Availability of short-term health insurance in Vermont

No. Vermont law allows short-term plans to have terms of up to three months, although renewal is not allowed. However, extensive additional rules (including a ban on pre-existing condition exclusions) make the state’s market unappealing to insurers.

Vermont’s Department of Financial Regulation has confirmed that due to the state’s regulations, no insurers offer short-term health insurance in the state.

The legislation passed in 2018 (H.892/Act 131) also directed the Vermont Insurance Commissioner to adopt rules that establish “the minimum financial, marketing, service, and other requirements” for short-term plans in the state — in other words, comprehensive written regulations pertaining specifically to short-term health plans.

The Department of Financial Regulation confirmed in September 2018 that these regulations would soon be drafted, and they were published in May 2019 under Rule I-2018-03. The rule clarifies that short-term health plans in Vermont must conform to numerous state regulations:

• They must provide coverage for essential health benefits (this is clarified in the regulation that notes that the benefits mandate in 33 V.S.A. § 1806(b)(1)-(2) must be covered; that section refers to essential health benefits as called for in the ACA).
• They must conform to Vermont regulations for health insurance and health care administration.
• They cannot impose exclusions or require waiting periods for pre-existing conditions.
• They cannot be renewable, and a person can only have a maximum of three months of short-term coverage within any 12-month period.
• The applicant must attest that enrollment in this plan will not cause the applicant to have more than three months of short-term coverage within a 12-month.
• They must conform to the medical loss ratio rules that the Affordable Care Act imposed on individual market plans, which means they must have an MLR of at least 80% (in most states, loss ratio requirements for short-term healthcare plans are more lenient, and they generally don’t follow the ACA’s formula for calculating the ratio). Vermont previously had statutory language requiring short-term plans to have loss ratios of at least 45%.

In addition to the federally-mandate disclosure that must be included on short-term plan marketing materials, Vermont has its own disclosure language that must be displayed above the federal disclosure, advising consumers about the limitations of short-term health insurance plans. It notes that Vermont’s consumer protections regarding short-term plan are much stronger than the federal requirements, but that short-term insurance plans can only be used to bridge a short gap in coverage and should not be purchased to serve as long-term, comprehensive coverage.

Since there were already no insurers that offered short-term plans for sale in Vermont, these regulations don’t currently apply to any plans. But if an insurer did want to start selling short-term health insurance in Vermont, they’d have to conform to those rules. That has not happened, and there are still no short-term health plans for sale in Vermont as of 2024.

Vermont enacted legislation in 2018 to limit short-term plan terms to three months and prohibit renewal. The new law also prohibits the sale of a short-term plan if it would result in the applicant having more than three months of short-term coverage in any 12-month period.

But even before that legislation was enacted, there were no short-term plans for sale in Vermont, due to the state’s restrictive regulations regarding the plans. Prior to the enactment of the Vermont legislation and the finalization of the Trump administration’s rules for short-term health plans, the Vermont Department of Financial Regulation confirmed that short-term health plans in Vermont must conform to the state’s health plan mandates, including a ban on pre-existing condition exclusions.

Consumers in Vermont can buy ACA-compliant health insurance through the state’s marketplace, Vermont Health Connect.  Two carriers offer coverage through the exchange in 2023.

ACA-compliant plans are purchased on a month-to-month basis, so you can enroll in coverage even for only a few months until another policy takes effect — and if you’re eligible, you may qualify for financial assistance in the form of a premium subsidy. And Vermont is among the states where state-funded subsidies are available in addition to the ACA’s federal subsidies.

Vermont residents may find that they’re eligible for Medicaid coverage, depending on their household income.

There are fixed indemnity plans and health care sharing ministry plans available in Vermont.¹  But these are not adequate substitutes for major medical health insurance.

Vermont enacted legislation to create an individual mandate as of 2020, but lawmakers failed to agree on a penalty for non-compliance. So although the mandate took effect in 2020, there is no financial penalty for not having health insurance.