Benefits Buzz

Lengthening Short-Term Medical

Posted on June 13th, 2017

Under the Obama administration, the Department of Health and Human Services (HHS) issued regulatory guidance which shortened the maximum duration of Short-Term Medical (STM) insurance plans to less than 3 months (90 days). This was fully implemented as of April 1, 2017. 
 
STM plans are not subject to the Affordable Care Act (ACA). These plans don’t have to cover all the essential health benefits that the ACA requires, and insurance companies can base eligibility for coverage on pre-existing conditions. As a result, premiums for STM plans are usually much cheaper than ACA-regulated health plans offered on the Exchange. 
 
The Obama administration shortened the maximum duration of STM plans for fear that younger and healthier people would enroll in these plans instead of plans available on the Exchange, creating an unbalanced risk pool for Exchange plans.
 
Fast forward to present day and we now have a new administration, and a new person heading up HHS, Republican, Tom Price. A group of 14 Republican Senators recently sent a letter to Price asking him to reverse the Obama-era STM plan rules. These Senators are pushing for restoration of the old rules which allowed STM plans to be issued for durations of less than 12 months (364 days). 
 
The Senator’s request comes from a belief that STM plans provide Americans with more choice and lower premium options as fewer insurance companies are offering coverage on the Exchange. Some areas of the country may not have any options in 2018 and STM plans could fill that void for some.
 
Reversing the guidance issued under the Obama administration doesn’t require an act of Congress. HHS and Price have the authority to reverse the rule, and it’s something that is expected to be considered.  
 

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