National Association of Insurance and Financial Advisors

States Move to Regulate Short-Term Limited Duration Insurance Policies

By Steve Kline
Steve Kline is Director of Government Relations at NAIFA. @SteveKlineNAIFA

Despite a new regulation from the Department of Health and Human Services (HHS) that significantly expanded the permitted duration of short-term limited-duration (STLDI) policies, some states have recently moved to enact strict regulations on such plans. State regulators and some consumer organizations argue that these are substandard policies that do not provide sufficient coverage to consumers and should therefore be stringently regulated or even banned.

As NAIFA members may recall, towards the end of 2016 the Obama administration imposed a regulation that limited the duration of STLDI plans to only 90 days. However, this past summer the Trump administration overturned that rule. New federal policy expands the duration of STLDI coverage by allowing these plans to last up 364 days and further permits them to be renewed for a total coverage time of up to 36 months. 
Yet, this new federal regulation does not preempt states from regulating STLDI plans.  In fact, we are aware of at least eight states that recently enacted laws to regulate STLDI policies to varying degrees. Maryland, Oregon, Vermont, and Washington moved to restrict STLDI plans to a coverage period of 90-days. California, New York, and New Jersey enacted laws to prohibit the sales of STLDI plans in their respective states.  In North Dakota, the Department of Insurance issued a Bulletin that informed carriers and producers that STLDI plans may provide a total coverage period of 12 months including renewals, must include a notice stating that the policy is not comprehensive major medical insurance, and must only be sold through a carrier’s appointed producers.  We anticipate that other states may soon establish parameters on STLDI coverage. 
NAIFA supports the federal regulation expanding the duration and access to STLDI plans and discourages states from imposing new regulations on these policies. STLDI plans can ensure that consumers are able to maintain critical and temporary health insurance coverage especially in instances where a consumer lost his or her individual market or group policy and needs sufficient time to obtain a more comprehensive insurance plan. Also, in some health insurance markets where there are very few and cost prohibitive plans available for consumers, STDLI policies may offer consumers the only affordable, albeit temporary, option. 
  • Posted November 12, 2018 IN
  • Comments (1)

Carroll Golden
Many of us who specialize in the limited, extended and long term care planning field might agree that given the right set of circumstances these limited plans are important. iThe plans allow consumers to have coverage during a limited period where they might otherwise not be able to obtain comprehensive coverage. Planning for care is of major importance. Planning for limited, extended and long term care is essential to the family and financial well-being of everyone.
11/19/2018 1:16:47 PM