New Regulations Redefine Short-Term, Limited Duration Insurance

November 17, 2016 Robert Sheen Affordable Care Act, Health Care Coverage, Regulations

While the nation was preoccupied with the 2016 Presidential Election, Congress was pushing on with more finalized regulations involving the Affordable Care Act. Last month, the Departments of the Treasury, Labor and Health and Human Services released a memo detailing their final regulations surrounding the redefinition of short-term, limited duration insurance, as well as other items defined as “excepted benefits.”

Existing as transitional coverage for individuals between jobs, switching plans or scopes of coverage, short-term insurance does not fall under the Affordable Care Act. Previously, insurers had been issuing short-term contracts for up to 12 months. Considering the exclusion from the ACA, some opted to use this as primary healthcare. However, aspects involving the bans on pre-existing conditions refusals and lifetime or annual dollar limits to essential health benefits (EHB)mandated by the ACA does not apply to short-term insurance.

In the newly released final regulations, the duration for short-term, limited duration insurance is now capped at less than three months, and applies to any extensions from the policyholder regardless of the issuer’s consent. These newly defined parameters for short-term, limited duration insurance go into effect for new policies starting on or afterJanuary 1, 2017, with plans prior to the effective date being considered for the new rules under certain regulations.

A warning for short-term healthcare must also be in full display on the policy contract reading: THIS IS NOT QUALIFYING HEALTH COVERAGE (“MINIMUM ESSENTIAL COVERAGE”) THAT SATISFIES THE HEALTH COVERAGE REQUIREMENT OF THE AFFORDABLE CARE ACT. IF YOU DON’T HAVE MINIMUM ESSENTIAL COVERAGE, YOU MAY OWE AN ADDITIONAL PAYMENT WITH YOUR TAXES.

While these changes may greatly impact those who considered their short-term care as primary health insurance, many who utilize the plans for temporary gaps in healthcare will not be significantly affected.

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