The United States Departments of Treasury, Labor, and Health and Human Services (the Departments) issued Final Regulations (“Final Regulations”) on August 3, 2018 to dramatically expand access to short-term, limited duration insurance coverage to provide Americans with more affordable health insurance coverage options. The Final Regulations lengthen the maximum duration of coverage allowed under short-term, limited-duration insurance (“STLDI”) as health coverage with an initial term of less than 12 months (and up to 36 months with renewals or extensions). While STLDI is subject to state law and some states currently prohibit the sale of STLDI policies (for example, New York), other states could act to limit STLDI policies in the near future. These rules take effect on October 2, 2018 and will apply to STLDI policies sold on or after that date.
The Final Regulations amend the definition of STLDI for purposes of its exclusion from the definition of individual health insurance coverage, which is highly regulated both at the state level and under the Affordable Care Act (ACA). STLDI coverage provided is generally limited and is designed to provide temporary coverage for individuals transitioning between healthcare policies, such as an individual in between jobs. The Final Regulations are intended to implement President Trump’s Executive Order No. 13813 (Promoting Healthcare Choice and Competition Across the United States), which required the federal government to expand access to more affordable health coverage. In addition to lengthening the current duration of STLDI from a period of less than 3 months to a period of less than 12 months after the original effective date of the contract, the Final Regulations also limit the maximum duration of such coverage, taking into account renewals or extensions, to 36 months. Issuers of STLDI are required to include a notice, meeting certain content and style requirements (as set forth in the Final Regulations) in their contracts and any applicable material provided in connection with enrollment. The purpose of the notice is to inform the consumer about the coverage limitations and exclusions so that consumers can make informed decisions While minimizing the cost is important, assuring adequate protection is also consistent with strong regulatory policy and in the interests of consumers.