Executive Order Mandates Reexamination of Short-Term Health Care Coverage Limits

The White House has issued an Executive Order (EO) directing the Department of Labor (DOL) to implement rules and regulations permitting small business as well as individuals to purchase health insurance coverage through association health plans (AHPs). The EO would also direct the DOL and the Internal Revenue Service to reexamine a regulation implemented under the previous administration that restricts short-term health insurance coverage to 90 days with no option for renewal. 
“NAIFA has strongly encouraged federal regulators to extend the Affordable Care Act’s three-month time limit on short-term health insurance, and we are pleased to see the president’s executive order calls on the IRS and DOL to review the limit,” said NAIFA CEO Kevin Mayeux. “Allowing consumers to purchase short-term plans for a longer period of time allows greater flexibility and access to coverage, especially for those facing transitional periods. People between jobs or waiting for coverage to begin at a new job or to obtain coverage during an open enrollment period may particularly benefit from short-term policies.”
Prior to the 90-day limit, short-term health insurance plans could provide low-cost coverage for up to a year, although it was not compliant with the Affordable Care Act’s (ACA) minimum coverage requirements. 
NAIFA comments to the federal agencies that implemented this rule argued that restricting these plans to only 90 days could result in consumers not being able to obtain necessary health insurance coverage while they wait for the next open enrollment period to purchase a policy compliant with the ACA. If a consumer’s ACA-compliant coverage is canceled as a result of an unpaid premium payment, the consumer may have to wait until the next open enrollment period which could well exceed 3 months. Short-term coverage can play a critical role in ensuring that consumers do not suffer a gap in their insurance coverage. 
While NAIFA supports review of the 90-day restriction on short-term plans, the association has concerns about other provisions in the executive order. Unlike traditional employer-sponsored group insurance coverage, AHPs would be self-insured and may be permitted to sell across state lines. NAIFA, as well as other industry associations and many state insurance regulators, are concerned about the potential adverse effects this proposal may have on the health insurance markets.  AHPs could enable employers to “cherry pick” only healthier employees to participate in the risk pool, potentially resulting in an unbalanced small group health insurance market that will lead to higher costs for those businesses that have mostly older and less healthy employees.
The DOL will soon prepare draft regulations to implement the executive order and will be opening a public comment period that will allow NAIFA to provide input. NAIFA looks forward to working with the administration and Congress to help lower health care costs and ensure coverage is available to all citizens—without jeopardizing the high quality of care American consumers expect.
NAIFA has developed principles that support a workable solution to our health care problems, and we encourage you to read them on our website.
  • Posted October 12, 2017 IN

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