Speaking of insurance market destabilization…

… another loophole in the Affordable Care Act could contribute to an even more destabilized market: Short-term health plans.  These plans could very well appeal to more low-risk individuals and especially the young invincibles population — the very population needed to sign up for plans on the exchanges to maintain a balanced insurance risk-pool.

The Weekly Standard explains it this way:

“Obamacare remakes the individual insurance market by amending the Public Health Services Act, a federal law from 1944 that defines different forms of health insurance coverage.  Individual insurance coverage, that act states, is ‘health insurance coverage offered to individuals in the individual market, but does not include short-term limited duration insurance.”  

Short-term plans usually last from six to eleven months and do not have to incorporate all 10 essential health benefits that the law mandates.  Yes, these plans are more or less catastrophic, as they offer limited benefits and come with lower monthly rates and high deductibles.  But an important distinction between these plans and the exchange plans is consumer choice, for add-on benefits are available.  So if you’re an individual who does not utilize a lot of health care services but doesn’t want to remain uninsured, these plans may play to your financial benefit.

In North Carolina, four companies offer short-term health plans via ehealthinsurance.com: Assurant Health, HCC Life Insurance, IHC Group, and United.

Because short-term health insurance plans do not fall under the law’s minimum essential coverage requirement, consumers will still be hit with the law’s individual tax – $95 or 1% of income, whichever is greater.  But savings will still be significant for many.

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