On July 7, the Departments of Health and Human Services, Labor, and Treasury announced the Biden administration’s notice of proposed rulemaking (NPRM) on short-term, limited-duration insurance (STLDI) and fixed indemnity insurance.
Because STLDI is designed to fill temporary gaps in coverage, these plans are not subject to consumer protections and are not considered comprehensive health insurance plans. They are excluded from the definition of individual health insurance coverage under the Public Health Service Act. The proposed rule would effectively reverse a 2018 rule that sought to expand access to these plans for consumers. The current initial contract term length for these plans is set at less than 12 months, with a maximum total duration of up to 36 months, including renewals and extensions.
The proposed rule would amend the federal definition of STLDI to limit the length of the initial contract period to no more than three months, with a maximum coverage period of no more than four months, including any renewals or extensions. Additionally, the proposed rule would redefine STLDI to prohibit “stacking,” or the practice of issuing multiple STLDI policies to the same policyholder within a 12-month period. If finalized, the proposal would allow an individual to enroll in consecutive STLDI contracts that in total exceed four months in duration only if the contracts effective within a 12-month period were sold by different issuers and if they are consistent with applicable state law.
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