Charlotte, North Carolina resident Steve Swicegood is frustrated that his short-term health insurance plan will expire this year. He can't renew coverage under current federal regulations. The Trump administration signaled plans to ease restrictions on these cheaper, bare-bone health insurance plans.

With millions of people projected to lose health insurance over the next decade, President Donald Trump's administration appears ready to ease access to a potentially cheaper form of coverage.

The Labor, Health and Human Services and Treasury departments said they'll relax enforcement of a Biden-era rule that limited the use of a type of bare-bones health insurance, known as short-term health insurance. The plans are typically cheaper, but often lack protections for consumers who buy their own health insurance.

Furthermore, the three departments expect to draft new rules to consider changes to these insurance plans.

What is short-term health insurance?

Short-term insurance plans often cost less than Affordable Care Act plans but come with a catch. Insurers that sell these plans don't offer all of the robust benefits of ACA plans. Also unlike ACA plans, insurers can deny or limit coverage based on a person's health status.

But some say these plans might appeal to healthy adults seeking less expensive coverage as insurance costs rise and federal cuts to Medicaid and the Affordable Care Act are projected to leave 10 million uninsured over the next decade, according to the nonpartisan Congressional Budget Office.

An additional 4 million-plus consumers could lose coverage if Congress doesn't extend the expiring COVID-19 pandemic-era tax credits that have made ACA plans more affordable for consumers, according to the CBO.

As more people lose insurance or no longer qualify for subsidized ACA plans, some "might look to less comprehensive plans to at least provide some levels of coverage," said Michelle Long, senior policy manager of patient and consumer protections for KFF, a health policy nonprofit.

Will Trump once again expand the use of short-term plans?

The Trump administration is again taking steps to make these plans more accessible for insurers and consumers.

In an Aug. 7 statement, the Labor, Health and Human Services and Treasury departments said they "do not intend to prioritize enforcement actions" for plans that fail to meet the terms of a Biden-era rule that limited short-term plans and made companies disclose the limits of services and amounts the plans cover. HHS also "encourages states to adopt a similar approach" and back off enforcing Biden's four-month limit on short-term plans.

The three federal agencies also said they intend to draft new rules and seek public comments to change the definition of short-term plans. The agencies didn't provide a timeline on when rule changes might be drafted.

White House spokesman Kush Desai said the Trump administration is "committed to expanding affordable plans that give Americans more choices for health coverage."

"It’s in the American people's interest to have more options and more competition in the insurance market," Desai said.

Given that Trump previously allowed short-term plans to extend up to three years, "I generally anticipate that's where we're headed again," said Justin Giovannelli, project director at the Center on Health Insurance Reforms at Georgetown University’s Health Policy Institute.

American Association of Ancillary Benefits, an industry group representing short-term health insurers, sued HHS in U.S. District Court in Texas seeking to halt Biden's 2024 rule. A federal judge stayed the case and ordered HHS to respond by Aug. 28 to detail its plans to issue new rules on short-term plans.

It's also unclear whether states will choose to scale back enforcement of Biden's short-term plan limits.

Idaho has proposed relaxing rules on short-term plans. Other states such as California and Colorado have banned or limited short-term plans.

Even if the Trump administration relaxes oversight of short-term plans, insurers will likely be cautious about selling plans until the administration drafts and finalizes more permissive rules, said Michael Cannon, directory of health policy for the libertarian Cato Institute.

The online insurance marketplace eHealth allows consumers to compare and enroll in short-term plans. While the Trump administration has signaled plans to ease restrictions on these plans, eHealth officials urged consumers to be cautious.

Whitney Stidom, vice president of consumer enablement at eHealth, consumers must be aware short-term plans are less comprehensive than ACA plans and typically lack coverage for some preventive services, mental health and preexisting conditions.

"While short-term health insurance plans have value for people who are between jobs or only in need of limited coverage, it is important for individuals to understand the limitations of these options and make informed choices,” Stidom said.

Democrats, Republicans differ on short-term plans

For nearly a decade, the legal status of short-term health insurance plans has depended on who's been in the White House.

In 2016, then-President Barack Obama's administration finalized a rule that limited short-term insurance plans to three months, a rule that took effect in 2017. The move came three years after the Democrat president's signature Affordable Care Act overhauled the health insurance market and marketed plans with minimum benefits such as prescription drug coverage, emergency and maternal care. ACA plans also prevent insurers from denying or limiting coverage based on a person's medical history − a common practice before 2014.

In 2018, the Trump administration loosened restrictions on these short-term plans. The Republican president's administration allowed consumers to purchase plans up to one year and renew coverage up to three years.

In 2019, about 3 million consumers signed up for short-term plans sold by 9 insurance companies, according to a June 2020 House oversight report.

Biden's administration in 2024 instituted its rules for short-term health insurance.

Are there benefits to short-term plans?

For consumers who are healthy and earn too much to qualify for ACA plan subsidies, short-term plans might be a viable option for temporary coverage, Giovannelli said.

An example would be someone who became uninsured due to a job loss or another change in life circumstances.

But Giovannelli said these plans are more of a stopgap for consumers.

"It's really quite risky for a person to be sold that product as an alternative to comprehensive coverage when it's really not," Giovannelli said. "You get a low, up-front cost if you are healthy, but there are no rules about all the back-end costs."

These plans also might include annual or lifetime limits on coverage – both of which are not allowed under ACA plans.

Cannon said Biden's four-month limit on these plans harms people who become ill while they are covered. He said healthy people can theoretically stack these plans, buying one plan after another from different insurers, to sustain coverage. But because short-term health insurers can deny coverage based on a person's medical history, a short-term insurance customer who is diagnosed with a new illness likely wouldn't qualify for a new plan.

"The rule hurts people who get an expensive illness and cannot buy another plan," Cannon said.

North Carolina man can't renew his short-term plan

Charlotte, North Carolina, resident Steve Swicegood purchased a short-term plan sold by UnitedHealthcare over two years ago.

The 59-year-old said his insurance is a "horrible plan" because it limits the number of doctor visits his family can make each year. He also now must pay more out of pocket for routine items such as immunizations and prescriptions.

But the coverage worked for him. His insurance costs $900 a month to cover him, his wife and his college-age son. The cost is largely covered by his former employer, NBC News, which pays a monthly stipend for his health insurance as part of an early retirement benefit. He forfeits the NBC insurance payments if he takes another full-time job or ACA health insurance subsidy.

If he selects an ACA plan, it will cost him an additional $800 each month, he said. He's frustrated because his family is healthy and doesn't visit the doctor often. Even with his short-term plan's limited coverage, it's worked for his family. He's not sure what he'll do when his plan expires at the end of the year.

"As a consumer, I don't want to spend more money than I have to," Swicegood said. "What really infuriates me is in Washington (D.C.), they play these political games. That's obviously what happened with this kind of insurance."

Email consumer health reporter Ken Alltucker at alltuck@usatoday.com.

This article originally appeared on USA TODAY: Trump eases red tape on bare-bones health insurance. What this means for you

Reporting by Ken Alltucker, USA TODAY / USA TODAY

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