Administration Issues Final Rule on "Short-Term, Limited-Duration" Plans

On August 1, the Internal Revenue Service, Department of the Treasury, Department of Labor, and Department of Health and Human Services (HHS) issued a final rule on "short-term, limited-duration" insurance (STLDI) plans. See HHS press release. Under this rule, insurers will be able to offer insurance policies that do not offer the same "essential health benefits" or consumer protections that apply to plans meeting the standards of the Affordable Care Act (ACA). Such STLDI plans were permitted under the ACA, intended for people transitioning between jobs or needing temporary coverage for some other reason. Under regulations issued by the Obama administration, these plans were limited to a maximum period of less than three months. Under the new rule, STLDI plans can cover an initial period of less than 12 months, and, taking into account any extensions, a maximum duration of no longer than 36 months in total. Premiums for these plans will be less expensive than premiums for ACA-compliant plans because they can offer less robust benefits, can be denied to people with pre-existing conditions, and do not offer the other consumer protections of the ACA, such as the ban on annual and lifetime caps. Experts expect that these plans will attract younger, healthier consumers, meaning that consumers who need more robust coverage will end up paying higher premiums than they would if the insurance pool included everyone. In addition, consumer advocates are concerned that purchasers of STDLI plans may find that they do not have the coverage they need if they become sick or injured. See Coverage That (Doesn't) Count: How the Short-Term, Limited Duration Rule Could Lead to Underinsurance (blog of the Georgetown Center on Health Insurance Reform, 7/26/18).

 

The recent rule expanding "Association Health Plans" is expected to have the same impact. See Buyer Beware of Association Health Plans (The Hill, 7/25/18); The New Association Health Plan Rule: What Are the Issues and Options for States (blog of the National Academy for State Health Policy, 6/26/18).