New Mexico Freezes the 'Excepted Benefits' Approval Pipeline

The administration has supported expanded use of short-term health insurance, for example, by reversing an Obama-era regulation that limited the benefits period for short-term health insurance policies to three months.

State regulators and insurers now can choose to have short-term health insurance policies stay in effect, with renewals, for as long as three years, without the policies coming under ACA requirements.

Some regulators and insurers oppose use of excepted benefits products as alternatives to major medical insurance. Critics of using excepted benefits as major medical substitutes say excepted benefits tend offer much less coverage, and that consumers lured by low premiums may not understand the limitations until they are seriously ill.

The critics also argue that excessive use of excepted benefits could kill the traditional major medical market, by leading younger, healthier, less-benefits-conscious consumers out of that market.

The New Mexico Situation

Toal says in the bulletin announcement that New Mexico has received 891 excepted benefits coverage form filings since June 14, 2019, when the state's excepted benefits act took effect.

The act requires the insurance superintendent to make sure issuers and producers aren't marketing and selling excepted benefits products as substitutes for major medical plans, Toal says.

"The continued approval of excepted benefit forms without the standards contemplated by the act could exacerbate the problems that the act was intended to eliminate," according to the bulletin announcement.

The excepted benefits approval moratorium will give all stakeholders time to participate in the rulemaking process required by the act, and lead to rules that give New Mexicans residents to the excepted benefits products without hurting the major medical insurance market, Toal says.

— Read Short-Term Health May Go Major, on ThinkAdvisor.

— Connect with ThinkAdvisor Life/Health on Facebook, LinkedIn and Twitter.