Background on Short Term Limited Duration Rule Change
On Wednesday, August 2, 2018, the Departments of Health and Human Services (HHS), Labor, and the Treasury released a final rule that will expand the availability of certain health insurance plans that are not required to cover people with pre-existing conditions or provide coverage for mental health services. Specifically, the rule will expand the duration of “short-term” limited duration (STLD) insurance, allowing plans to be issued for 364 days (up from three months) and be renewed for up to 36 months. STLD insurance is exempt from the definition of individual health insurance coverage under the Affordable Care Act (ACA) and is therefore not subject to the ACA consumer protection provisions.
Therefore, this action unilaterally undermines federal health insurance protections for people with private insurance, especially those with pre-existing conditions. Specifically, STLD plans could:
- Deny coverage for any pre-existing condition like mental illness. Plans can do this both at the point a person first applies or later when they need medical care and the plan “rescinds” coverage due to a mistake on the application;
- Set higher premiums for people with a history of mental health conditions;
- Deny access to basic benefits like mental health and substance use disorder treatment; and coverage of services resulting from self-inflicted injury.
IThe administration contends that this rule will “provides consumers with more affordable options for health coverage.” In doing so, the rule will siphon younger and healthier individuals out of the individual market risk pool, forcing patients with preexisting health conditions to pay far higher costs for the comprehensive coverage they obtain through the insurance marketplaces. It will also expose those younger, healthier individuals to the significant risk that their health plan will fail to cover critically necessary care if they fall ill or develop a serious medical condition.
The administration ignored requests from state insurance regulators and others to delay implementation of the rule until 2020 to give states time to assess their existing laws and adopt new protections if needed. Instead, the rule becomes applicable in 60 days, but it is not clear if products will be available that soon given that state insurance commissioners will need to review the filings of these plans.
Micah Pearson, CPSW
National Board Member, National Alliance on Mental Illness
Affiliate President, NAMI Doña Ana County