STM or short-term medical plans continue to gain ground. Reduced premiums and ability to tailor benefits creates an alternative to conventional ACA plans. STM’s draw customers that do not qualify for financial subsidies.
It has become a contentious debate as carriers forced to cover essential health benefits argue that STM’s, lowering their rates attract healthy consumers, weakening the pool of insureds under the ACA. The argument is valid and exposes the areas of the ACA needing improvement: competitive rates, added carriers and choice of benefits.
A recent ruling allows STM to expand coverage periods. The judge ruled against the plaintiffs, through both arguments did not find any effect on ACA enrollments because of STM’s. Margaret A. Murray, Chief Executive Officer of the Association for Community Affiliated Plans, made the following statement on ACAP v. Treasury, in which Judge Richard Leon of the U.S. District Court upheld regulations allowing for the sale of short-term limited-duration insurance plans as a substitute for comprehensive health insurance:
“We remain firm in our contention that the Trump administration’s decision to expand dramatically the sale of junk insurance violates the Affordable Care Act and is arbitrary and capricious. Indeed, the district court itself recognized that administration’s decision allows junk insurance to compete directly with comprehensive, Affordable Care Act-compliant insurance plans. That result subverts the health care protections of the ACA. Junk insurance, no matter what it’s called, is an inferior and hazardous substitute for comprehensive coverage.
“We are confident that the appellate court will see this differently.”
As you can see, the debate continues. As agents we must continue to do what is in the best interest of our clients. Sometimes an STM is a valid alternative to the ACA, but, cases where because of underwriting, lifetime coverages and decreased benefits that we must assess the needs of the client before we make a recommendation driven by price.