Changes To Short-Term, Limited- Duration Insurance Coverage

On August 1, 2018, the department of Health and Human Services (HHS), Labor (DOL) and the Treasury issued a final rule that allows for the sale and renewal of short-term, limited-duration health insurance plans that cover longer periods than previously permitted. For background, see my column from May 2017, New Guidelines for Excepted Benefits and Annual and Lifetime Limits. An executive order by President Trump called for expanding this type of insurance to create a more affordable option of health insurance with longer coverage periods and renewals.

Originally, short-term insurance was coverage of less than three months in duration. The plan also had to contain an expiration date specified in the contract that was less than three months after the first effective date of the contract and provide prominent information concerning the plan. These final rules amend the definition of short-term, limited-duration insurance while continuing to maintain its non-compliance with the insurance mandates contained in the Affordable Care Act (ACA).

Maximum Short-Term and Limited-Duration Extensions Periods
Such insurance may have an initial maximum coverage period of less than 12 months after the original effective date of the contract, taking into account any extensions that may be elected by the policyholder without the issuer’s consent. The limited-duration time period allows renewal or extensions for up to a total of 36 months.

There are no rules concerning the purchase of more than one policy as long as each policy is separate and does not extend the maximum short-term or limited-duration extension periods.

Required Notice to Participants
“This coverage is not required to comply with certain federal market requirements for health insurance, principally those contained in the Affordable Care Act. Be sure to check your policy carefully to make sure you are aware of any exclusions or limitations regarding coverage of preexisting conditions or health benefits (such as hospitalization, emergency services, maternity care, preventive care, prescription drugs, and mental health and substance use disorder services). Your policy might also have lifetime and/or annual dollar limits on health benefits. If this coverage expires or you lose eligibility for this coverage, you might have to wait until an open enrollment period to get other health insurance coverage. Also, this coverage is not ‘‘minimum essential coverage.’’ If you don’t have minimum essential coverage for any month in 2018, you may have to make a payment when you file your tax return unless you qualify for an exemption from the requirement that you have health coverage for that month.”

As under the proposed rule, the last two sentences of the notice are only required for policies sold on or after the applicability date of this final rule that have a coverage start date before January 1, 2019.

Late Breaking News
The Senate was unsuccessful in their efforts to overturn the Trump Administration’s final rule on short-term health plans this week after a vote on the resolution failed. It would have blocked the Trump Administration’s move to expand the use of short-term health plans.

It is worth noting that even if the measure did pass in the Senate, it most certainly would have failed in the House.

The information contained in this article is not intended to be legal, accounting, or other professional advice. We assume no liability whatsoever in connection with its use, nor are these comments directed to specific situations.

Janet LeTourneau, ACFCI, is the director of compliance services at WageWorks. She draws upon more than 25 years of experience with flexible benefits plans and tax laws to perform consulting services and monitor quality control.

LeTourneau is a frequent speaker to employer groups and conferences and was formerly on the board of directors for the Employers Council on Flexible Compensation (ECFC) and is a current member of the ECFC Technical Advisory Committee (TAC). She is the lead instructor for the Section 125 administrators training workshop.

LeTourneau was one of the first people in the country to earn the Advanced Certification in Flexible Compensation Instruction designation sponsored by the Employers Council on Flexible Compensation. She is a certified trainer in the ACFCI program.

LeTourneau can be reached by telephone at 262-236-3021 or by email at