SOURCE: HealthPocket


August 02, 2016 09:00 ET

Major Consumer Harm Hidden in Proposed Federal Rule on Short-Term Health Insurance

Vulnerable Populations Included Among Affected Groups

MOUNTAIN VIEW, CA--(Marketwired - Aug 2, 2016) - HealthPocket has released a white paper calling attention to the various consumer groups who will be harmed if a recently proposed federal government regulation on short-term health insurance is implemented without modification. The proposed regulation includes a new restriction on short-term health insurance that arbitrarily limits this coverage to less than three months despite the fact that people who miss the Affordable Care Act enrollment period can be locked out of exchange coverage for 11 months out of the year.

Under current regulations, short-term health insurance is available for enrollment throughout the year and has a 360-day maximum term in most states. The limitation of coverage to less than 90 days effectively mandates an uninsured period for many populations, some quite vulnerable. For example, in most cases people who let their exchange coverage lapse for nonpayment of premium cannot renew Affordable Care Act coverage until Jan. 1 of the following year. In 2016, approximately 1.6 million individuals let their exchange health coverage discontinue by the end of March, most due to nonpayment, according to CNBC.

Others negatively affected by the proposed regulation are the poor who do not qualify for subsidies. While many assume subsidy ineligibility is always due to a higher income, there are millions of low-income individuals who are excluded from subsidies. For example, in states that did not expand Medicaid, there are nearly three million people in poverty who do not qualify for Medicaid but make too little to qualify for an Affordable Care Act subsidy. The minimum income necessary for subsidy eligibility is the federal poverty level, which for an individual in 2015 was $11,770. Other low-income populations who do not qualify for subsidies include people without legal residence in the United States. According to law, people without legal residence cannot buy health insurance on a government exchange or be given premium subsidies.

The proposed coverage limitation on short-term health insurance presents multiple problems for consumers who rely upon short-term health insurance. First, the uninsured period resulting from the under-three-month coverage period will expose these consumers to the risk of catastrophic financial costs should a major medical event happen during their uninsured period. Second, the lack of insurance excludes these consumers from the lower negotiated rates on medical services that insurers obtain for their health plan enrollees.

"Short-term health insurance has historically helped many low-income Americans gain access to health coverage instead of joining the ranks of the uninsured," explained Bruce Telkamp, CEO of HealthPocket, Inc. "Sadly, the proposed federal restriction on short-term coverage would force many Americans out of the only affordable insurance option available to them."

In order to prevent an increase in the uninsured population and the financial risks that attend a lack of medical coverage, HealthPocket's white paper recommends that the proposed regulation be revised to make 11 months the maximum annual coverage period for short-term health insurance.

The full discussion of the proposed rule and its consequences can be reviewed at "Major Consumer Harm Hidden in Proposed Short-Term Health Insurance Rule." is a free website that compares and ranks all health insurance plans, helping individuals, families, and small businesses to make their best health plan decisions. HealthPocket publishes health insurance market analyses and other consumer advocacy research. HealthPocket's research is nonpartisan and uses only objective data from government, non-profit, and private sources that carry no conditions that might restrict the site from serving as an unbiased resource. HealthPocket, Inc. is independently managed and based in Mountain View, California. Learn more at

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