for coverage and are not misled into enrolling in a plan that does not meet their needs.”

The American Academy of Family Physicians, in a statement on the social media platform X (formerly Twitter) thanked President Biden and HHS for the rule and added, “Family physicians will alays support policies that ensure high-quality health care for all.”

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