New Federal Rules Limit Short-Term Plan Durations - But There Still are Options

​Beginning Sept. 1, 2024, new short-term health plans will be limited to three months and a one-month extension providing a duration maximum of four months per insurance carrier over a 12-month period (additional state rules may apply). 
 
Short-term health insurance plans (STM) are designed to provide individuals with economical, temporary coverage for illnesses and accidents. Benefits can include wellness visits, doctor office copays, and coverage for hospital emergencies, surgery and more. A range of deductible options usually are available to keep monthly premiums lower.

​The Departments of Treasury, Health and Human Services, and Labor on March 28, 2024, imposed these new duration limits on STM plans effective Sept. 1, 2024, in order to ensure that short-term coverage will not be used as long-term coverage. The federal government also wanted to make it easier for consumers to distinguish between Affordable Care Act-compliant individual/family health insurance and STM plans so that they won’t accidently purchase short-term coverage when trying to buy comprehensive coverage.
 
Short-term health plans are currently NOT available in the District of Columbia and 14 states: California, Colorado, Connecticut, Hawaii, Maine, Massachusetts, Minnesota, New Hampshire, New Jersey, New Mexico, New York, Rhode Island, Vermont and Washington.
 
Options
Despite these changes, there are consumers who are fans of the plan and the level of coverage STM plans provide. STM plans are excellent options for recent college graduates, student athletes, workers who are between jobs or for employees who can’t afford COBRA coverage after losing a job. 
 
It’s important to note that these changes do not affect STM coverages already in effect. If a consumer purchased a short-term insurance plan for 36 months up to Aug. 30, 2024, they are grandfathered in and can keep their coverage for the entire 36 months.
 
In addition, some marketers, like Pivot Health, have developed a way to give consumers up to 12 months using three independent insurance carriers in specific states. This option will be available starting Aug. 31, 2024.
 
Talk to your broker today if you have questions or need short-term coverage. 

13202s0724

Author: Allied National.
Founded in 1970, Allied is one of the nation's oldest and most experienced third-party administrators. As the small group benefit experts, Allied works with agents whose small business employer clients are seeking affordable group health benefits.