On October 28, new rules were released, that among other things, govern excepted benefits coverage and short-term medical (STM) coverage. An October 30 article from the Health Affairs Blog provides a nice overview of the key changes.
From the short-term medical stand-point, there is no immediate impact on how we do business, but the new rules prompt participants to choose ACA plans rather than short-term medical plans, and STM plans are generally limited to three months in duration, rather than “less than 12 months” as previously interpreted. Data indicates the short-term medical coverage market grew considerably between 2013 and 2015 suggesting that some short-term medical coverage may have been used longer than intended.
Short Term Medical Rule Highlights:
- All STM policies sold with effective dates between January 1, 2017, and March 31, 2017, which have durations of three months or more, must terminate on or before December 31, 2017.
- All STM policies sold with effective dates of April 1, 2017, and later, must be less than three months in duration.
- The STM policies and applications must prominently state that Short Term Medical is not Minimum Essential Coverage and a tax penalty may be owed.
Similar Supplemental / Excepted Benefits Coverage
HealthAffairs.org reports that the rule interprets coverage that fills gaps in group coverage as excepted benefits coverage. The final rule clarifies that supplemental coverage must:
- cover benefits that are not covered by the primary coverage and are not essential health benefits in the state where the coverage (including expatriate coverage) is issued;
- cover cost-sharing for primary benefits; or
- both provide supplemental benefits and cover cost-sharing.