The Health and Human Services, Labor and Treasury departments have released final regulations that limit short-term limited duration insurance policies to no more than three months. With extensions or renewals, the maximum coverage period can be no more than four months.
Under the Trump-era rule, the maximum initial term could be as long as 12 months with a total coverage period of up to 36 months with extensions or renewals. The final rules also contain new notice requirements, so that a clear and concise notice must be placed on the front page of each policy.
The short-term policies are not subject to certain Affordable Care Act protections, including prohibitions on discrimination based on health status, preexisting condition exclusions or dollar limits on certain essential health benefits.
We asked two professors and authors of ALM's Tax Facts with opposing political viewpoints to share their opinions about the final regulations limiting the permissible length of short-term limited duration insurance policies.
Below is a summary of the debate that ensued between the two professors.
Their Votes:
Bloink
Byrnes
Their Reasons:
Bloink: When taxpayers are permitted to purchase this non-comprehensive coverage for a longer period of time (before the final regulations, 12 months), they're more likely to mistake this "skinny" medical coverage for comprehensive coverage. Limiting the duration of these policies to three months should alert taxpayers to the fact that these policies don't provide the kind of robust coverage that ACA-compliant policies do provide. It also reaffirms that the role of STLDI is to provide temporary coverage, rather than an alternative to comprehensive coverage.
Byrnes: Short-term, limited-duration health coverage offers a valuable solution to clients in a variety of situations. There is no reason why we shouldn't allow taxpayers to make their own decisions and evaluate their own health care needs when deciding whether STDLI is the right fit for them.
Bloink: The final regulations comprehensively address the duration of these policies and take steps to prohibit "stacking," so that an insurance company won't simply issue multiple extensions to the same policy holder within a single 12-month period to give the illusion of full coverage. These policies are intended to provide only a stopgap solution for individuals with no other option for a short period of time, until they can enroll in marketplace coverage or qualify for employer-provided coverage.
Byrnes: Taxpayers who only need a more limited health insurance coverage option should be entitled to choose that coverage if they see fit. The government, by issuing these regulations, is taking away a valuable lower-cost insurance option when they should realize that some insurance is better than no insurance at all.
Bloink: The new notice requirements will also serve to alert taxpayers to the drawbacks of these STLDI policies. The entire goal is to make sure that these STLDI policies aren't replacing the comprehensive coverage that Americans need. We've had this debate time and time again. No one can predict when they'll need major medical care. Americans shouldn't think that STLDI coverage is a viable substitute for comprehensive medical coverage.
Byrnes: Remember, taxpayers who are purchasing STLDI are not subject to any sort of government mandate to purchase any health coverage at all. Why not allow the option? Such severe limitations on the duration of these policies is yet another example of government overreach in an area that should be left to the markets. A clear demand for these types of limited medical coverage policies exists. Insurers should be entitled to provide coverage options to satisfy that demand.
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Bloink 
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