On March 28, 2024, multiple federal agencies released final rules affecting short-term medical (STM) and hospital indemnity plans.
The Department of Health & Human Services, Department of Labor, and Department of Treasury’s new rules stem from their July 2023 proposed STLDI restrictions. Currently, they’re only finalizing a few of the restrictions. The agencies will be spending more time studying the others before moving forward with them.
In short, the policy amendments seek to make the line between short-term, limited duration insurance (STLDI) and comprehensive health insurance clearer to beneficiaries. (STLDI plans do not provide minimum essential coverage, or the protections guaranteed by the Affordable Care Act.) By being able to recognize comprehensive or temporary coverage more easily, beneficiaries should be able to better weigh their health risks and health coverage options.
Here’s what independent agents selling individual market STLDI health plans need to know right now.
2024 Short-Term Medical Insurance Changes
Generally speaking, the following federal law changes are effective September 1, 2024, for STLDI sold/issued on/after that date. There may be additional restrictions or state regulations in your health insurance markets.
Limits STM Coverage Periods to Three to Four Months
STM policies may initially provide coverage for up to three months. Insurers may extend/renew the coverage for one month, for a maximum coverage period of four months total.
Previously, STM plans could have an initial contract term fewer than 12 months and a maximum coverage period of 36 months. This will remain the case for STLDI policies sold or issued prior to September 1, 2024.
Aim: To better distinguish STLDI as a temporary form of coverage and not a long-term alternative to comprehensive coverage
Redefines STLDI Renewals and Extensions
STLDI renewals or extensions will now be defined as STLDI sold by the same issuer, or any issuer that is a member of the same controlled group, to the same policyholder within a 12-month period.
Aim: To prevent policy stacking
2024 Hospital Indemnity Insurance Changes
The following federal law changes applies to new and existing coverage, with respect to plan years, beginning January 1, 2025.
Revises Consumer Notice Required for Fixed Indemnity Excepted Benefits Coverage
The revised consumer notice highlights the differences between fixed indemnity excepted benefits coverage and comprehensive coverage. According to the final rule, plans and issuers must prominently display the notice in marketing, application, enrollment, and reenrollment materials.
Aim: To ensure consumers are aware of the limitations of this coverage and don’t purchase it as comprehensive coverage
Overall, these changes seek to ensure beneficiaries understand and use STLDI coverage as temporary coverage — not as an alternative to the marketplace. Please keep these changes in mind as you’re assisting clients and reach out if you have any questions.
Ritter partners with many competitive Affordable Care Act and STLDI carriers and has the trainings and tools you need to better help your clients. To explore our solutions, register with our site for free or contact your sales specialist.
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