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Health Insurance Regulations

It is observed that many people are buying insurance policies that do not meet the Affordable Care Act requirements. In the wake of that, the Obama Administration has decided to put a limit on the short-term health insurance plans.

Short-term insurance policies help people take care of their medical bills temporarily while moving to a normal policy. Obviously, that makes these health insurance plans much cheaper than the regular ones. However, most of them do not provide coverage for pre-existing medical conditions, maternity care, or even some prescribed drugs that is mandated by the ACA.

In addition, insurers get to decide the maximum reimbursement amount here, and can even decline an insurance plan that they deem will invite high expenses. As both of these practices are banned by the ACA for regular health insurance policies, officials have taken this decision to put a control on short-term plans.

As per the proposal by the Department of Health & Human Services, the short-term policies should not exceed 3 months term, which is up to 1 year at present, and should not be renewable either. “Some insurers are now offering short-term limited duration plans to consumers as their primary form of health coverage for periods that last nearly 12 months, allowing them to target only the healthiest consumers while avoiding consumer protections,” HHS said in a fact sheet.

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Short-Term Health Policies

“As highlighted in recent press accounts, by keeping these consumers out of the ACA single risk pool, such abuses of limited duration coverage increase costs for everyone else, and they could have a greater impact over time if allowed to become more widespread,” the agency added. The new regulation also require insurance providers to inform the buyer that the policy does not meet with the ACA regulations, which would make them receive a tax penalty.

“The proposed rule also improves transparency for consumers by requiring issuers to provide notice to consumers that the coverage is not minimum essential coverage, does not satisfy the health coverage requirement of the ACA and will not prevent the consumer from owing a tax penalty,” the fact sheet said.

“The proposed changes will help strengthen the risk pool by ensuring that short-term limited duration plans are used only as intended, to fill truly temporary gaps in coverage,” HHS representatives said.

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