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The new federal regulation loosening restrictions around short-term health plans could mean more consumers signing up for insurance plans with little or no coverage for occupational therapy – and not always understanding what their coverage lacks until it’s too late.

Starting in October, people in many states may be able to hold on to short-term plans for as long as three years, positioning “short-term” plans to be a long-term alternative to ACA marketplace coverage.

Several states have enacted laws restricting short-term plans. Since the federal government proposed the short-term plan changes, Hawaii, Maryland, and Vermont have enacted laws restricting short-term plans, and California has banned them outright. Massachusetts, New York, and New Jersey already prohibited them. Oregon limits them to three months, and several other states have laws on the books setting a maximum duration that is shorter than the period the new federal policy allows, usually six months.

Other states might be able to cap short-term plans through the regulatory process. Washington state is in the midst of rulemaking to restore the 3-month limit previously required by the federal government.

Connecticut's insurance commissioner issued a bulletin clarifying that state law requires short-term plans to cover essential health benefits (EHBs) and, for plans longer than six months, preexisting conditions. 

Because the new federal regulation doesn’t preempt state laws regarding short-term plans, some states that want to implement the federal policy will have to change their laws first. In Oklahoma, short-term plans can only be sold on a nonrenewable basis for a term of six months or less, but the state’s insurance commissioner has vowed to work with the state legislature to bring state law in line with the Trump Administration policy.

Avoiding Unexpected Gaps

Unless state law says otherwise, short-term plans can deny, delay, limit, or charge more for coverage based on a person’s health status, and include annual and lifetime limits – practices that were common in the individual market before the ACA. They don’t have to cover rehabilitation and habilitation or the other categories of EHBs.

The federal regulation requires short-term plans to display the following notice:

This coverage is not required to comply with certain federal market requirements for health insurance, principally those contained in the Affordable Care Act. Be sure to check your policy carefully to make sure you are aware of any exclusions or limitations regarding coverage of preexisting conditions or health benefits (such as hospitalization, emergency services, maternity care, preventive care, prescription drugs, and mental health and substance use disorder services). Your policy might also have lifetime and/or annual dollar limits on health benefits. If this coverage expires or you lose eligibility for this coverage, you might have to wait until an open enrollment period to get other health insurance coverage. Also, this coverage is not “minimum essential coverage.” If you don’t have minimum essential coverage for any month in 2018, you may have to make a payment when you file your tax return unless you qualify for any exemption from the requirement that you have health coverage for that month.

Because short-term plans are not required to cover benefits that consumers may have come to expect, like OT, people who sign up could run into unexpected coverage gaps if they don’t understand the policy details. The consumer notice mentions some, but not all, of the EHBs and consumer protections that might not apply. Unlike comprehensive individual and group health plans, short-term plans are not required to provide a standardized Summary of Benefits and Coverage (SBC), a short document written in simple language that lists upfront whether or not OT is covered and any quantitative limits (e.g., days, hours, visits).

Some states are requiring stronger consumer disclosures for short-term plans. For example, the proposed rule under consideration in Washington state would require a standard disclosure form that spells out the details of what the plan would and would not cover, including coverage for preexisting conditions and coverage, cost sharing, and quantitative limits for 19 categories of health benefits, including OT. At the beginning of the form is the following warning.

CAUTION:

This plan may not cover preexisting conditions, including any medical or mental health conditions you’ve been treated for in the past.

It provides limited benefits and does not include benefits required by the Affordable Care Act.

It’s temporary and may not cover your costs for most hospital or other medical services, or some essential health benefits.

Read carefully what the plan does and doesn’t cover before you sign up.  

Updated on 10/17/2018 to add information about Connecticut

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