HHS Releases Final Rules Protecting Consumers Purchasing Short-Term Health Plans

The Departments of Health and Human Services, Labor and the Treasury have released the Short-Term, Limited- Duration Insurance and Independent, Noncoordinated Excepted Benefits Coverage, or “Junk Insurance,” final rules. Short-term, limited-duration insurance (STLDI) is a type of health insurance that is typically designed to fill temporary gaps in coverage when an individual is transitioning from one source of coverage to another. Unlike most health insurance plans, STLDI plans are not subject to the Affordable Care Act’s critical consumer protections, including guaranteeing coverage for people with preexisting conditions and prohibiting discrimination based on health status, age or gender. The final rules will limit these “short-term” plans to truly short time periods, no more than four months instead of three years. 

In addition, the final rule will require health insurance companies to be clear and up front with what consumers are buying. Short-term plans, as well as “fixed indemnity” insurance policies that provide a fixed, cash payment for a healthcare event, will have to include a clear, easy-to-understand consumer notice on marketing, application, enrollment and re-enrollment materials so that consumers can make informed coverage purchasing decisions. The final rules increase transparency while helping to ensure consumers do not mistakenly enroll in these types of insurance plans as substitutes for comprehensive coverage. 

“HHS is cracking down on junk insurance plans to help consumers make informed choices and avoid mistakenly paying for a plan that does not provide them the coverage or protection they expect,” said HHS Secretary Xavier Becerra. “Over the past three years, we have helped more people gain access to high-quality, affordable coverage — and more than 300 million Americans are covered for the first time ever. We want everyone to have the peace of mind that comes with having coverage that includes the protections and benefits they expect.”