Availability of short-term health insurance in Alabama

Yes. There are numerous insurers approved to offer short-term health insurance in Alabama, and the majority of them are actively marketing their policies as of 2023.

The average monthly premium for a short-term health insurance plan sold in Alabama was $248.09 in 2022, according to data from IHC Specialty Benefits.

Prior to October 2, 2018, federal rules limited short-term health plans to three months in duration, and prohibited renewal. But the Trump Administration relaxed those rules.

Insurers are now allowed to offer short-term plans with initial terms up to 364 days and the option to renew for a total duration of up to 36 months. A bulletin published by the Alabama Department of Insurance in October 2018 confirms that the new federal rules are applicable to short-term health insurance in Alabama. But insurers also have the option to offer shorter maximum terms and to prohibit renewal. Some are choosing to offer plans with terms of up to six months, while others are offering 364-day policies with renewals that allow the coverage to last for up to three years.

The Biden administration has proposed a federal rule change that would limit short-term health plans to maximum durations of no more than four months. If finalized, plans in Alabama would have to start following those rules (states would be able to have stricter limits, but not more lenient limits).

Although short-term health insurance in Alabama is allowed to follow the new federal regulations, the state’s bulletin reminds consumers that short-term plans are not considered minimum essential coverage, and that the termination of a short-term plan will not grant a person a special enrollment period for ACA-compliant coverage. The bulletin also notifies insurers that they must submit rates and forms via SERFF for the new short-term plans, and reminds agents and brokers that short-term plans are not intended to be a replacement for regular health insurance, but are instead designed to fill in short gaps in coverage.

The Alabama Department of Insurance also has a general information page about short-term health plans, with a side-by-side comparison of the coverage requirements for ACA-compliant plans versus short-term medical plans.

According to the Alabama Department of Insurance, the following insurance companies are approved to offer short-term health insurance plans in the state:

• AdvantHealth (American Financial Security Life Insurance Company)
• Blue Cross Blue Shield of Alabama
• Companion Life
• Everest Reinsurance
• Freedom Life Insurance
• Golden Rule (UnitedHealthcare)
• National Health Insurance Company (Allstate Health Solutions)
• The North River Insurance Company
• Philadelphia American Life Insurance Company
• Southern Guaranty Insurance Company
• United States Fire Insurance Company
• Pan-American Life Insurance Company

However, some of the insurance companies on the Alabama DOI list do not appear to be actively marketing their plans as of 2023. And Pan-American has not yet been added to the Alabama DOI list, but plans are available for purchase as of 2023.

The available plans have different deductibles, benefit maximums, term limits, provider networks, and exclusions. It’s important to carefully consider the details of each plan before selecting one.

Short-term health insurance in Alabama can be purchased by residents who can meet the underwriting guidelines of insurers. This normally means being under 65 years old (some insurers use 64 years) and in fairly good health.

Short-term health insurance typically include exclusions for pre-existing conditions, so for residents of the Cotton State who need medical care for ongoing or pre-existing conditions we advise you seek a medical insurance policy that will cover those needs.

If you need health insurance in Alabama outside of the annual open enrollment period for ACA-compliant coverage (November 1 through January 15), your first step should be to check if you’re eligible for a special enrollment period that would allow you to purchase an ACA-compliant major medical plan.

There are a variety of qualifying life events that trigger a special enrollment period. The marketplace plans are purchased on a month-to-month basis, so you can enroll even if you only need coverage for a few months before another policy takes effect (with a premium subsidy if you’re eligible).

From Mobile to Birmingham, there are times when short-term health insurance could be the only realistic option for you, such as:

• If you missed open enrollment for ACA-compliant individual market coverage (ie, Obamacare) or your employer’s healthcare plan, and do not have a qualifying event that would trigger a special enrollment period.
• You’ve lost coverage from an employer and can’t afford COBRA or an ACA-compliant plan in the marketplace to bridge the gap until you’re employed again at a job that will provide health benefits. The Alabama Department of Insurance notes that short-term plans are a potential temporary solution in this situation, but they caution that the plans are not the same sort of coverage that’s provided through HealthCare.gov.
• Because Alabama is one of the dwindling minority of states where Medicaid still has not been expanded under the ACA, most adults with income below the poverty level are not eligible for financial assistance with their health insurance in Alabama. People in the resulting coverage gap might be able to afford a short-term health plan, even if a full-price (non-subsidized) ACA-compliant plan would be far too costly.
• You’ll soon be enrolled in Medicare, don’t have other coverage in place until then, and do not qualify for a special enrollment period that would allow you to purchase an ACA-compliant plan to cover you until your Medicare takes effect. But if your Medicare coverage won’t take effect until after the start of the next year, you can switch to an ACA-compliant plan through HealthCare.gov during the fall/winter open enrollment period (November 1 – January 15), and keep that plan from January 1 until the month your Medicare takes effect.
• If you’re not eligible for a premium subsidy for the ACA-compliant marketplace plans, the monthly premiums might be unaffordable.

People ineligible for premium subsidies include:

• Those who earn too much money to qualify for a subsidy. In the past, this happened if income exceeded 400% of the poverty level. That income cap has been eliminated through at least 2025, but subsidies are never available if the second-lowest-cost plan would cost less than 8.5% of the applicant’s household income.
• Those who earn less than the poverty level ($13,590 for a single person in 2022) and are thus caught in the coverage gap that Alabama has created by refusing to accept federal funding to expand Medicaid.
• People who are not lawfully present in the U.S. and thus not eligible to enroll in a plan through the Marketplace.

Alabama does not have state-specific regulations for short-term health insurance plans, so the state defaults to the federal regulations. Because Alabama does not limit short-term coverage, the Trump Administration’s regulations apply in the state.