A quiet but significant shift may be brewing in the world of health insurance: the U.S. federal government is signaling that short-term, limited-duration health plans might again gain prominence.
What’s Changing—and What Isn’t
Recently, the Departments of Labor, Treasury, and Health and Human Services announced they will not prioritize enforcement of the current rule that limits short-term health plans to three months.
This echoes earlier rules that allowed these plans—including their renewals—to span up to 36 months.
Why This Matters
Employers—especially small ones not bound by Affordable Care Act (ACA) requirements—might consider pointing employees toward short-term plans as an interim solution. These plans can be more affordable and have lower deductibles than ACA-compliant coverage since they don’t have to provide essential health benefits. But it’s important to remember: they’re not comprehensive, and in many states, insurers can still exclude people with health conditions or charge them more.
Industry Perspective
Some industry leaders are noting that this change could bring back long-duration short-term plans, especially in states friendly to them, such as Texas. However, in states with stricter rules, insurers may tread more carefully.
The Risks Remain
Short-term health insurance is governed by state rules, not the ACA. That’s a big part of the appeal—but also the biggest risk. States that allow these policies—many of which permit medical underwriting and minimal benefits—can expose consumers to significant risk if they fall ill.