HHS Issues Proposed Rule on Availability of Short-Term, Limited Duration Health Plans; Comments Due September 11
Published July 12, 2023
The Departments of Health & Human Services (HHS), Labor (DOL) and Treasury have issued a proposed rule aimed at helping consumers distinguish between short-term, limited-duration insurance (STLDI) and fixed indemnity insurance (plans that pay a pre-determined fixed amount for a health-related event, regardless of expenses incurred) from comprehensive coverage. STLDI and fixed indemnity insurance sometimes include benefit limitations. These types of plans are not subject to many of the Affordable Care Act’s (ACA) consumer protections, and, as a result, individuals may unknowingly end up in plans that do not cover essential benefits like prescription drugs, exclude coverage for pre-existing conditions, or impose annual or lifetime dollar limits on services.
The proposed rule, among other policies, would:
- Amend the federal definition of STLDI to ensure these “short-term” plans are truly short-term and used to fill temporary gaps in comprehensive coverage. It would also require STLDI and fixed indemnity excepted benefits coverage to make clearer to consumers the differences between these products and comprehensive coverage, including what is covered and how much is covered.
- Call for limiting the length of the initial STLDI contract period to no more than three months, and the maximum coverage period to no more than four months, taking into account any renewals or extensions. That would reduce the current maximum length of short-term coverage from up to 36 months, including renewals and extensions, according to the Centers for Medicare & Medicaid Services (CMS).
- Only allow an individual to enroll in consecutive short-term contracts that exceed four months if the contracts—effective within a 12-month period—were sold by different issuers.
- Prohibit short-term coverage providers from “stacking,” or issuing multiple policies to the same policyholder within a 12-month period.
Comments are due September 11, 2023.
Additional Information: