The Expansion-Related Effects of Short-Term, Limited Duration Insurance on Policyholders and the Affordable Care Act Individual Marketplace
Open Access
Author:
Westfall, Gregory
Area of Honors:
Actuarial Science
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
Nan Zhu, Thesis Supervisor Matthew D Beckman, Thesis Honors Advisor
Keywords:
actuarial science insurance health insurance STLDI ACA
Abstract:
Short-term, limited-duration insurance (STLDI) is an umbrella term used to describe certain health insurance policies sold by major medical carriers. These policies are unique in that they do not have to comply with regulations set forth in the Affordable Care Act, including covering preexisting conditions and inability to deny or underwrite applicants based on health. For this reason, these plans are often cheaper than ACA-compliant plans for many healthy individuals. Sustained enrollment in these plans used to be very restrictive, as prior to 2017 an individual could only hold an STLDI plan for 90 days. However, short-term plans can now be purchased for one year, with an option to renew for up to two more years. This change in legislation dramatically altered the market for STLDI plans and has had some unintended effects on the individual market for ACA-compliant plans as well, even though many states have restricted or banned STLDI plans altogether. This paper will examine these continuing effects on the ACA marketplace and will evaluate the financial risk that individual policyholders may face under coverage of an STLDI plan.
