As ACA Deadline Approaches, Some Price-Sensitive Consumers May Consider Switching to Short-Term Plans
With the approaching December 15th deadline to enroll in coverage that begins January 1, many ACA Marketplace enrollees may be weighing their coverage options for next year in a new light. With the expiration of the ACA’s enhanced premium tax credits looming and Congressional negotiations to extend them stalled, 22 million Marketplace enrollees who currently receive tax credits are expected to see their out-of-pocket premiums more than double, on average, in 2026. According to a new KFF poll, nearly six in ten Marketplace enrollees say they would not be able to afford an annual increase of $300 in health care expenses without significantly disrupting their household finances. Some consumers may decide to purchase alternative coverage products such as short-term plans, a type of private coverage sold directly to consumers outside the Marketplaces, which tend to have lower premiums but few consumer protections and limited benefits.
A recent KFF analysis of short-term products found that only half cover prescription drugs, fewer than half cover mental health and substance use services, and virtually none cover maternity care. Additionally, covered services often have limitations that would not be permitted in ACA-compliant insurance. For example, some issuers will not cover hospital stays if the enrollee is admitted on a Friday or Saturday. Others do not cover care for injuries related to participating in certain sports. Short-term plans can and do deny coverage for people with common health conditions such as diabetes, obesity, and depression and/or anxiety. Women are typically charged higher premiums than men, and other factors, such as not having been covered in the prior months or owning a motorcycle, could also increase premiums.
The sale of these products to consumers may also become more appealing to insurers and brokers. In August, the Trump administration announced that it would scale back enforcement of Biden-era consumer protections that limit the duration of short-term plans to four months and require insurers to notify consumers that short-term plans are not comprehensive health coverage; the announcement encouraged states to do the same. This fall, UnitedHealthcare began selling a version of its short-term plans that lasts longer than current federal regulations permit, and is advertising additional financial incentives to brokers who sell these and other limited benefit products. Compared to Marketplace plans, short-term plans cover fewer benefits, do not cover pre-existing health conditions, and on average spend a lower share of premiums on medical care (as opposed to administrative overhead and profits). Therefore, these plans are more lucrative for insurers (and brokers) than ACA-compliant health insurance.
Although all the short-term plans in KFF’s recent analysis indicated general limitations of these plans somewhere in their marketing materials or websites, that information is not always prominently featured, and complex terminology (e.g., “medical underwriting”) is not always explained. Some of these insurers provided detailed information about the plan before purchase, but others provided only a general outline, and no plans made written contracts available in advance. Other studies have found that consumers who enroll through a broker are not always presented with plan details before purchase. Additionally, consumers looking for affordable insurance online can be misled by the way search results are displayed or aggressive online marketing techniques that lead them to believe these products are Marketplace plans. There have been numerous reports of unsuspecting consumers enrolling in short-term plans only to learn of the plan’s limitations after receiving costly medical bills for services they thought would be covered by their plan but were not.
With Marketplace open enrollment in full swing, 45% of current Marketplace enrollees said they are planning to wait until December or mid-January to make a final decision about their health insurance coverage for 2026. In the final six weeks of open enrollment, price-sensitive consumers may be considering tradeoffs: pay more for health insurance that provides more financial security or lower their monthly costs by assuming more financial risk if they get sick or injured (if they’re healthy enough to enroll in a limited benefit product to begin with). The decision could come down to the information they receive about their options and health insurance literacy.