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Agencies Finalize Rule on Short-Term Insurance Plans

The departments of Labor, Treasury, and Health and Human Services issued a final rule increasing the availability of short-term, limited duration insurance (STLDI) plans.

Consumers often use STLDI as a stop-gap measure when they are between jobs or need access to temporary coverage.

The final rule defines STDLI plans as health care coverage that expires in less than 12 months under the original contract, with a maximum duration of 36 months after renewals and extensions. The finalized policy extends the maximum length from three months as mandated by the Affordable Care Act (ACA).

The final rule provides updated impact estimates and contains a severability clause in case stakeholders challenge the 36-month maximum duration standard in court.

Issuers Must Notify Customers of Limited Coverage

The rule finalizes the requirement that issuers prominently display one of two versions of a notice to consumers enrolling in STLDI plan coverage. Under the rule, the notice must include language instructing consumers to read through the contract carefully and be aware of any coverage exclusions or limitations.

In response to feedback, the revised notice language specifically lists health benefits that might not be covered by the STLDI plan, such as hospitalizations, emergency services, and maternity care. The associated commented on the draft plan, urging the agencies to require issuers to provide consumers clear information that fully explains the coverage and enables purchasers to determine whether their health care needs will be met and protected.

With the repeal of the ACA’s individual mandate, insurers no longer are required to inform consumers that their plan might result in a tax penalty.

Contact Senior Director of Policy Erin O’Malley at eomalley@essentialhospitals.org or 202.585.0127 with questions.

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About the Author

Gontscharow is a senior policy analyst for America's Essential Hospitals.