Short-term health plans offer substantial savings for some
On average, a 30 year-old’s premium was 80 percent less for short-term insurance than for an unsubsidized 2018 ACA bronze plan.
For those without pre-existing medical conditions, short-term plans might be a better deal than the least expensive plans available on the Affordable Care Act exchanges, according to AgileHealthInsurance’s report, “Price Advantage of Short-Term Insurance Over Obamacare Widens in 2018.”
Across ages and genders, short-term insurance plan premiums were on average 75 percent less expensive than unsubsidized 2018 ACA bronze plans, with premium savings averaging $352 per month, according to the report.
Men and women age 50 had the greatest monthly premium savings, $412 and $423 respectively. On average a 30 year-old’s premium was 80 percent less for short-term insurance than for an unsubsidized 2018 ACA bronze plan. For 50 year-olds, short-term premiums offered savings of 70 percent compared to bronze plan premiums.
“As insurers and consumers await confirmation whether 12-month short-term health coverage will return to the market in 2018, we see that short-term plans have preserved their exceptionally low premiums in 2018 and have, in fact, become even more affordable when compared to ACA/Obamacare plans,” says Bruce Telkamp, founder and CEO of AgileHealthInsurance.com.
“The affordability of short-term health plans is central to their intended purpose as these plans primarily cover Americans who have lost employment income, lost their student or parent coverage, or otherwise have been priced out of the high premium cost ACA market,” Telkamp says. “For all these impacted groups, inexpensive coverage makes the crucial difference between having insurance or going uninsured.”
With that said, there are significant differences between short-term health plans and bronze plans that go beyond price, the report’s authors noted. For example, bronze plans must accept all applicants regardless of health status and cover pre-existing medical conditions. Short-term plans, in contrast, may reject some applicants with expensive pre-existing conditions and they typically do not pay for health care related to medical conditions that began prior to the insurance policy’s effective date.
Another caveat: short-term health insurance enrollees are not eligible for premium tax credits, while a premium tax credit is available to ACA enrollees whose income falls below 400 percent of the federal poverty level. In addition, cost-sharing reductions for silver ACA plans become available to enrollees whose incomes are no higher than 250 percent of the federal poverty level. A silver plan is the next least expensive type of ACA plans after bronze plans.
“Short-term plans are not for all consumers,” the authors write. “Obamacare will remain the obvious choice for consumers who by income or subsidy can afford ACA coverage.”
The ACA plans’ guaranteed issue provision and pre-existing condition coverage will also attract consumers who would not find coverage otherwise, they add.
“Short-term plans, in contrast, will continue to serve primarily consumers in need of temporary medical coverage as well as consumers at risk of going uninsured due to the affordability problems with ACA plans,” the authors conclude.