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Short-Term Plans

Short-term Limited-Duration Insurance



On August 1, 2018, the Departments of Labor, Treasury and Health and Human Services released final rule and fact sheet regarding short-term limited duration insurance (STLDI), often referred to as short-term plans (STPs), which will take effect in early October. The rule was in response to an executive order issued by President Trump on October 12, 2017 directing federal agencies to expand the availability of Association Health Plans, Health Reimbursement Arrangements and STPs. The final rule effectively ends the policy established by the Obama Administration in 2016 restricting the length of time for STPs and instead extends eligibility for the plans from a maximum of three months to less than 12 months, with the ability to renew coverage at the end of that period. The proposed rule was released in February and NAHU submitted comments on the proposal in April.

The final rule restores the maximum term of STPs to up to 364 days as previously permitted, with the ability to renew for a duration up to 36 months at the carrier's discretion. Therefore, while insurers would not be required to offer guaranteed-renewable coverage of STPs, individuals could re-apply for coverage and resubmit to underwriting for that policy, with insurers also able to offer renewal without additional medical underwriting or experience rating. The rule’s 36-month maximum duration could also effectively be extended even further by consumers who move from one STP to another, after the 36-month duration has been exhausted under the first insurer. These individuals would still need to submit to any underwriting, as required by the plans.

The final rule requires insurers to clearly disclose the type of policy the individual is choosing, the coverage’s limitations, that these plans do not offer the same coverage as individual plans under the ACA and they do not satisfy the requirement for minimum essential coverage. States are permitted to adopt a definition with a shorter maximum initial duration, prohibit renewals or extensions of short-term plans, or require additional insurer disclosures. The final rule also does not preempt state laws that prohibit the sale of STPs.

NAHU Reviews Short Term Plan Final Rule

August 1, 2018

This special edition NAHU Healthcare Happy Hour features a discussion with NAHU Vice President of Government Affairs Marcy M. Buckner to review the 121-page STP rule and what it will mean for your clients and prospective clients who may be considering STPs.

Click here to listen to the episode.