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The convergence of insurance regulation at the federal and state levels keeps getting more complex. In July, the DC Circuit Court of Appeals upheld the Trump administration rule that loosened the Obama era restrictions on the sale of Short-Term Limited Duration Insurance (STLDI) plans that do not meet the ACA’s requirements.
The Obama era rule had limited the duration of STLDI plans to three months. The Trump rule, finalized in 2018, allows STLDI plans to have an initial term just under one year (literally 364 days) and allows them to be renewed as long as the total duration of the plan does not exceed 36 months. It does require the STLDI plan to provide an information disclosure to help people understand the difference between an ACA compliant individual health plan and STLDI plans.
In the face of the new Trump rule, many states either severely limited or outright banned STLDI plans in their state. These states include California, Hawaii, Maryland, Vermont, Illinois, Colorado, Delaware, New Mexico, and Maine. Conversely, several states have passed legislation loosening the rules on STLDI plans during the same timeframe. This includes Indiana, Oklahoma, and Arizona.
The fractured approach to STLDI plans being taken by the individual states, with some clearly wanting to expand access to STLDI plans, while most prefer to either eliminate or restrict the plans (over half the states currently have some restriction on either the initial term or total duration of STLDI plans), continues to add to the complexity of ACA compliance.
One thing continues to remain constant: the ACA Employer Mandate.
As a reminder to employers in conjunction with the Employer Shared Responsibility Payment (ESRP), the ACA Employer Mandate, organizations with 50 or more full-time employees and full-time-equivalent employees are required to offer Minimum Essential Coverage (MEC) to at least 95% of their full-time workforce (and their dependents) whereby such coverage meets Minimum Value (MV) and is affordable for the employee or be subject to Internal Revenue Code (IRC) Section 4980H penalties. The healthcare law defines full-time employees as workers who average 30 hours of work a week or 130 hours a month.
Employers identified as having failed to comply with the ACA could be subject to penalty assessments from the IRS as well. The agency is currently issuing Letter 226J penalty notices for the 2017 tax year.
Contact us to learn how to improve your ACA compliance for this year, and every year going forward.
