A PYMNTS Company

Biden Administration Proposes Rules Targeting ‘Junk Fees’

 |  July 9, 2023

The President Joe Biden administration has proposed restrictions on “junk insurance” plans that don’t meet the standards of the Affordable Care Act.

These short-term plans have taken advantage of loopholes that allowed them to avoid some requirements of the act, the White House said in a Friday (July 7) fact sheet.

“If finalized, the rule would limit so-called ‘short-term’ plans to truly short time periods, close loopholes made worse by the previous administration and establish a clear disclosure for consumers of the limits of these plans,” the White House said in the fact sheet.

One proposed change will limit short-term health insurance to three months, or four months if extended, rather than the current limit of three years, according to the fact sheet.

Read more: Junkyard Dogs: The Law and Economics of “Junk” Fees

Another will require that sellers of income replacement “fixed indemnity” plans make it clear that these plans do not provide comprehensive health insurance.

A third proposal in the rules will require clear disclosures of the limits of plans’ benefits to both potential buyers and existing customers, the fact sheet said.

These proposals are meant to eliminate the unwelcome surprises consumers have encountered when they learned that their short-term plans didn’t cover pre-existing conditions or other procedures that they thought would be covered, per the fact sheet.

“Today, the Biden-Harris administration is proposing rules to crack down on this junk insurance, as part of the latest efforts by the administration to eliminate hidden and junk fees in every industry across the economy,” the White House said in the fact sheet. “These actions will reduce scam insurance plans that offer really no insurance at all.”