The Internal Revenue Service, Department of Labor and Department of Health and Human Services released a joint proposal that would place restrictions on short-term health insurance under the Affordable Care Act.
The Obama Administration recently proposed a rule that seeks to deter the sale of short-term, limited duration health insurance policies—and it’s raising red flags.
Earlier this summer, the Internal Revenue Service, Department of Labor and Department of Health and Human Services released a joint proposal that would, among other things, place considerable restrictions on short-term health insurance under the Affordable Care Act (ACA). The Big “I” responded by submitting a comment letter outlining concerns with the proposal.
In sum, the proposal would:
1) Limit policies to a duration of three months or less
2) Make policies non-renewable.
3) Require that insurers and their agents provide purchasers with detailed disclosures about policy limits during the sales and enrollment process.
Currently, short-term, limited-duration health insurance coverages are regulated primarily at the state level, and virtually all states have detailed laws and regulations both defining and governing the sale of these policies.
In its response to the proposal, the Big ‘I” raised concerns that providing such an overarching and restrictive definition of short-term, limited-duration health insurance could negatively impact the health insurance market in some states. For example, limiting policy duration to three months and prohibiting renewal could leave individuals with no reasonable insurance options if they lose coverage outside the open enrollment period and do not qualify for the special enrollment period.
Additionally, affordability issues related to post-ACA health insurance coverage remain. Short-term, limited-duration coverages can help alleviate some of these affordability issues for families or individuals who are in unique, special or temporarily difficult circumstances. Severe and arbitrary restrictions on coverage options for consumers in special circumstances are counter to the ACA’s goal of increasing health insurance coverage.
Finally, the Big “I” raised questions regarding the rule’s enforcement and the potential for consumer fraud such a rule could create. The Big “I” asked that the Administration consider all these issues when developing a final rule.
Jennifer Webb is Big “I” federal government affairs counsel.
