Smart Benefits: New Rule Proposed to Limit Short-Term Health Coverage
Monday, June 13, 2016
Rob Calise,GoLocalProv Business/Health Expert
As part of HHS’ efforts to continually monitor the health of the Marketplace and identify opportunities for improvement, the department has taken a series of actions to strengthen the Marketplace risk pool over the past few months, including efforts to curb abuses of short-term plans that exploit gaps in current rules to use medical underwriting to keep some of the healthiest consumers out of the ACA's single risk pool.
Short-term limited duration health coverage is issued for a short period of time. Because short-term plans are designed to fill only very short coverage gaps, the coverage is not subject to any of the key rules governing the ACA’s single risk pool, meaning that they can be priced based on health status (medically underwritten), can discriminate against consumers with pre-existing conditions, and do not have to cover essential health benefits.
Some issuers now offer short-term limited duration plans to consumers as their primary form of health coverage for periods that last nearly 12 months, allowing them to target only the healthiest consumers while avoiding consumer protections. By keeping these consumers out of the ACA single risk pool, such abuses of limited duration coverage increase costs for everyone else.
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To limit abuse of these plans, last week the Departments of Labor, Treasury, and HHS issued a proposed rule to revise the definition of short-term, limited duration coverage. Under the new rules, short-term policies may be offered only for less than three months, and coverage cannot be renewed at the end of the three month period. The proposed rule also improves transparency for consumers by requiring issuers to provide notice to consumers that the coverage is not minimum essential coverage, does not satisfy the health coverage requirement of the ACA, and will not prevent the consumer from owing a tax penalty.
Rob Calise is the Managing Director, Employee Benefits. of Cornerstone|Gencorp, where he helps clients control the costs of employee benefits by focusing on consumer driven strategies and on how to best utilize the tax savings tools the government provides. Rob serves as Chairman of the Board of United Benefit Advisors, and is a board member of the Blue Cross & Blue Shield of RI Broker Advisory Board, United HealthCare of New England Broker Advisory Board and Rhode Island Business Healthcare Advisors Council. He is also a member of the National Association of Health Underwriters (NAHU), American Health Insurance Association (AHIA) and the Employers Council on Flexible Compensation (ECFC), as well as various human resource associations. Rob is a graduate of Bryant University with a BS in Finance.
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