Short-term limited-duration health insurance (STLDI) provides coverage for a limited time period up to a year. While this coverage may seem like a good option for people who need healthcare coverage for only a short period of time, these plans are regulated by different standards than comprehensive healthcare plans. Some states also have tight regulations or bans on STLDI plans altogether.
People experiencing a temporary lapse in health insurance coverage, such as from job loss or a career change, may choose an STLDI plan to help provide coverage until they can access traditional health insurance again. But before choosing short-term health insurance coverage, it’s essential to understand how your state regulates this type of coverage and how it differs from traditional health insurance.
Short-term Health Regulations In Your State
|State||Regulations / Bans|
|California||As of 2019, California has banned insurers from issuing, selling, renewing, or offering short-term health insurance policies.|
|Colorado||Colorado put specific restrictions in place in 2019. Short-term health insurance policies are non-renewable and limited to six months.|
|Connecticut||Connecticut laws require health insurance providers to cover essential health benefits (EHBs). As a result, insurers do not offer short-term health insurance policies in Connecticut.|
|Hawaii||Hawaii laws prohibit the purchase of short-term health plans by those eligible to purchase health insurance in the ACA marketplace during the previous year. Short-term plans are limited to no more than 90 days. Insurers do not currently offer short-term plans in Hawaii.|
|Maine||Maine allows the sale of short-term health plans, but they require carriers to include coverage for those with pre-existing conditions and the law requires carriers to clearly state what is and is not covered.|
|Massachusetts||Short-term health plans are banned in Massachusetts|
|New Jersey||Short-term health plans are banned in New Jersey. According to state laws, these plans do not qualify as standard health benefits plans.|
|New Mexico||Short-term health plans are not available in New Mexico. Strict rules, including prohibited renewals, caused insurers to stop selling the plans shortly after the 2019 rules took effect.|
|New York||Short-term health plans are banned in New York|
|Oklahoma||Plans that do not include mandatory state benefits can only last 6 months or less, and cannot be renewed. Plans that last longer must include mandatory state benefits.|
|Rhode Island||While the sale of short-term health plans isn’t banned in Rhode Island, regulations in the state are strict, and insurers don’t offer this coverage.|
|Vermont||Vermont’s laws allow insurers to provide access to short-term health insurance to residents, but terms are limited to three months. Strict rules prevent insurers from offering short-term plans.|
|Washington, D.C.||While short-term health plans are available in Washington D.C. policies have a maximum duration of 3 months and are non-renewable. Pre-existing exclusions are prohibited.|
Why Some States Regulate or Ban Short-Term Health Plans
STLDI coverage was designed to fill temporary gaps in coverage while people transitioned between traditional health insurance plans. However, though short-term plans may have lower premiums than standard health insurance policies, many state lawmakers became concerned that the plans may trigger higher out-of-pocket costs, drive up prices for ACA-compliant insurance policies, or cause people to forgo necessary healthcare.
By 2020, 12 states had passed specific legislation to ban health status underwriting for these policies, making it impossible for insurers to sell STLDIs to residents of these states. Thirteen states and the District of Columbia have three-month limits on how long an individual can use a short-term health plan to encourage a traditional health insurance policy enrollment. The states that have banned or restricted access to STLDIs did so partly because these lower-cost plans offering limited coverage may lure residents away from purchasing traditional Affordable Care Act plans.
Short-Term Health Insurance vs. ACA Plans
According to the Affordable Healthcare Act, short-term health insurance policies are not required to comply with ACA regulations because STLDI coverage is not considered comprehensive under ACA market reforms. As a result, consumers may receive less coverage with an STLDI policy than they would with an ACA-compliant healthcare plan. For example, ACA-compliant healthcare insurance must offer coverage to those with pre-existing health conditions, while STLDI plans may deny coverage based on health status.
In addition, traditional health plans offer coverage for important services, including maternity care, substance use disorder services, tobacco cessation treatment, and prescription drug coverage. Short-term health insurance is not required to provide the same breadth of coverage.
ACA-compliant health plans also offer important consumer protections, including:
- Holding insurers accountable for rate increases
- Protection from employer retaliation
- Protects the consumer’s right to choose their doctors
- Provides young adults with numerous coverage options
- Free preventative care
- Guaranteed coverage for pregnancy and pre-existing conditions without a rate increase
ACA-compliant plans also do not use underwriting to manage risk and qualify applicants; these plans accept everyone who applies and pays premiums. On the other hand, short-term policies typically manage risk by denying applicants with a higher statistical likelihood of needing medical attention. This means ACA-compliant health insurance tends to be more expensive than short-term policies, but the coverage is also more comprehensive.
However, the biggest drawback to traditional health insurance is that unless you are eligible for a Special Enrollment Period, you may need to wait until the annual Open Enrollment Period to get coverage. Keep in mind that the Open Enrollment Period is currently open, running from November 1, 2022 until January 15, 2023. Short-term health insurance, which accepts enrollment year-round, is designed to protect people during this gap between loss of coverage and enrollment in your next traditional health plan.