FACT SHEET: President Biden Announces New Landmark Rule to Protect Americans from Junk Health Insurance

Latest action to deliver better health care and prevent consumers from getting ripped off

Today, the Biden-Harris Administration is taking a major step to crack down on junk health insurance for American families and consumers and deliver better health. As the President has said, people hate being played for suckers and the current practice of offering low-quality insurance that people pay into, but then provides no coverage when people need it, is a bait and switch. That’s why the Biden-Harris Administration is issuing a final rule that protects consumers from junk health insurance and makes sure Americans aren’t scammed into low-quality coverage that leaves consumers on the hook for thousands of dollars in medical bills or denies life-saving care right before treatment. The President is committed to building on the promise of the Affordable Care Act and its critical consumer protections that ensure meaningful coverage for people’s health care needs.

The Affordable Care Act has helped tens of millions of Americans access high-quality, affordable health insurance and protects Americans from being discriminated against because of pre-existing conditions.  But actions by Republican elected officials, including the previous administration, undermined the promise of the Affordable Care Act, allowing insurance companies to take advantage of loopholes in the law and sell “junk insurance” plans that evade its critical consumer protections, like denying care based on pre-existing conditions. These “junk insurance” plans leave families surprised by thousands of dollars in bills, often because the insurance plan claims they have a pre-existing condition that isn’t covered.  For example, a man in Montana faced $43,000 in health care costs because his insurance plan claimed his cancer was a pre-existing condition, and a Pennsylvania woman was surprised by nearly $20,000 in bills for an amputation her junk plan refused to cover. 

With today’s rule, the Biden-Harris Administration is cracking down on this junk health insurance as part of its continued efforts to eliminate hidden fees and rip offs in every industry across the economy.  These actions will reduce scam insurance plans that offer really no insurance at all.

• “Short-term” plans must be truly short-term.  Under the new rules, new plans that claim to be “short-term” health insurance are now limited to just 3 months, with renewal for a maximum of 4 months total, if extended – instead of up to 3 years as the previous administration allowed, causing junk health insurance plans to proliferate and confuse consumers that they were real, comprehensive coverage when they in fact provided little to no coverage.

• Plans have to clearly disclose limits. Insurance plans will now be required to provide consumers with a clear disclaimer that explains the limits of what services they cover and how much they cover. 

Today’s actions stand in stark contrast with an extreme House Republican budget proposal released last week, which 100% of House Republican leadership and 80% of House Republicans support.  They want to reverse the Administration’s actions to protect consumers from junk health insurance and other insurance plans that evade the Affordable Care Act’s critical consumer protections, and take the country back to the days where consumers think they’re buying quality, comprehensive health insurance, only to find out at the last minute that they’ve been hoodwinked into coverage that doesn’t cover the care they need or leaves them saddled with huge medical bills. In fact, alongside promoting junk health insurance, the House Republican budget calls to cut $4.5 trillion from the Affordable Care Act and Medicaid, which would rip coverage away from over 45 million people, eliminate pre-existing condition and other consumer protections and jeopardize benefits, services, and coverage for tens of millions more. 

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