As millions of Americans prepare for increased health insurance costs, plans promoted during the Trump administration are gaining attention. While these plans are typically cheaper, they often provide limited coverage, leaving many enrollees facing substantial medical bills.
Robert Hays, an industrial electronics salesman from Arkansas, thought he had purchased comprehensive health insurance when he signed up for one of these plans. The same assumption was held by Essie Nath, a 67-year-old retired cafeteria worker in Wyoming, and Martin Liz, a 47-year-old chef from Key West. Each found themselves surprised by the limitations of their policies after requiring surgery, resulting in bills amounting to tens of thousands of dollars. Hays is now liable for approximately $116,000 after neck surgery; Nath faces an $82,000 bill following heart failure, while Liz is contending with over $100,000 in costs related to a knee replacement.
“These policies are a horrible idea,” stated Ken Swindle, an attorney based in Arkansas representing Hays. “People think they’re getting comprehensive medical coverage, but they’re not, and they often don’t realize that until it’s too late.”
The expiration of enhanced government subsidies for plans under the Affordable Care Act (ACA) has prompted many to consider these “short-term” insurance options. Unlike traditional insurance, these plans do not have to cover preexisting conditions or essential health needs, such as maternity care or mental health services. Due to their significant coverage gaps, five states have banned their sale, according to data from the Kaiser Family Foundation (KFF).
Despite the potential pitfalls, the lower cost of these plans is appealing. For instance, a 40-year-old nonsmoker in Florida may find a short-term plan costing around $320 a month, compared to about $500 for an ACA-compliant plan on HealthCare.gov. Insurance agents report that many consumers, facing skyrocketing premiums under the ACA, are increasingly drawn to these alternatives.
“Costs continue to go up, leaving individuals, families, and businesses scrambling to find and keep the coverage they need,” remarked Kelly Loussedes, vice president of the National Association of Benefits and Insurance Professionals (NABIP). “It’s essential that consumers understand these plans are not comprehensive coverage.”
Insurance consultant Andy Mided from the Chicago area has noted a surge in inquiries from people looking for cheaper alternatives. He expressed concern over short-term plans, stating, “I couldn’t sleep at night if I sold that to somebody.”
Currently, five states have outright bans on short-term plans, including California and New York, while nine more have regulations that effectively prevent their sale. According to KFF, nearly half of these plans do not cover outpatient prescription drugs, and 40 percent exclude mental health services—both of which are mandated under ACA-compliant plans.
However, some insurance professionals argue that short-term plans can be suitable for specific demographics, such as healthy individuals needing temporary coverage or those transitioning between jobs. “It’s an important option to keep on the table,” said Joshua Brooker, an insurance agent based in Pennsylvania.
The Trump administration significantly expanded the availability of short-term plans in 2018, allowing them to last up to three years, contrary to the previous four-month limit. Alex Azar, the former Health Secretary, stated at the time that these plans offered more affordable options to millions who felt neglected by the existing healthcare system.
Yet, even within the insurance industry, there were doubts regarding this regulatory relaxation. Executives from Cigna expressed concerns about the potential for consumers to be misled by what they believed were comprehensive plans.
A 2020 study by congressional Democrats indicated that after the regulations were loosened, approximately 600,000 consumers enrolled in short-term plans, bringing the total to around 3 million annually. However, issues quickly surfaced, with reports of deceptive marketing practices by brokers incentivized by large commissions.
The Biden administration attempted to reverse this trend, reinstating the four-month limit on short-term plans. Yet, recent developments indicate a renewed push by the Trump administration to redefine “short-term” insurance and relax enforcement of the previous rules.
According to a statement from the Centers for Medicare and Medicaid Services (CMS), short-term plans can offer valuable stopgap coverage and may be significantly cheaper than ACA options. The agency also noted efforts to expand access to “catastrophic” health plans, which come with high deductibles but lower premiums.
As consumers gravitate towards the lower premiums of short-term plans, the experiences of individuals like Hays serve as cautionary tales. In May 2023, Hays enrolled in a short-term policy from Golden Rule Insurance. Shortly after, he experienced severe neck pain that required surgery to prevent paralysis. Despite receiving pre-authorization for the procedure, his claims were later denied due to a preexisting condition.
“How did they give pre-authorization and then tell me none of this is going to be covered?” Hays questioned. He is currently pursuing legal action to recover his medical expenses.
Similarly, Nath faced challenges with her coverage when applying for a new policy after being denied due to a preexisting condition. Liz, too, encountered difficulties when his insurer claimed he had not disclosed a knee replacement surgery he had previously discussed with his agent, leading to a refusal of reimbursement.
The ongoing debate surrounding short-term health insurance plans highlights the complexities and risks involved in seeking affordable healthcare solutions. As consumers navigate a landscape of rising costs and limited options, understanding the nuances of these plans becomes increasingly vital for making informed decisions about their health coverage.
