Best’s News & Research Service - August 10, 2018 08:35 AM (EDT)
Best’s Briefing: Short-Term Health Plans Present Growth Potential for Some Insurers
- August 10, 2018 08:35 AM (EDT)
Oldwick //BestWire// - The U.S. Department of Health & Human Services’ final rule on short-term, limited-duration medical products should have a positive impact on insurers that offer these policies, as these carriers will likely see top-line growth through increased sales in this business line, according to a new A.M. Best briefing.
The Best’s Briefing, “HHS Rule Expands Coverage Period for Short-Term Plans,” notes that among the finalized changes, the definition of a short-term policy — one that is less than 12 months — stays intact, but the coverage may be renewed for up to 36 months without re-underwriting the individual covered by the policy. A.M. Best believes that the longer duration of the policies and the inability to re-underwrite at renewal may result in higher rates than that seen on the current policies with 90-day duration limits, although the cost of these policies is expected to remain well below an Affordable Care Act-compliant policy.
According to the briefing, many carriers that offer short-term medical plans also sell supplemental benefits, such as hospital indemnity and accident insurance. Buyers of the short-term medical policies also may purchase these supplemental products, adding to the likelihood of premium growth. The potential to keep short-term medical clients for longer periods also may provide additional revenue and reduce acquisition costs. Ultimately, the greatest potential for uptake of short-term medical products in 2019 are purchases by healthier individuals who are not Affordable Care Act-subsidized, or by individuals that do not currently have coverage.
To access the full copy of this briefing, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=276793 .
A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry.