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HHS final rule on
short-term, limited-duration insurance brings more
flexibility and choices to consumers
On Wednesday, the departments of Health and
Human Services, Labor and the Treasury issued a final rule
to help Americans struggling to afford health coverage find
new, more affordable options. The rule allows for the sale
and renewal of short-term, limited-duration plans that
cover longer periods than the previous maximum period of
less than three months. Such coverage can now cover an
initial period of less than 12 months, and, taking into
account any extensions, a maximum duration of no longer
than 36 months in total. This action will help increase
choices for Americans faced with escalating premiums and
dwindling options in the individual insurance market.
“Under the Affordable Care Act, Americans have
seen insurance premiums rise and choices dwindle,” said
Health and Human Services Secretary Alex Azar. “President
Trump is bringing more affordable insurance options back to
the market, including through allowing the renewal of
short-term plans. These plans aren’t for everyone, but they
can provide a much more affordable option for millions of
the forgotten men and women left out by the current
system.”
In a recent release of three reports on the
current state of the individual insurance market, Centers
for Medicare & Medicaid Services (CMS) data reveal
serious problems. While enrollment data show stable
enrollment for subsidized exchange coverage, the number of
people enrolled in the individual market without subsidies
declined by an alarming 20 percent nationally in 2017,
while at the same time premiums rose by 21 percent. Many
state markets experienced far more dramatic declines, with
unsubsidized enrollment dropping by more than 40 percent in
six states, including a 73 percent decline in Arizona.
These troubling trends were besetting
individual markets as President Trump took office, which
led the President to issue the executive order “Promoting
Healthcare Choice and Competition Across the United States”
in October 2017. The executive order seeks to address the
failings of the ACA, which severely limited the choice of
healthcare options available to many Americans and produced
large premium increases in many state individual markets
for health insurance.
“We continue to see a crisis of affordability
in the individual insurance market, especially for those
who don’t qualify for large subsidies,” said CMS
Administrator Seema Verma. “This final rule opens the door
to new, more affordable coverage options for millions of
middle-class Americans who have been priced out of ACA
plans.”
Short-term, limited-duration insurance, which
is not required to comply with federal market requirements
governing individual health insurance coverage, can provide
coverage for people transitioning between different
coverage options, such as an individual who is between
jobs, or a student taking time off from school, as well as
for middle-class families without access to subsidized ACA
plans. Access to these plans has become increasingly
important as premiums have escalated for individual market
plans, and affordable choices for individuals and families
have dwindled.
The average monthly premium for an individual
in the fourth quarter of 2016 for a short-term,
limited-duration policy was approximately $124, compared
with $393 for an unsubsidized individual market plan.
*Notice:
This HHS-approved document has not yet been placed on
public display or published in the Federal Register. The
document may vary slightly from the published document if
minor editorial changes have been made during the OFR
review process. The document published in the Federal Register is
the official HHS-approved document.
** People using assistive technology may not
be able to fully access information in this file. For
assistance, contact digital@hhs.gov.
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