Short-term health insurance plans are about to get a lot longer. 

The Trump administration issued a new rule Wednesday that extends the duration of all short-term health insurance from three months to up to 36 months. The short-term plans were originally designed to provide stop-gap insurance during transitional periods and can cost less than the most affordable plans offered through the Affordable Care Act. While the new rule could create an attractive health care alternative if you work as a freelancer and don't have employees, this type of insurance typically provides limited benefits and doesn't cover prescription drugs, mental health, or maternity care.

Short-term health insurance plans may also deny coverage to people with pre-existing conditions and come with deductibles as high as $10,000 that you'll need to pay out-of-pocket. Critics of the new rule have referred to short-term coverage as "junk insurance" and expressed concern that increasing its duration could have negative long-term effects on the health insurance market. 

"They will split the market into plans for healthy people and plans for sick people," Mary Dwight, a senior vice president of the Cystic Fibrosis Foundation told The New York Times.

The extension follows another rule change issued in June that lets small businesses band together to buy a type of insurance known as association health plans. Both changes are touted as a way to make lower-cost insurance plans available for those who can't afford the high premiums of comprehensive health care plans.

The revised short-term insurance plans are expected to go into effect in about 60 days, according to the Trump administration.

Published on: Aug 1, 2018