HHS Releases Rule on Short-Term Health Plans
This week, the Trump Administration issued a proposed rule to expand the availability of short-term health insurance coverage. This move would expose more consumers to limited coverage health plans, including plans that lack mental health and substance use disorder benefits. The proposed rule comes from an executive order President Trump signed in October 2017 that directed federal agencies to loosen restrictions on short-term health insurance and association health plans to create less comprehensive coverage options.
The Administration’s stated goal of expanding short-term health plans is to provide consumers more affordable options for health care coverage. Yet, industry experts have warned that short-term health plans, like newly-proposed association health plans, lack key patient protections and would actually raise costs for some consumers. Most notably, these plans would be exempt from the ACA’s essential health benefits (EHB) requirement, which ensures that health plans cover mental health and substance use disorder services. Further, these plans would be most attractive to healthier individuals, likely causing healthy consumers to leave ACA health insurance exchanges. If so, this could lead to higher premiums for remaining enrollees, including those with chronic mental health and substance use disorders, that rely upon the ACA marketplaces for health care coverage.
SUMMARY OF RULE
The proposed regulation would make the following changes:
- Amends Definition of Short-term, Limited-Duration Plan – Under the proposed rule, the Departments of Health and Human Services, Labor and Treasury would amend the definition of short-term, limited-duration insurance to include a 12-month maximum length of coverage policy, which was previously limited to a maximum of three months during the Obama Administration. In doing so, this proposal would expand the types of coverage policies that are excluded from the definition of individual health insurance coverage and ACA coverage requirements.
- New Notice Language – In addition, this proposed rule would revise the required notice to consumers that must appear in any application materials for short-term, limited-duration insurance. To help ensure consumers can distinguish between the 12-month short term coverage and the ACA compliant coverage (which is also typically offered on a 12-month basis), these agencies are proposing to require insurers to include one of two versions of a notice in the health plan contract and in any application materials provided relating to enrollment. The Departments are seeking comments on the revised notice and whether the language or other language would ensure consumers understand the nature of the short-term coverage.
- Effective Date – The Departments are proposing that the applicability date for this proposed rule, if finalized, would be 60 days after the publication of the final rule. Policies sold on or after that date would have to meet the requirements of the final rule in order to constitute short-term, limited-duration insurance.
The proposed rule can be found here in the Federal Register. The rule has a 60-day comment period that will end on April 23, 2018.