Rule goes into effect 60 days from today
Coverage lasts up to 364 days
Can be renewed for up to 36 months
Estimated to be 50% to 80% cheaper than ACA plans
The Trump Administration released a final rule on short-term, limited-duration health insurance plans (STLDI), also know as short-term plans, on August 1, 2018. This new rule eliminates the Obama Administration’s policy limiting the duration of short-term plans from a maximum of three months and restores it to less than 12 months. This new rule also adds the ability to renew the policy at the end of the term for up to 36 months, at the discretion of the insurance company.
There are new consumer protections insurers must adhere to under this rule as well. Disclosures indicating the type of policy that is being purchased must be prominently printed in the policy and all application materials. This notice must also state that the short-term plan does not offer the same level of coverage as ACA plans. It is important to read the policy so you are aware of what is and is not covered.
The Trump Administration estimates these plans to be 50% to 80% cheaper than individual plans under the ACA. However, short-term plans do not satisfy the requirement for minimum essential coverage. It is important to note, individuals who enroll in a short-term plan for 2019 will not face a penalty for not having minimum essential coverage. This is due to the December 2017 tax reform bill which reduced the penalty to $0, effective January 1st, 2019.
Short-term plans will continue to be regulated by the states, and state Insurance Commissioners can implement rules that are more strict than the Federal regulations. This final rule will go into effect in 60 days. During this time, state Insurance Commissioners may likely release new rules for short-term plans within their state.