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Delaware Short-Term Health Plans
Delaware short-term insurance is limited to three months, and renewals of temporary policies are prohibited after the state-enacted legislation in response to regulatory changes from Washington. Other states that don’t adopt their own rules are subject to default to federal guidelines.
In addition to restricting the extension of these policies, insurers may not issue a new policy to the same individual more than once a year. Insured individuals are unable to obtain successive back-to-back policies either.
Until the Trump administration eased restrictions on short-term insurance, Delaware didn’t have its own regulations. When the federal government addressed these policies, Delaware began drafting rules which threw the industry into a state of uncertainty.
In November 2018, the state of Delaware published new regulations, “Minimum Standards for Short-Term, Limited Duration Health Insurance Plans.” This law limited temporary plans to three months in duration and took effect on December 1, 2018.
Delaware residents were given a shorter window in which to purchase the limited-duration policies, with these plans no longer available at the end of November. Most of the companies offering short-term coverage in the state had ceased doing so by December.
These new regulations were passed on an emergency basis and are only effective through March 31, 2019. Delaware is expected to adopt permanent regulations for short-term health plans.
Under the temporary measure, short-term plans must have loss ratios of at least 60 percent. This means that total claims when divided by total premiums must equal at least 0.6.
Further, these regulations require applicants who are moving to temporary coverage to be provided with an extensive notice warning them of the pros and cons of replacing major medical insurance with a short-term plan. It seems that the state is throwing cold water on the option for consumers to purchase a policy at much lower premiums without providing any alternative.
While the Delaware Insurance Department has severely restricted short-term healthcare coverage, the problem is further compounded by only one insurer offering ACA-compliant individual market plans in Delaware’s health insurance exchange. The remaining participant in the exchange anticipated that the risk pool for ACA-compliant plans was expected to worsen in 2019 if the state had allowed short-term plans to become an alternative to Obamacare.
Delaware Short-term Plans
Golden Rule/UnitedHealthcare, Companion Life, and Independence American Life ceased offering short-term plans in November 2018. Everest, Everest Prime, and LifeShield also stopped offering temporary plans.
Standard Life continues to offer short-term health plans with a maximum term of three months.
History of Federal Regulations
In 2017, Congress repealed an Obama-era provision of the ACA with passage of the Tax Cut and Jobs Act. . Lawmakers opened the door for temporary policies to be offered throughout the nation as an alternative to the higher premiums of major medical plans.
The new law ended the ACA’s “individual mandate,” which required Americans to purchase qualifying health insurance, obtain an exemption, or pay a penalty if they weren’t already covered by their employer or a program such as Medicare or Medicaid.
These changes in legislation and procedures have given consumers far more options for healthcare, especially for young and healthy individuals seeking to save money on the rising premiums of Obamacare.
Consumers who were young and healthy flocked to alternative plans. In turn, this left the marketplace exchanges as a haven for the sickest individuals, further driving up premiums as insurers sought to minimize their risks, which served to force out healthier plan members.
This cycle has resulted in the rise of short-term temporary plans throughout the nation. Consumers are frequently reminded that these temporary policies don’t meet federal standards for acceptable coverage to be included in ACA marketplace exchanges.
In order to comply with government requirements, plans must meet strict conditions to be considered “minimum essential coverage.” Delaware short-term health plans aren’t considered to provide major medical coverage and are therefore not ACA-compliant.
These plans cover fewer medical expenses, but most of the time come with much lower premiums.
Delaware Moving Back into the Exchange
Another important provision that residents of Delaware should keep in mind is that termination of a limited duration coverage doesn’t meet the federal standard for a “qualifying life event,” a situation that would allow consumers to seek insurance in the marketplace exchange under the Special Enrollment Period (SEP).
SEP is outside of the ACA’s “open enrollment period,” which specifies several weeks at the end of the calendar year when individuals and family can sign up for government-compliant insurance. An SEP is triggered when situations or events outside of Open Enrollment qualify the individual to seek coverage (situations such as losing a job, divorce, or the death of a spouse).
For example, losing a Medicare, Medicaid, employer-sponsored plan, or major medical coverage would be considered a qualifying event. However, losing short-term coverage isn’t a qualifying event, as defined by the federal government.
This is an important difference that consumers should understand before enrolling. As Delaware short-term insurance hasn’t yet been permanently resolved by the state, individuals seeking insurance should be careful when enrolling in alternative plans.
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