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Hawaii Short-Term Health Plans
For all practical purposes, Hawaii short-term insurance doesn’t exist. The state enacted HB1520 (Act 192) in July 2018 which prohibits the sale or renewal of short-term health plans to anyone who was eligible to purchase coverage through marketplace exchange during the previous calendar year under the provisions of the Affordable Care Act (ACA).
Insurers don’t offer plans because the law effectively eliminates the need for short-term coverage in the state due to virtually everyone being eligible to purchase a policy through the exchange. Only undocumented immigrants, individuals who are incarcerated, and those who are eligible for premium-free Medicare Part A aren’t eligible to purchase a marketplace plan.
It doesn’t matter if the individual was eligible during Open Enrollment or a Special Enrollment Period, either. Although temporary plans have been available for sale in Hawaii in the past, the passage of HB1520 saw insurers stop offering the short-duration coverage.
The new law basically eliminated all potential short-term health plan customers for insurance companies. By November 2018, no insurers were offering limited duration plans.
The law also specifies that limited-duration health insurance is subject to the same provisions of the insurance code currently applicable to “limited benefit health insurance.”
Hawaii Health Insurance – Limited Benefit Plans
Limited benefit health insurance are policies which provide limited coverage based on a healthcare setting, condition, or disease. Plans include Basic Hospital Expense Coverage which is limited to usually not less than 31 days of continuous in-hospital facility care or specific outpatient services.
Basic Medical-Surgical Expense Coverage is associated with surgery, usually not less than 21 days of in-hospital services. Accident-only Coverage may be limited to specific accidents or can cover death, disability, dismemberment, or medical care as the result of an accident.
Hospital Confinement Indemnity Coverage is a fixed amount of usually no less than $40 for each day you’re in a hospital facility. Benefits paid aren’t based on actual expenses incurred either.
Specific Disease Coverage provides for diagnosis and treatment of a specific disease. Other Limited Coverage provides for vision, dental, or other specified care.
Hawaii Short-term Plans
Prior to October 2018, federal regulations limited short-term medical coverage to three months and prohibited insurance companies from renewing the plans. The Trump administration charged federal agencies to “consider proposing” new regulations to ease restrictions under the ACA.
This new directive would reverse an Obama-era rule and would return to previous guidelines for temporary coverage. The idea was that “short-term, limited-duration insurance” would help millions of Americans to obtain some form of coverage, especially for those who don’t want or couldn’t afford major medical healthcare insurance.
Lower premiums offered by temporary policies are largely the result of the coverage not qualifying as a major medical plan due to providing fewer benefits. Additionally, insurers don’t have to guarantee acceptance of everyone who applies, allowing companies to reject individuals with preexisting conditions.
Because short-term plans don’t cover medical conditions such as hypertension, diabetes, chronic obstructive pulmonary disease (COPD), arthritis, and others, they’re not deemed qualifying coverage. Under ACA-compliant plans, acceptance is guaranteed regardless of health history.
In order to offset the risk and due to more covered medical expenses, premiums for plans in the exchanges tend to be significantly higher. Younger, healthier individuals without preexisting conditions wanted the short-duration plans because of the cost savings.
This would leave behind those who were sicker in the marketplace exchanges, which led to higher premiums. The costlier plans would force out even more individuals who weren’t eligible for an exemption and be fined; this is known as the “individual mandate.”
This was the most unpopular portion of the ACA and generated many consumer complaints. In response, Congress enacted the Tax Cut and Jobs Act which repealed the unpopular individual mandate.
In August, 2018, the government issued a final rule clearing the way in which companies sell temporary insurance policies that don’t comply with the ACA. States which don’t adopt their own laws default to federal guidelines.
Since Hawaii had passed legislation limiting eligibility for short-term plans, the new federal rules don’t apply in the state. Hawaii short-term health plans are no longer available for sale.
Several companies are offering fixed indemnity policies, but these aren’t the same as short-term health insurance. Fixed indemnity is a type of medical insurance that pays based on per-period or per-incident, but isn’t based on the total charges incurred.
For many individuals, these plans have become an option for having healthcare coverage because major medical coverage isn’t offered through their employers or they feel it’s too expensive. Hawaii short-term health plans would give consumers an extra option, but legislators have made the sale of the policies unprofitable for insurers.
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