There are many types of products being sold in the health insurance market; understanding the dierent types of coverage will allow
you to make a more informed decision when purchasing health insurance coverage. The purpose of this fact sheet is to highlight the key
dierences between major-medical health insurance plans, short-term health insurance plans, and supplemental health insurance plans.
MAJOR-MEDICAL HEALTH INSURANCE
Major-Medical Health Insurance is comprehensive coverage which, on average, pays for at least 60% (usually much higher) of your
expected healthcare costs throughout the year. Major-Medical Health Insurance plans cannot place lifetime or annual dollar limits on
coverage. Most plans have a maximum-out-of-pocket dollar limit, which is the most amount of money a consumer will be required to
spend on medical expenses in a given year. Once a consumer hits this limit, the insurance company will pay all medical bills for covered
services at in-network providers for the remainder of the year.
Additionally, the Major-Medical Health Insurance plans oered on DC Health Link to individuals or small businesses with 50 or fewer
employees are commonly known as Qualied Health Plans (QHP); these health insurance plans have 10 categories of essential health
benets that must be covered.
Unlike Short-Term Health Insurance and Supplemental Health Plans (explained below), Major-Medical Health Insurance cannot deny
you coverage based on your medical history. Also, having Major-Medical Health Insurance means you have met the Individual Shared
Responsibility Provision of the federal Aordable Care Act (commonly known as the “ACA” or “Obamacare”) and will not need to pay a
tax penalty with the Internal Revenue Service (IRS) (see below for more information).
SHORT-TERM HEALTH INSURANCE
Short-Term Health Insurance, also known as temporary health insurance, gap coverage or a short-term medical plan, lasts less than 365
days and cannot be renewed or extended. These products are exempt from the ACA requirements, so they do not need to cover the
same level of benets and services as Major-Medical Health Insurance. Unlike Major-Medical Health Insurance, these plans are unlikely
to cover prescription drugs, maternity care, or preventive services, such as immunizations or cancer screening. Additionally, Short-Term
Health Insurance can deny you coverage based on your medical history and exclude benets related to a pre-existing condition.
Short-Term Health Insurance will not excuse you from paying the individual mandate penalty (discussed below).
SUPPLEMENTAL HEALTH PLANS
Supplemental Health Plans may be known by a variety of names such as accident, illness, or xed-indemnity polices. Primarily, they are
intended to provide you with protections against out-of-pocket costs in case of an unexpected injury or hospitalization. Like Short-Term
Health Insurance, Supplemental Health Plans typically place a dollar limit on how much the insurer will pay for covered medical services
while you’re enrolled. Supplemental Health Plans will not excuse you from paying the individual mandate penalty (discussed below) and
can decline coverage based on your prior medical history.
IMPORTANT: In the District of Columbia, Supplemental Health Plans may not be sold to consumers who are not covered under a Major-
Medical Health Insurance policy.
FILE A COMPLAINT
If you have questions about the type of health insurance product you purchased, or believe you received misinformation about an
insurance product, please le a complaint with the District of Columbia Department of Insurance, Securities and Banking’s Consumer
Services Division at disb.[email protected]v or call 202-727-8000.
Major-Medical Health Insurance vs.
Short-Term Health Insurance Fact Sheet
Department of Insurance, Securities and Banking (DISB)
Government of the District of Columbia
810 First Street, NE, Suite 701, Washington, DC 20002
Oce: 202-727-8000 | Fax: 202-576-7989
Web: disb.dc.gov | Email: disb.communica[email protected]v | Follow us on Twitter @DCDISB
Key Dierences
Major-Medical Health
Insurance
Short-Term Health
Insurance
Supplemental
Health Plans
When do I purchase coverage?
During open enrollment,
usually at the end of the
year
Anytime Anytime
When can coverage start?
2-6 weeks after
enrolling
Usually within 1-14
days
Depending on
policy
Can my application be declined because of pre-existing
conditions?
No Ye s Ye s
Will it cover maternity care? Ye s No No
Can it be purchased with the assistance of a government
subsidy?
Ye s No No
Is there a maximum dollar amount the plan will pay before the
consumer is required to pay the rest of the bill?
No Ye s Usually
Will it cover Mental Health and Substance Use Disorder
Services?
Ye s No No
Can I renew it every year, as long as the plan is available? Ye s No Ye s
Where can I purchase the plan?
Through your employer,
DC Health Link or via an
agent/broker
Agent/Broker Agent/Broker
Can it protect me from the tax penalty for not having health
insurance?
Ye s No No
A TIP FOR PURCHASING MAJOR-MEDICAL HEALTH INSURANCE:
If you are purchasing insurance directly for yourself or your family in the
District of Columbia, only CareFirst BlueCross BlueShield and Kaiser
Permanente oer plans guaranteed to meet the coverage requirements to
provide comprehensive coverage and avoid penalties. The plans are only
available through DC Health Link. If you work for a small employer (50
employees or less) Aetna, CareFirst, Kaiser and United Healthcare oer
QHPs that are guaranteed to meet the coverage requirements to avoid
penalties. Most large employer-based coverage will also qualify, but you
should conrm with your employer or consult with a tax professional that
the coverage meets minimum standards to avoid paying a tax penalty.
INDIVIDUAL MANDATE PENALTY FOR NOT HAVING
MAJOR-MEDICAL HEALTH INSURANCE
Consumers who lack Major-Medical Health Insurance that meets
Aordable Care Act standards can face penalties known as the Individual
Shared Responsibility Payment. Below is a list of Major-Medical Health
Insurance that fulll the ACA coverage requirement; being covered under
one of these plans should exempt you from the penalty.
The penalty is calculated as the larger of:
• 2016: $695 per adult or 2.5% of household income
• 2017 and Beyond: The percentage option will remain at 2.5%
and the at fee option will be adjusted each year for ination.
Note: Additional fees can be assessed for children; households’ annual
total fees are subject to certain caps.
Types of Major-Medical Health Insurance
Plans purchased on DC Health Link
Medicare Part A and Medicare Advantage Plans
Insurance purchased through your employer
Medicaid, DC Alliance, or Children’s Health
Insurance Program (CHIP) coverage
TRICARE and other plans administered by the Veter-
ans Administration
Federal Employees Health Benets Program
COBRA coverage
Student health plans
Coverage provided to Peace Corps volunteers
