Biden Proposes New Rules to Regulate ‘Junk Health Insurance’: Four-Month Limit and Greater Transparency for Consumers

The Biden administration has proposed new rules to prevent short-term health insurance companies from denying coverage for preexisting conditions and exploiting loopholes in the Affordable Care Act. Under the proposed changes, short-term health insurance coverage would be limited to four months, and insurers would need to clearly outline what is included and excluded in their plans.

Currently, approximately 1.9 million Americans have short-term health insurance, which is designed to provide temporary coverage for individuals transitioning between different health insurance plans. However, critics argue that these short-term plans do not offer comprehensive coverage and do not have to comply with important ACA protections, such as covering preexisting conditions.

White House domestic policy adviser Neera Tanden has criticized these short-term plans as “junk insurance,” as they can mislead consumers into believing they are receiving full-coverage health insurance when in reality their coverage is limited or certain health conditions are not covered at all. The new rules aim to provide greater transparency and protection for consumers by limiting the duration of short-term plans and requiring insurers to clearly explain the scope of coverage.

Despite the new rules, individuals currently enrolled in short-term plans will be able to renew their coverage according to the terms of their existing plans. The changes are expected to take effect in 60 days, providing more clarity and consumer protections for those utilizing short-term health insurance.