The administration has released new rules for the short-term policies. We knew this was coming but I was surprised that they will allow renewal for up to three years. These are a fantastic alternative to the expensive plans available through Affordable Care Act. Now that they have been released, the critics are up in arms and calling these plans “junk” and the more surprising term, “skinny plans”. Here is where it gets confusing. When I go to the doctor, he tells me that I need to get skinny. The critics are telling me not to get skinny and that it is bad. What am I supposed to do?
Let’s look at these short-term plans and see why I feel they are the best option for most people. With ACA, unless you are receiving free government money in the way of subsidies, the cost is usually 3 to 4 times that of a short-term plan. In either case, the deductible is most likely around $6,000 per year. So, unless something severe happens, you are paying all your own medical expenses under either option till you reach $6,000. I would venture to say that since the annual per capita expenditure for a 40-year old is $3,578.93 (based on studies by Health Services Research HSR), most people will never see any benefits whether they have a skinny plan or a Fat Plan (ACA).
The only reason I can see for the critics bad mouthing these short-term plans is that it will decrease enrollments with ACA plans. Protection will be similar, and in most cases, superior to an ACA plan. Of course, there is a need for ACA plans. They will become the safety net for the unhealthy and the not wealthy. They will ultimately be plans much like the Comprehensive Health Insurance Plans (CHIP) of pre-ACA except they will be funded with Federal dollars rather than state funds.
Those who can go through the underwriting process (are healthy) will take advantage of short-term plans with additional protections for unforeseen events. This will produce savings of hundreds to thousands of dollars each month which in turn, can be used to pay for medical expenses not covered by insurance. Professional agents will thrive in this new environment as they find the best solutions for their clients.
Rather than calling these plans “skinny”, I personally think that ACA plans should be called “obese.” ACA plans are unhealthy, expensive, and ultimately will have a premature death. Let’s consider putting our clients on a sensible plan that lets them pare down their budgets and still provide adequate protection.