Recent­ly, the U.S. Depart­ment of the Trea­sury, Depart­ment of Labor (DOL), and Depart­ment of Health and Human Ser­vices (HHS) (col­lec­tive­ly the Depart­ments) issued final reg­u­la­tions regard­ing the def­i­n­i­tion of short-term, lim­it­ed-dura­tion insur­ance, stan­dards for trav­el insur­ance and sup­ple­men­tal health insur­ance cov­er­age to be con­sid­ered except­ed ben­e­fits, and an amend­ment relat­ing to the pro­hi­bi­tion on life­time and annu­al dol­lar limits.

Effec­tive Date and Applic­a­bil­i­ty Date 

These final reg­u­la­tions are effec­tive on Decem­ber 30, 2016. These final reg­u­la­tions apply begin­ning on the first day of the first plan or pol­i­cy year begin­ning on or after Jan­u­ary 1, 2017.

Short-Term, Lim­it­ed-Dura­tion Insurance 

Short-term, lim­it­ed-dura­tion insur­ance is a type of health insur­ance cov­er­age designed to fill tem­po­rary gaps in cov­er­age when an indi­vid­ual is tran­si­tion­ing from one plan or cov­er­age to anoth­er plan or cov­er­age. Although short-term, lim­it­ed-dura­tion insur­ance is not an except­ed ben­e­fit, it is exempt from Pub­lic Health Ser­vice Act (PHS Act) require­ments because it is not indi­vid­ual health insur­ance cov­er­age. The PHS Act pro­vides that the term ‘‘indi­vid­ual health insur­ance cov­er­age’’ means health insur­ance cov­er­age offered to indi­vid­u­als in the indi­vid­ual mar­ket, but does not include short-term, lim­it­ed-dura­tion insurance.

On June 10, 2016, the Depart­ments pro­posed reg­u­la­tions to address the issue of short-term, lim­it­ed-dura­tion insur­ance being sold as a type of pri­ma­ry coverage.

The Depart­ments have final­ized the pro­posed reg­u­la­tions with­out change. The final reg­u­la­tions define short-term, lim­it­ed-dura­tion insur­ance so that the cov­er­age must be less than three months in dura­tion, includ­ing any peri­od for which the pol­i­cy may be renewed. The per­mit­ted cov­er­age peri­od takes into account exten­sions made by the pol­i­cy­hold­er ‘‘with or with­out the issuer’s con­sent.’’ A notice must be promi­nent­ly dis­played in the con­tract and in any appli­ca­tion mate­ri­als pro­vid­ed in con­nec­tion with enroll­ment in such cov­er­age with the fol­low­ing language:

THIS IS NOT QUALIFYING HEALTH COVERAGE (‘‘MINIMUM ESSENTIAL COVERAGE’’) THAT SATISFIES THE HEALTH COVERAGE REQUIREMENT OF THE AFFORDABLE CARE ACT. IF YOU DON’T HAVE MINIMUM ESSENTIAL COVERAGE, YOU MAY OWE AN ADDITIONAL PAYMENT WITH YOUR TAXES.

The revised def­i­n­i­tion of short-term, lim­it­ed-dura­tion insur­ance applies for pol­i­cy years begin­ning on or after Jan­u­ary 1, 2017.

Because state reg­u­la­tors may have approved short-term, lim­it­ed-dura­tion insur­ance prod­ucts for sale in 2017 that met the def­i­n­i­tion in effect pri­or to Jan­u­ary 1, 2017, HHS will not take enforce­ment action against an issuer with respect to the issuer’s sale of a short-term, lim­it­ed-dura­tion insur­ance prod­uct before April 1, 2017, on the ground that the cov­er­age peri­od is three months or more, pro­vid­ed that the cov­er­age ends on or before Decem­ber 31, 2017, and oth­er­wise com­plies with the def­i­n­i­tion of short-term, lim­it­ed-dura­tion insur­ance in effect under the reg­u­la­tions. States may also elect not to take enforce­ment actions against issuers with respect to such cov­er­age sold before April 1, 2017.

 

By Danielle Capil­la, Orig­i­nal­ly pub­lished by Unit­ed Ben­e­fit Advi­sors — Read More