The Trump Administration had previously issued Executive Order 13813 last October, entitled “Promoting Healthcare Choice and Competition Across the United States”, in which the President ordered the agencies to review association health plans, short term health insurance and additional ways that the health reimbursement arrangement could be used by employers to help employees buy individual health policies. The Department of Health and Human Services (HHS) released a proposed rule on short-term, limited duration health insurance on February 20, 2018 as a result of that executive order.
Short-term, limited duration health insurance is exempt from the Affordable Care Act’s requirements for individual market health insurance. Current proposed regulations limit short-term, limited duration health insurance to periods of 3 months or less. This proposed regulation would provide that limited duration insurance could be for periods of up to 12 months.
The rule on the expansion of the duration of short term health insurance can be found by clicking here, the HHS press release about the rule can be found here, and the CMS fact sheet can be found here.
The CMS fact sheet touted the benefits of the proposed rule as follows:
“Today’s proposed changes are intended to provide additional, often much more affordable coverage options, while also ensuring consumers understand the coverage they purchase. Individuals and families who would benefit from this policy may include those:
- who are between jobs or other sources of coverage;
- who find ACA coverage too expensive or have seen their health insurance choices diminish; and
- whose doctors are not in network under ACA plans.
Longer limited-duration plans would also reduce the risk of a gap in coverage for people with short-term coverage who become seriously ill while covered. Under current rules, a person who becomes ill would likely not qualify for another plan less than three months in duration because of the illness and would then need to wait without coverage until the next year to gain coverage in the individual market.”
Industry groups like the National Association of Health Underwriters (NAHU), Blue Cross Blue Shield Association (BCBSA), America’s Health Insurance Plans (AHIP), Families USA have already voiced their concerns that this expansion of short term health insurance could further contribute to the instability of the Marketplace as it may be an incentive for younger and healthier individuals to migrate towards the cheaper short term policies. In addition, there is speculation that it could lead to higher premiums in the traditional individual market as well.
The October 2017 Executive Order also directed the HHS, the Department of Labor and the Internal Revenue Service to review previous guidance regarding health reimbursement arrangements (HRAs) and we are still awaiting the agencies response to that directive.
HHS requests comments on the proposed regulation by April 23, 2018.
We will continue to monitor this issue and provide additional updates as they become available.