July 14, 2023
On Friday, July 7, the Departments of Labor, Health and Human Services, and Treasury (the Agencies) issued a Proposed Rule that would significantly reduce the term limits and allowable duration of short term, limited duration insurance (STLDI). Comments are due 60 days after publication in the Federal Register. The Council will be evaluating whether to submit comments and we encourage members to advise on any issues or concerns with the Proposed Rule that we should consider in our assessment.
The Proposed Rule would:
- Amend the federal definition for STLDI to require a specified expiration date of no more than 3 months after the original effective date and a maximum permitted duration of 4 months in total (accounting for renewals and extensions). This would apply to policies sold on or after the effective date.
- Explicitly states that payments from the employer to provide fixed indemnity plans are not excluded from the employee’s gross income if the amounts are paid without regard to the actual amount of medical expenses incurred, as well additional restrictions on how plans can be sold.
- Amend the current consumer notice requirements for both STLDI and Fixed Indemnity plans, revising both the content and formatting of the notice to promote better readability and comprehension. Notably, the Proposed Rule would add language to the notice that helps consumers identify how to enroll in comprehensive coverage, including links to reliable resources.
Read a summary of the Proposed Rule from Steptoe & Johnson here. If you have questions or comments regarding the Proposed Rule on short term health plans, please reach out to Katie King, VP of Health Policy & Strategy.