National Association of Insurance and Financial Advisors

NAIFA Supports Lengthening 90-Day Limit on Short-Term Health Plans

Short-term, limited-duration insurance (STLDI) provides consumers with temporary, basic, affordable health insurance coverage, often at times they are in dire need of insurance and facing setbacks in their careers or finances. These policies also benefit people who are undergoing less stressful life transitions.
STLDI plans provide necessary stop-gap coverage health insurance while consumers shop for more comprehensive plans or until they are able to join group plans. Sometimes STLDI fills coverage gaps, which can last for many months, for consumers who must wait for open enrollment periods.
Currently, federal regulations require STLDI plans to be in force for no more than 90 days. NAIFA believes this is an excessive restriction that limits consumer choice and makes Americans vulnerable to having to go without health insurance for extended periods.
“These short-term policies are crucial for people who have lost coverage or are otherwise unable to obtain long-term health insurance right away,” said NAIFA CEO Kevin Mayeux. “Often these are people who have also lost their jobs or are struggling with other financial setbacks. They frequently need more than three months to get back on their feet, and the loss of their affordable, temporary insurance after 90 days is an additional blow.”

A Regulatory Solution

NAIFA supports a proposed Department of Health and Human Services rule that would allow STLDI policies to remain in force for up to 12 months. This simple change would better reflect the reality of how these policies benefit consumers.
NAIFA members report that clients who purchased STLDI policies before the 90-day restriction went into effect kept them in force for five to six months, on average. They say cases in which clients use short-term policies that often extend beyond 90 days include:
  • Individuals seeking coverage while in a job transition who discover COBRA payments to be too costly
  • New retirees seeking temporary health insurance while waiting to enroll in Medicare
  • Clients seeking coverage to ease financial hardships in the event of critical illnesses or injuries
  • Self-employed people who need additional coverage to complement their major medical plans
  • Young adults who recently turned 26 and are therefore no longer eligible to be covered under their parents’ plans
  • Recent college graduates who have yet to secure group coverage through an employer
  • Clients going through divorce or taking early retirement
  • Students who have lost university-provided coverage and do not qualify for a special enrollment period
  • American students studying abroad
  • Individuals temporarily in the United States on VISA programs
“Ninety days can go by in a hurry for someone who needs short-term coverage,” said Mayeux. “What’s worse, people who must wait for an open enrollment, possibly many months in the future, may have little choice but to go without insurance until they are eligible for regular coverage. Common sense dictates the 90-day restriction on STLDIs harms consumers when situations the policies are specifically designed to address often last longer than that. NAIFA appreciates that HHS is considering this change, and we encourage the department to move forward with it.”
NAIFA President Keith Gillies submitted a comment letter to HHS explaining NAIFA’s position in greater detail.
  • Posted April 19, 2018 IN

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