DFS “Skinny” Plan Press Release

On October 2nd, 2019 the New York State Department of Financial Services (DFS) released a statement reminding New Yorkers that limited duration health insurance plans cannot be legally sold in New York.

The Trump administration has had little success in either repealing the ACA or introducing a comprehensive plan to assist U.S. citizens with the rising cost of health care (and, in turn, health insurance). However, so called ‘TRUMPCARE’ plans are marketed on the internet as low cost alternatives after the Trump administration issued a regulation in 2018 that allowed “short-term health insurance plans” to be sold in the U.S. These plans have dollar and coverage limits, or no coverage at all, for certain benefits like prescriptions, maternity care, pre-existing conditions, and mental health. In turn, they have much lower premiums than those plans that conform to the ACA.

The DFS release goes on to label these plans as ‘junk plans’ and states ‘the fact that such junk insurance is allowed for sale anywhere in the U.S. is an unfortunate product of the current federal administration’s continual dismantling of basic protections for Americans seeking quality and affordable healthcare’. This harsh language isn’t surprising coming from the DFS; New York State continues to be one of the most supportive of States championing the benefits and regulations of the Affordable Care Act (ACA).

Prior to the ACA many states approved similar plans to “short-term” or “skinny” insurance plans. While New York has required/mandated health plans to cover more medical and prescription services, resulting in ever increasing cost, many southern and mid-western State Insurance Departments allowed plans to offer limited coverage and underwrite individual participants. The “short-term” plans now allowed by the federal government replicate a common approach to benefits sold prior to healthcare reform in these states.

It’s important for consumers to understand two points: First, insurance is governed individually by each State in the Union and short-term plans have not been approved for sale in New York (as you might gather from the DFS press release). Second, if someone does purchase a plan like this in a State where the plans are legal they need to educate themselves on the benefit limits associated with them.

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