Final Rule Expands Short-Term, Limited-Duration Insurance

On August 1, 2018, the Departments of Health and Human Services, Labor, and Treasury issued a final rule which expands access to short-term, limited-duration insurance coverage. The rule extends short-term health insurance plans from three months to one year, with renewal options to extend coverage to three years.

The coverage is not required to comply with certain federal market requirements for health insurance, principally those contained in the Affordable Care Act (ACA). The final rule will make many more health insurance policies available that do not comply with the ACA and do not have to cover prescription drugs, maternity care or people with pre-existing medical conditions. The final rule also includes updated notice requirements.

The new rule was developed in response to President Trump’s executive order issued in October 2017 that directed the federal agencies to consider expanding access to short-term plans, associate health plans, and health reimbursement arrangements, funded by employers and used by employees to purchase coverage on the individual market. President Trump has said that the new plans will provide “much less expensive health care at a much lower price.”

Criticism of the plans stems from the fact that short-term policies can deny or restrict people with pre-existing conditions and are not required to cover essential health benefits. However, proponents of the new plans feel as though the option for short-term, transitional coverage is important for people, as a more affordable choice to fill gaps in coverage and under the new rule consumers can purchase consecutive short-term plans with renewal guarantees which would protect them from medical underwriting should they become ill.

The final regulations, were published in the Federal Register on August 3, 2018, and will take effect 60 days later, on October 2, 2018.