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CMS issues final rule on Short-Term Limited Duration Insurance plans

The Centers for Medicare and Medicaid (CMS) released its final rule on short-term limited duration insurance (STLDI) plans on Wednesday. The rule increases from three to 12 months the period an individual can be covered by a STLDI plan and allows two 12-month plan renewals—a total of 36 months of continuous coverage.

The final rule establishes federal standards for STLDI with respect only to the maximum length of the initial contract term and policy duration and consumer notice. All other regulatory authority regarding these plans is being deferred to the states. which may shorten the length of plans offered or otherwise regulate how the STLDI plans operate. The rule does not preempt state law regarding the sale of STLDI plans.

The Society had expressed opposition to the proposed rule in April because STLDI plans do not have to adhere to the patient protections of the Affordable Care Act (ACA) and the rule permits individual underwriting for preexisting conditions, coverage limits and termination of coverage.

“The changes proposed by the Department of Health and Human Services (HHS) regarding short-term limited duration insurance plans present two concerns for the Society,” said Society CEO Bud Chumbley, MD, in the Society’s letter. “First, the coverage provided by STLDI plans is neither robust, nor do they maintain the patient protections as codified by the Affordable Care Act. Second, expansion of STLDI plans could undermine and destabilize the ACA marketplace.”

While CMS acknowledged that it received numerous comments regarding the lack of patient protections, officials stated that “individuals are in the best position to evaluate the tradeoffs between lower premiums and limitations of short-term limited duration insurance.”

CMS estimates that between 100,000 and 200,000 people will enroll in STLDI plans. As a result, premiums for ACA-compliant plans are expected to increase by 5 percent by 2021, while STLDI plan premiums are projected to decrease 49 percent vs. ACA exchange averages during the same period.

If you have questions about the STLDI rule, contact H.J. Waukau.

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