The Marketing of Short-Term Health Plans

Assessment of industry marketing practices and state regulatory responses of short-term health plans.

The Issue

In 2018, a federal rule changed the definition of short-term limited-duration insurance (STLDI) so that it could be sold as a full-year substitute coverage for traditional health insurance. This rule change created new marketing opportunities for insurance companies and brokers. STLDI can be risky for consumers because many people purchase plans mistakenly believing that they are as comprehensive as traditional, ACA-compliant plans.

Authors assess short-term limited-duration insurers’ marketing tactics in the wake of the new federal rules and, through interviews with insurance officials in Colorado, Florida, Idaho, Maine, Minnesota, Missouri, Texas, and Virginia, how regulators have evaluated and prepared for this new market.

Key Findings

• State officials have mixed views on short-term plans’ benefits for consumers but generally agree they pose several risks, including coverage denials because of health status, refusal to cover services because of a preexisting condition, the retroactive cancellation of coverage for enrollees with certain medical claims, and surprise balance billing because of a lack of in-network providers.
• State officials lack comprehensive data about which insurers actively market STLDI to their residents.
• Consumers shopping online for health insurance, including those using search terms such as “Obamacare plans” or “ACA enroll,” will most often be directed to websites and brokers selling STLDI or other non-ACA compliant products.
• State insurance departments generally lack the authority and/or capacity to engage in preemptive regulatory oversight that would prevent deceptive marketing tactics before they occur.
• In most states, plan and marketing standards will primarily be enforced retroactively, after insurance regulators receive complaints.

Conclusion

Consumers shopping online for health insurance will often find websites and brokers selling short-term plans as a replacement for ACA-compliant coverage. These websites and brokers often fail to provide consumers with the detailed plan information necessary to inform their purchase.

About Georgetown University's Health Policy Institute–Center on Health Insurance Reforms

The Center on Health Insurance Reforms at Georgetown University’s Health Policy Institute is a nonpartisan, expert team of faculty and staff dedicated to conducting research on the complex and developing relationship between state and federal oversight of the health insurance marketplace.