Proposed rule would allow short-term, limited-duration health insurance for longer periods

The Departments of Health and Human Services (HHS), Labor, and the Treasury (the Departments) have issued a proposed rule that would amend the definition of short-term, limited-duration insurance to lengthen the maximum period of such insurance. Consumers would be allowed to buy plans providing coverage for any period of less than 12 months, rather than the current maximum period of less than three months.

Executive Order.

The proposed rule is in response to President Trump’s Executive Order 13813, issued on October 12, 2017, which directed the Departments to consider proposing regulations or revising guidance to expand the availability of short-term, limited-duration insurance. The order stated the Departments should consider allowing such insurance to cover longer periods and be renewed by the consumer.

Exempt from market requirements.

Short-term, limited-duration insurance is a type of health insurance coverage that was designed to fill temporary gaps in coverage that may occur when an individual is transitioning from one plan or coverage to another plan or coverage. Although short-term, limited-duration insurance is not an excepted benefit, it is exempt from the Public Health Service Act’s (PHSA) individual-market requirements because it is not individual health insurance coverage. PHSA Sec. 2791(b)(5 provides “[t]he term ‘individual health insurance coverage’ means health insurance coverage offered to individuals in the individual market, but does not include short-term limited duration insurance.”

Definition changed.

The PHSA does not define short-term, limited-duration insurance. Under regulations implementing HIPAA, and that continued to apply through 2016, short-term, limited-duration insurance was defined as “health insurance coverage provided pursuant to a contract with an issuer that has an expiration date specified in the contract (taking into account any extensions that may be elected by the policyholder without the issuer’s consent) that is less than 12 months after the original effective date of the contract.”
A final rule issued in October 2016, changed the definition of short-term, limited-duration insurance that had been in place for nearly 20 years by revising the definition to specify that short-term, limited-duration insurance could not provide coverage for 3 months or longer (including any renewal period(s)).

Proposed definition.

In light of Executive Order 13813, as well as continued feedback from stakeholders expressing concerns about the October 2016 final rule, the Departments propose to amend the definition of short-term, limited-duration insurance so that it may offer a maximum coverage period of less than 12 months after the original effective date of the contract, consistent with the original definition in the 1997 HIPAA rule. The proposed rule would expand the potential maximum coverage period by 9 months. In addition, the proposed rule would revise the required notice that must appear in the contract and any application materials for short-term, limited-duration insurance.

Comments requested.

The Departments seek comments on all aspects of this proposed rule, including whether the length of short-term, limited-duration insurance should be some other duration. The Departments seek comments on any regulations or other guidance or policy that limits issuers’ flexibility in designing short-term, limited-duration insurance or poses barriers to entry into the short-term, limited-duration insurance market.
Comments must be submitted by April 23, 2018. Electronic comments may be submitted to Via regular mail send comments to: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-9924-P, P.O. Box 8010, Baltimore, MD 21244-8010.

SOURCE: Fact Sheet: Short-Term, Limited-Duration Insurance Proposed Rule, February 20, 2018.
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