New Regulations Tighten Short-Term Health Insurance: What You Need to Know

A new federal regulation announced March 28, 2024, by the Departments of Treasury, Health and Human Services, and Labor will soon introduce significant changes to short-term health insurance plans. Previously, these plans could be renewed from one month to 36 months with the same provider. Starting Sept. 1, 2024, however, these plans will be limited to three-month terms, with a total duration — including renewals — of no more than four months, according to HealthInsurance.org.

For wedding professionals who own businesses, this change is crucial to understand. Many entrepreneurs, including those in the wedding industry, have relied on short-term health insurance to bridge gaps between more comprehensive plans. However, under the new rule, stacking multiple short-term policies from the same or affiliated insurers within a 12-month period will no longer be allowed. This change is intended to prevent short-term plans from being used as a substitute for long-term health coverage.

Why is this happening? The federal government aims to ensure that short-term plans are used only as temporary solutions, not as long-term alternatives to comprehensive health insurance. Short-term plans do not provide the same level of protection or coverage as plans under the Affordable Care Act. The new rules are designed to protect consumers and help them clearly distinguish between ACA-compliant insurance and short-term policies.

This change comes as health insurance coverage remains a critical issue in the United States. According to Forbes, 7.6% of Americans under 65 did not have health insurance in 2023. The top reason uninsured nonelderly adults reported for not having coverage was affordability, cited by 64.2% of respondents. Other reasons included eligibility issues (28.4%) and not needing or wanting insurance (26.1%). These statistics highlight the importance of accessible and affordable health coverage, especially for business owners who must manage their health needs alongside their professional responsibilities.

Many wedding professionals, including myself, have found that short-term plans, particularly those offered by Golden Rule, part of UnitedHealthcare, provide lower monthly premiums and deductibles compared to ACA-compliant plans. The affordability and coverage offered by Golden Rule’s 12-month plans have made them a popular choice, especially for those who find ACA-compliant plans too costly. Given these advantages, it’s understandable that the discontinuation of these longer-term short-term plans is disappointing.

Philip Blystone, a licensed agent with HealthGuys, expressed a sentiment shared by many, stating, “The bottom line is that short-term medical plans are major medical PPO plans and have been a great option for thousands of people, and the federal government is taking away that option.”

For those who already have short-term plans, there will be no changes until your current policy expires. Policies issued before Sept. 1, 2024, will remain under the existing rules, which allow for longer coverage durations depending on your state’s regulations.

It’s also important to know that states can impose stricter rules than the federal government regarding the duration of these plans. In some states, short-term plans may not be available at all, or the allowable duration may be even shorter than the new federal limit.

The next open enrollment period for ACA-compliant coverage begins Nov. 1, 2024. This provides an opportunity to transition from short-term coverage to a more comprehensive plan, ensuring you and your business are fully protected as you move forward.

Personally, I plan on taking the longest short-term plan available to see what happens in 2025.