Biden-Harris Administration Acts to Stop "Junk Insurance" Scams and Lower Health Costs

The Biden-Harris Administration is taking steps to protect consumers from being misled into buying low-quality health insurance, often referred to as "junk insurance." These actions aim to prevent insurance companies from offering plans that discriminate against people with pre-existing conditions and provide inadequate coverage when it's needed most. By closing loopholes, families can avoid hefty health care bills.

Here's what's happening:

1. New Rules on Short-Term Plans: Short-term, limited-duration insurance (STLDI) is meant to cover temporary gaps in coverage, but it's not subject to important protections under the Affordable Care Act (ACA). The new rules will limit these plans to only four months, instead of allowing them to stretch up to three years.

2. Transparency Requirements: Insurance companies must now be upfront about what their plans offer. Clear notices will be required on marketing and enrollment materials for short-term plans and fixed indemnity policies, which provide a fixed cash payment for medical events. This helps consumers make informed decisions and prevents them from mistakenly choosing these plans as substitutes for comprehensive coverage.

Health and Human Services Secretary Becerra stated, "HHS is cracking down on junk insurance plans to help consumers make informed choices and avoid mistakenly paying for a plan that does not provide them the coverage or protection they expect."

CMS Administrator Chiquita Brooks-LaSure added, "By increasing consumer understanding of short-term, limited-duration insurance and fixed indemnity excepted benefits coverage and making short-term plans truly short term, people will be more informed about the risks associated with these types of coverage and their options for comprehensive coverage."

These actions aim to ensure that Americans have access to high-quality, affordable coverage, providing peace of mind and protection against unexpected medical costs.