Health Insurance and Managed Care (B) Committee
Thursday, August 15, 2024
9:30 AM CDT
McCormick Place Convention Center—S103—Level 1
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Short -Term Limited-Duration Health Plans
Background
Last Updated: 7/26/2024
Background: Short-term, limited-duration insurance (STLDI) is a type of health insurance that provides coverage to policyholders for a period of as little as a month to as long as three years. This is a type of health insurance meant for temporary coverage and is designed for people who need insurance for a short period, like between jobs or outside of open enrollment periods for traditional health insurance. These plans typically offer limited coverage and benefits. Short-term plans may offer coverage for some of the same types of health care services as traditional comprehensive health insurance, but they have very different plan designs and are not regulated with the same consumer protections as comprehensive health coverage.
STLDI policies are often medically underwritten, exclude coverage for pre-existing conditions, and do not always cover essential health benefits such as maternity care, prescription drugs, or mental health care. These plans can also impose annual and lifetime limits and are not subject to other ACA market requirements, including rate review or minimum medical loss ratios. As a result, STLDI plans can offer lower monthly premiums than ACA-compliant plans, making them attractive to some consumers despite offering less protection. According to a study by the Kaiser Family Foundation, these plans' limited coverage and lower costs can appeal to individuals who do not qualify for premium subsidies or who missed open enrollment periods.
In 2024, the federal government made significant regulatory changes concerning STLDI plans. The new federal rules, effective September 1, 2024, set a maximum coverage period, including renewals or extensions, of four months. These regulations aim to clearly define the temporary nature of STLDI coverage and to deter the practice of "stacking," wherein policies are repeatedly renewed to extend coverage beyond the intended limits.
Additionally, several states have implemented measures to regulate or limit STLDI policies. These state-level limitations include stricter duration limits and, in certain instances, complete bans on the sale of STLDI plans. This trend demonstrates an increasing number of states adopting stricter regulations on these short-term plans.
State insurance regulators are exploring the effects of STLDI plans on the broader health insurance market, balancing the benefits of providing a temporary coverage option against the risks of undermining comprehensive health insurance protections.
Actions
Actions: State insurance regulators have limited knowledge about the size of the market for short-term, limited-duration insurance (STLDI) because these plans are generally not required to report enrollment data.
In 2019 the Accident and Sickness Insurance Minimum Standards (B) Subgroup revised and renamed NAIC Model #170 as the Supplementary and Short-Term Health Insurance Minimum Standards Model Act. The revisions removed provisions related to health benefit plans subject to the ACA's requirements and incorporated provisions concerning STLDI plans, including requirements for consumer disclosures. The revised model aims to address the lack of consumer protections in STLDI plans by setting minimum standards and ensuring that consumers are adequately informed about the limitations of these plans.
The NAIC’s Health and Managed Care (B) Committee is charged with monitoring developments in the health insurance market.
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